"Supply will be up and prices will come down in six months" will join "Yes, I'll respect you in the morning" as a meaningless promise.

This should be the quote of the day!

In such countries, where stiff gas taxes help induce motorists to drive small, fuel-efficient cars, the griping by Americans about high gasoline prices evokes little sympathy. Ruth Bridger, a spokeswoman for the AA Motoring Trust, a British consumer advocacy group, said Britons look at the sport-utility vehicles that dominate U.S. highways and think, "Serves you right."

The article notes some countries impose hefty taxes that help the state budget. They are under pressure to scale them back to make gas more affordable. Other countries subsidize gas and are getting their budgets hit hard.

In India, which imports about 75 percent of its crude oil, domestic fuel prices have risen less than one-third as fast as international prices, according to Hans Timmer, an economist at the World Bank; the government's failure to implement a system of market-determined prices caused state-owned refineries to lose $4.6 billion in 2004.

snip

Indonesians have been paying about 90 cents a gallon for gasoline -- until this weekend, that is, when the government of President Susilo Bambang Yudhoyono announced that gasoline prices would nearly double and kerosene prices would triple. Officials said they had no choice, since fuel subsidies have swelled to about one-third of government spending. Word of the impending price hike sparked protests in many cities; on Friday, police were using tear gas to disperse thousands of demonstrators. The reaction was muted compared with the deadly rioting triggered by previous price hikes, but the government is bracing for possible violence as the impact sinks in.

People in oil exporting countries seem especially pissed because they expect plentiful oil within the country would translate to (perpetually?) cheap gas. The article doesn't make the point explicitly, but anger is directed not just at government but ultimately globalization and the largest consumers.

The issue is when oil gets so expensive, and we have enough alternative technology and infrastructure in place, that we simply stop using oil for most purposes.

I am in 100% agreement with you.  Most people I talk to can't comprehend the difference between saving energy by applying more efficient technology to do the same job vs just doing less.  Not all transportation has the same efficiency.  Not all building designs are equally efficient.  We need a national drive for energy efficiency now.  This will reduce consumption of petroleaum now and maybe get us so efficient in the future that we can substitute some less energy dense alternative.  

All the arguments to date say we can't substitute any alternative energy for diesel/gasoline because there isn't enough energy density  in those approaches.  I agree, if we assume current transportation technology.  The civilization saving question is how do we move the same mass of goods in essentially the same time frame using 30-40 less energy?  That might (still a big might) get us onto more renewable fuels or at the very least stretch our fossils until the next technological stair step innovation.

But if we don't start now the whole system just might grind to a halt in the near future.  Oh, and lest people think this is a free lunch we all will all need to do some sacrificing and cut back on wasteful luxuries.  I personally believe some luxuries are not energy wasteful.  A week canoeing in the boundary waters comes to mind!

My impression is that windmill generators and solar water heaters make economic sense, but most "green" technology doesn't. I don't know at what point home insulation reaches a diminishing return.

But, you say, wait until oil hits $200 a barrel!

But, I reply, how much of the high cost of the technologies is from the energy it takes to build them? Enough to indicate that their EROEI is poor, maybe even less than 1? Of course it depends on the technology. And if energy is under-priced today, it may be a good investment to buy equipment that will become more valuable later... but if its construction uses more energy than it creates or saves later, it still wouldn't be good conservation.

Chris

Try this posting by a Nobel Laureate:

http://cohesion.rice.edu/NaturalSciences/Smalley/emplibrary/120204%20MRS%20Boston.pdf

"There are two sides to any debate."

    This is called a "false choice" in the study of mental manipulations. No. There can be many sides.
   Moreover, the manipulation attempts to present the sides of the debate as deserving equal credibility irrespective of what is being debated. It sounds "fair", but it is wrong headed.
   The proposition about equally balanced sides can be easily disproved with hypotheticals that test the proposition. Example: a 3 year old child is "debating" a 30 year old mathematician. The child says 2+2=5. The mathematician says, no. Are there 2 equally balanced sides to this "debate"? No.

