An interesting exercise...

I received this email from a reader, William, yesterday.  I was working up my reply to him, and then I realized that I should put this out there, as it may be an interesting exercise for us all to participate in.
I am about to participate in a mock government exercise for my home state, and, oil independence being a subject of great interest to me, I want to draft a piece of legislation that would drastically reduce our consumption. I know it would be best to make such efforts on a federal level, but that's not the opportunity afforded, and I picture it as somewhat of a statement.  I would like your advice on what elements to put in a bill to eliminate all but essential oil consumption in the course of fifty years?
Now, you must keep in mind some political realities: In a mock gov't exercise, even at the state level, we must adhere to the realities to our current system...and because it is a catch-all two-party system (search good ol' Duverger's law), it is tough to be anything but slow, pragmatic and deliberative in our legislative process (e.g., the energy bill that we just got out of Congress.)  So, ergo, if the simulation will be realistic in that regard, and you wish to actually have an impact on the legislative outcome instead of being laughed out of the chamber, I would suggest starting from the status quo energy bill that was just passed as a starting point (since it was a result of the current political process) and improve on it from there. In other words, this isn't a pie in the sky wish list, this is a question of "what is politically feasible in the political climate that will actually help the situation?" 

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" eliminate all but essential oil consumption in the course of fifty years". You don't need legislation to do that. It will be realized more or less anyway. What you really need is a bill to guarantee gasoline and natural gas and electricity for just those essential services.

If you start from the possibility of a severe energy supply disruption and try to plan some system to manage it, it may well get support. Emergency situations are "in" and everybody has seen that there is a strong need of better planning and setting legal frameworks to manage them in a civilized manner.

You could also propose a plan to help car pooling, avoiding unnecessary driving and maybe gas rationing in a sudden crisis situation or to ease excessive gasoline prices. It could be wise to plan how to help those people who have no car or cannot afford to buy gas in a situation when prices go very high. How about to provide some public transport. Some of these measures would help people cope with crisis situations.

Good luck.

Try the immediate contingencies at
for an insight.

The most important element - and it applies to the diminishing supply due to peak oil - is allocating diesel resources to critical industries such as agriculture and food distribution.

The model used in UK appears to be to designate named service stations as dedicated fuel suppliers to those 'priority' card holders only. Private individuals may not use those stations. Those stations have priority and security of supply.

This is common sense, and would work well.

I guess it's not blog hoaring if I'm so directly linked, but I just wrote a post on PO-NYC about some new polling results in the post $3/g gas world. There are parts that I think any politician (mock or not) would find appealing now to really start improving energy efficiency.

Personally, I know gas taxes are probably more efficient, but given that most of the public wants subsidies instead, I'll settle for greater fuel efficiency standards on newer vehicles.

Who defines what is essential?

That's the key problem; if you leave it to a political process, the "essential" users will be the ones with political pull.  If you just increase the price, require reserves to buffer shocks, and other measures which simply drive up the cost of using oil, people will instead look to see how difficult it is to either economize or switch.  The ones who find it easiest to switch are by definition the "least essential", regardless of how well-connected they are.

Take certain city functions, like parking meters.  The needs of a ticket-writer can be handled with a golf cart or 3-wheel electric motorcycle; this particular job requires no fuel at all, even though government is an essential function.  Bus service may be an essential function, but if fuel costs enough it starts making sense to use flywheel hybrid buses and put overhead electric contacts at bus stops to spin up the flywheel for the next several miles.  Enough of that, and the bus system only needs oil during electric outages.

Maybe you use something else as a proxy for money, but you're not going to get a good outcome if you don't make everyone look hard for ways to conserve or switch - no matter how essential they are.

I'm sorry for not more clearly defining essential. I would consider "essential" oil usage as something that cannot be replaced or minimalized through alternatives. For instance, whereas through increased efficiency and alternatives we could plausibly near eliminate oil use in transportation, I don't see a feasible alternative for jet-fuel, fertilizers, or plastics (correct me if I'm wrong). I would like to make some legislation that could concentrate on eliminating use of oil in areas where the job can get (feasibly) done using something else.
You are  wrong. Jet-fuel and plastics can be (and are) made from coal and natural gas (by SASOL). Fertilizers are not made from oil. They are made from natural gas, coal and mined minerals.
Fertilizer is only a problem if it's mis-managed.  Consider corn; average nitrogen usage is 86 kg/hectare/year, or about 77 pounds/acre/year.  An acre of corn can easily yield 2.5 tons of stover (stalks and leaves);  if you converted it to syngas to make hydrogen for nitrogen fixation, you'd get many times that 77 pounds out of it.  There are other ways to get hydrogen for nitrogen fixation, which I wrote up here (hydrogen from algae) and here (hydrogen from a zinc process).

Plastic isn't a big problem because per-capita consumption isn't all that huge.  The UK consumed about 5 million metric tons of plastic in 2002 over a population of ~60 million; that's less than 200 pounds/person/year.  If we can assume that people don't accumulate plastic at a significant rate, it winds up as waste at about the same rate as it's produced.  Probably 70% of that waste can be recycled to hydrocarbons (thermal depolymerization), leaving about 60 pounds a year that has to be created de novo.  You could easily grow a couple pounds a week of plant matter to make up each person's losses from the plastics cycle; people eat far more than that in food.

Jet fuel is an issue.  The easiest options appear to be liquid methane (if you can capture carbon cheaply enough to replenish your supply) or liquid hydrogen.  Gas turbines will run nicely on either, but the bulk of liquid hydrogen yields funny-looking aircraft.

As EP notes, markets already do a good job of allocating scarce resources. And I think your 50 year time horizon is a little unrealistic. You need to be looking at more short-term actions.

A good case can be made that oil consumption today is substantially subsidized in the U.S.  Oil taxes are relatively low, and don't cover all of the government expenditures related to our transportation infrastructure. If you then add in the military expenditures which are arguably oil-related (no coincidence that Iraq has some of the biggest petroleum reserves in the world) it is clear that consumers are not paying the full costs of the oil they use. This distorts market incentives and makes people use more oil than is optimal.

An appropriate remedy therefore would be to raise oil/gas taxes to more closely approximate the amount government spends to make oil available. Doing this will make fuel more expensive, therefore encouraging conservation and leaving more oil available in the future, when it will be in shorter supply. The money could be invested in alternate energy, or perhaps even more politically popular would be to return it to the people as a tax rebate.

You could present it as a "gas guzzler tax" which puts money into the pockets of people who are thrifty and drive fuel efficient vehicles. There's a lot of resentment towards SUV drivers and you could capture this politically to get support for your tax.

Good luck!

Raising gas taxes would be political suicide here in the USA. In fact you might find a lynch mob at your door before anybody has a chance to vote you out. :)
I am probably going to include some kind of gas tax, as I believe that that would leave increasing efficiency more to the market. I have two ideas, of which I might use both, on that. One, I do think we should give most, if not all, money raised from such a tax back to the taxpayers in a totally non-consumption-related tax area, like education, both to keep the voters happy and to keep the government from becoming dependent on the habit it's trying to curtail (as has happened in some European countries).

Second, I would like to format the tax so that it will make the price gas predictable, resetting the tax at, say, 2 month intervals so that the lowest available price is a set number (the intervals are to keep distributors competitive). This would absorb supply shocks (say if the target number was 5$, the tax would be reduced until the min. price was 5$, not the heightened price plus a huge tax), and make gasoline expenses very predictable, hopefully allowing the market to plan alternative schemes far into the future.

I've heard the first plan before, and am pretty sure I'll use it, but the second concept just seems like a good idea, please tell me any reasons you think it might not be.

An interesting tool for directing change, and one that is not often used in this country, is the feebate.

A feebate is a carrot-and-stick approach that can be applied to many situations and markets.  For example, if you want to encourage the purchase of more efficient vehicles, you can levy a fee against purchasers of the least efficient and use that money to finance a rebates to the purchasers of the most efficient.