  As for the mathematically ungifted, econo-geniuses at your Becker-Posner site: wake up. The Earth is round. It has a finite volume: V=4/3 pi*R^3. "Matter" consumes volume. Malthus was right. The finite surface area and volume of the planet cannot support an infinite number of resource-consuming critters. We will not be the first "intelligent" species to die-off due to over-shoot. Sorry.  

"I would like to see the Oil Drum discuss this posting by a Nobel Laureate."

     People in the know understand that the "Nobel Prize" is a politically bestowed title. Quite often, the wrong person is awarded the prize because of his or her political connections and because of cronyism (sp?). I am less than impressed by the "noble" title.
    IMHO, economics is mostly a "religion" rather than a science. Economists too often filter out all the objective observations that disprove each of their theories. Example: New Orleans 2005. Why did free-thinking "rational" humans invest their scarce resources into building a city on the edge of hurricane alley despite the fact that scientists have for over 30 years warned that this is a recipe for disaster? Where is your free markets now, momma? Never mind. The human brain easily denies that which does not fit the religiously adopted model.

I'm not sure I'd be prancing around in an Escalade when my countrymen are suffering ...

"... we were able to substitute energy sources smoothly as the population grew: from wood to coal, and coal to oil."

And the transitions have not been very smooth. There has been deforestation, coal and oil crises and they have been solved mostly by adding new energy sources and importing energy from somwhere else. The fact is that the world has not really experienced a situation where some important primary energy source has depleted.

It is not possible to get more for less. We only get less for less. Even if we can get the same miles with half the gasoline in a smaller car, we are driving in a smaller car ant that is not the same as in a SUV. This sounds trivial but if we have a truck it is not a trivial matter if we get only 5 tons instead of 10 tons goods to the destination. In fact modern cars and trucks are already very energy-efficient and there is not much room left for improvement. The energy-efficiency means here tons x miles / gallons. A smaller car is not always more efficient, it is just smaller.

It is not possible to start huge investments for improving energy eficiency or rearranging urban areas in the middle of an energy crisis. This kind of investments are very energy-intensive and will make the situation even worse. We have real life examples of something like this. It means that a lot of investments cannot be completed and a lot of energy is wasted, not saved.

If there is less energy the only way is to use less and get less. It is not enough to set mpg norms for cars. Why not set norms for housing - how many heated or air-conditioned rooms per person? What temperature range? Something has to give.

But I think there is more. All our energy sources are pretty old now. Biomass was the first one, peat probably almost as old. Coal use started in China at least two millenia ago, in Britain before the year 1300. Oil history is over one and a half century long, in Middle East oil has been known since ancient times. Natural gas is a about a century old, but it has been known as long as oil. Even nuclear energy has a half century behind it. Water and wind are very old, geothermal also in some forms. Tidal power was used already in Tudor England.

All these energy sources are still in use and all of them are still needed for the energy supply of the humankind. And only nuclear power is really "new" among all these. So finding a new energy form has been a rare occasion. All the others have been known for a long time. They were taken in use when more growth was needed, not when the older ones were depleting. The renewables don't deplete but they won't grow either after they have been fully exploited. The fossiles were needed for additional growth. And all these are technologically build on each other. Oil rigs and pipes need a lot of steel and steel is made with coal. Oil moves coal. Natural gas makes oil from tar sands.

Oil is only 35% of the global energy consumption. The most important single addition to the world energy supply right now has been the increase in Chinese coal production - not any new oil field. The coal mines in Inner Mongolia are just as important as Saudi-Arabia. All the energy sources has contributed to the exploitation of each others. That is why we are getting nearly simultaneous peaks of all the main fossile fuels. We have not substituted anything and not left unused resources behind but only accelerated simultaneously the use of all of them. Yes, this makes very bad news. But this is the problem we have to manage somehow - with the least damage.

http://www.chim.unisi.it/en&war/bender.pdf