Feebates seem like they would be politically more palatable than many similar solutions for a couple of reasons:

  1. The government gives away money, which is always popular. :)
  2. The program is (or should be) entirely self-funding
  3. A relatively small feebate can generate an impact out of proportion to its size.  By disincentivizing bad behavior and simultaneously incentivizing good behavior, you double your impact.
  4. The program could be effective while targetting a relatively small market segment on either end of the spectrum: e.g. fees for cars under 15 MPG and rebates for cars over 50 MPG.  Most drivers are unaffected, and the ones who get dinged are the SUV drivers (whom, righly or wrongly, are becoming somewhat unpopular in the public mind of late).
I like this approach. Sure I would prefer to see a "club" approach, but from a political point of view a "carrot and stick" approach is more viable.

The problem is that the politicians are in the pockets of the big auto industry. So first some of the big auto people will have to come on board or they will have to be driven out of business. Or people will just get so mad that they demand serious change from the government, but by then it'll likely be an even more painful process. It's hard for people to switch to alternatives when the economy has gone down the crapper.

Really there is no reason that the automakers can't make vehicles go a minimum of 50mpg. If someone wants a vehicle with poor mileage, they should be able to have it with extremely high tax penalties. They might also need to phase certain aspects in. There are already tax incentives for hybrid owners I believe. They should increase those incentives and set a date for the beginning of the other half of the feebates.

However, they need the support of the people and until they acknowledge the problem they won't have the support they need. People are apathetic and only severe shock will wake them up from the energy binge.

it's kind of a stretch to imagine there's gonna be a lawful way of getting us past peak oil. probably the most likely way of accomplishing reduction of oil consumption is to do exactly what the powers-that-be are doing: stage terrorist attacks to serve as pretexts to capture every drop of oil possible, then sell that oil at the highest possible prices to finance the conversion to hydrogen.

the next attack will enable cheney or whoever to declare martial law, reinstate the draft, nationalize the media and oil biz.

the most interesting question is this: who will wind up in control, the corporate fascist faction of PNAC,  or the suicidally desperate israeli american faction of PNAC?

dont forget the long term sea level rise threat to israel, and remember high ground must be captured before american armies run out of gas.

Sorry, this info is not really relevant to this post, but I have to put it somewhere:

Gasoline is a fundamental human right …
Created: Sep 16 2005

On this, I bet many American and Chinese citizens agree ... only here in the US, we think "cheap" gas - not just gasoline -- is a fundamental human right.  

The US decision to block (de facto tho not de jure) CNOOC's bid raises some serious issues, but this outburst from CNOOC's CFO still struck me as a bit over the top.  

In a rare public outburst, Yang Hua, the [CNOOC's] chief financial officer and main negotiator with Unocal, said it was important for the world to grant both China and India, which have become major consumers of oil and gas, long-term energy security.  "What is ‘human rights'? I'll tell you what it means. It means having guaranteed access to energy. It means having petroleum to run your car," he told journalists in Hong Kong yesterday."

It also seems like CNOOC no longer wants to be viewed as basically private company

 "When [Cnooc] goes abroad, it is treated as an ordinary listed oil company. But if the state-owned parent goes out, it will be representing the Chinese government. And there are many countries where China is received with opened arms, such as Africa," he said.
"Our parent company is our major shareholder. There is nothing wrong with borrowing a bit of political capital from it."

I wish I knew which state William is in. If it is a state with a large population then just the use of the state's purchasing power could drive free market innovators to provide non-fossil fuel solutions to your goal. It may mean that for several years the state may pay more for new vehicles, buildings, and energy supplies. Investment capital flows toward the demands of big customers and your state and the jurisdictions under them could means billions in profits for investors. Eventually the price of using renewables and new vehicle and building technologies will undercut the 20th century way of operating.
He works for a state government!  That's a point I'd missed.

The California Air Resources Board (CARB) promulgated its ZEV mandate starting in 1990.  Batteries were not up to the task then, and the automakers won repeated postponements and dilutions of the mandate until it was recently rescinded entirely.

A really useful general-purpose electric vehicle requires a range of 100 miles or more, which was barely feasible (very difficult) in 1990.  But even with 1990 technology it would have been feasible to mandate a PZEV, or plug-in hybrid (gas-optional hybrid) with perhaps 20 miles of all-electric range.  The improvement of batteries over time would allow this range to be extended, replacing petroleum fuel with whatever is feeding the grid that day.

Plug-in hybrids or GO-HEV's are coming to market; the Dodge Sprinter delivery van is coming in two hybrid versions (one plug-in, one not) and CalCars is working with a company to produce Prius+ conversion kits.  The cobalt-free Saphion Li-ion battery promises to make hybrid batteries much lighter and more powerful.  Zinc-air fuel cells are already running test buses, and could run much else besides.

Here's what you could propose for the simulation:

  1. All vehicle purchases must consider battery or zinc fuel-cell vehicles first, plug-in hybrids second, hybrids third, and conventional vehicles only if nothing else is suitable.  (Avoid hydrogen, it's a blind alley.)
  2. All fuel-fired heating systems in the state should cogenerate electricity (which can supply the vehicle fleet).
  3. All building codes should aim for integrated solar energy systems.
Since transportation accounts for most oil use, cutting it means finding another energy source and getting that to vehicles instead.  All that new generation plus battery vehicles would be able to do a lot of that in the next ten years, and if you've got the preferences for all-electric vehicles built into your policy you've showed the auto companies what to aim for.  Writing your rules so that it takes in options which are already in demonstration means you won't have long to wait, and when one company making a vehicle in a particular segment can effectively shove other companies out of the market due to the preference rules, you'll spur some serious competition to not be late to the party.
These seem like good ideas, but I would rather leave the specifics to the market, because you can never know where the best solution is going to come from. I would rather pick the losers (oil), than the winners (say, solar over wind).

Beyond punitive measures on consumption, the only real spending I'm considering at this point is research grants aimed at general problems and mass transit. Perhaps the "freebates" as well. I'm also considering tax breaks for alternatively generated electricity (funded by an emissions tax?), for it would be silly to merely replace oil consumption with natural gas and dirty coal, and perhaps a rezoning initiative aimed at making new development less car dependent.

You might want to consider that if you don't do something to "pick winners" (by removing roadblocks), someone else's political pull might do it for you.  This could leave you with a politically-determined solution not in your favor.  (I don't know if your simulation includes Washington lobbyists, but it ought to.)

There are things you could do that would radically lower resistance to electric vehicles at low cost.  Requiring all new construction to include electrical circuits suitable for charging would be inexpensive, but would greatly increase the desirability of EV's and GO-HEV's by making it easier to charge them.  Similar measures for parking lots could let people charge at work and while shopping.  If a couple thousand dollars in conduit, cables, meters, etc. let the average driver eliminate 50% of  their need for motor fuel, it would pay off in about 3 years at current prices (figuring 13,000 miles/year and 25 MPG).  Where else can you get that kid of return?

Consider it to be economic development.  If you prevent money from going to the Middle East, it is more likely to stay in the country and even within the state.

Off topic.

For those interested the President of OPEC member Venezuela, Hugo Chavez, is supposed to be on Nightline tonight.  Could be interesting.

How about creating tax incentives of some sort for cities who undertake projects to convert HOV lanes into rail? I'm located in Houston and we have a terrible problem with urban sprawl. Unfortunately while we do have a bus system, it's not nearly convenient enough. Many areas don't have bus services on the weekend, much less at "off peak" times. Building subways isn't practical here due to our flooding problems, so we need a solution that works above ground.

We have a new rail system in our downtown area that only goes a few miles up and down Main St. It cost us something like 7.5 billion to create it, which is insane really. Yet I think if we re-appropriated the HOV lanes for rail use or if we left the HOV lanes intact but built a second level for use by trains (Chicago style rail sorta); we could make a practical system of mass transit. I'd like to see us focus more on rail, while we use the bus system to make smaller connections. Over time we can migrate to hybrid and then maybe hydrogen powered busses.

I'm not thinking of making the federal government pay for all of it, but I do think it would be nice if they provided incentives for this sort of thing. The state government needs to play a role as well, but that's a different subject.

I've been to Budapest before, a city of modest means by American standards, and yet they have an excellent mass transit system, consisting simply of trollies that intermix with the rest of traffic. France, Europe in general, and Japan also all have excellent high-speed rail systems that provide an efficient, faster, and altogether superior alternative to most high-way driving, at very low costs. It just seems that when these simple ideas get in American hands, we manage to run up ridiculous costs with luke-warm results.

I really don't know a good way to legislate, especially from the state level, mass transit into being. Even high-speed rail would be doable, seeing as our main population centeres lay on a roughly straight line, but I'm very afraid that any state program to institute such a thing would get out of control and die before it got anything done. Any suggestions?

Maybe next time, instead of a mock government exercise, we could discuss some timely, real-world legislative topics such as: opening ANWR and the OCS (Outer Continental Shelf) for drilling, relaxing gasoline formulation rules etc.
I would try to use a combination of high gasoline taxes and the market to reduce gas usage.  Instead of trying to ration gasoline based on particular uses, I would give each adult a tax rebate on his income tax return [it would be a refundable credit like the federal earned income tax credit].  The tax rebate would be equal to the gas tax on a certain amount of gallons per week, like a personal allowance.  That would offset the gas tax paid at the pump so that people would only bear the burden of the gas tax on their extra gas usage.

You'd need to make some adjustments in the personal allowance.  For example, certain occupations like cab drivers and people in rural areas would need a higher amount.

The gas tax should probably be a fixed amount per gallon, instead of charging it on a percentage rate.  That way, it wouldn't vary with price changes.

I agree with the need to increase gas taxes.  

In order to avoid the problems with the regressive nature of a fixed tax rate, the tax should vary with the amount of gas used over a fixed period.  So, for example, each month, everyone would be entitled to buy a certain amount of gas at $2.50, which is equivalent to no tax, additional amounts at $2.75, $3.00, $3.50 and maybe an unlimited amount at $4.00.  This form of tiered pricing can be designed to result in certain tax receipts and to reduce overall usage.

Implementation will require a universal gas card that will track usage and apply the approriate pricing as gas is used during the month.  The program could even allow the allocations to be tradeable so that people who do not use a lot of gas can trade their allocations to those who need more gas.

I think some these measures would make it too complicated and undermine the point. I believe it would be best to give the taxes back in a non-related, egalitarian fashion because that way effectively punishes those who consume more and reward those who consume less, encouraging more efficient habits.  Those whose livelihoods are dependent upon gasoline consumption will simply have to find various alternatives, or pass the price on to the consumer, ultimately encouraging efficiency.

Not to say they won't get a fair warning. Since I'll be dealing with a fifty year period, it will probably be atleast two years before there's any tax, and it will gradually increase in the afore-mentioned manner that will allow the market to plan a response all fifty years into the future.

I believe educating the public is the most important thing you can do.  Without public support, politicians cannot move - even if all of them "believe".  You need to begin at the beginning.

There are not only practical issues, but philosophical ones - in an era of decline, we will badly need new ideas / ethics on which to base our lives.  (The concept of "competing with our children" as William Catton eloquently discusses in "Overshoot"; or Hans Jonas' book "The Imperative of Responsibility" are relevant.)  

I don't think it's smart to try to mandate a "message" from government to people; there's an obvious trust problem.  Instead, you should legislate funding for universities to study the post-peak world, and to release reports of such studies frequently.  You fund conferences as well, and enable them to be well publicized.  The subjects would be (1) scenarios and (2) how to manage the scenarios envisioned.  (We will find ourselves transitioning from trying to "solve" problems to learning how to manage / live-with problems.)  Reward universities for rapid work and for a good match of their (2) to their (1); don't judge the scenarios, because we don't have any basis to judge, do we??

Sociology: How to keep people sane and under control while they absorb an utterly different (i.e. non growth) environment
Agriculture: How Cuba does it
Business: How to get the best out of telecommuting
Economics: How governments can manage economic collapse (e.g. you don't want to spend energy and money on maintaining an infrastructure facility you will have to abandon as unaffordable 5 years hence).  What highways do we "let go"?
Government: How to lead and succeed while telling the public the truth
Extension: Programs to disseminate information to the public

The attention paid by universities to the subjects will feed via news media and conferences to the public.  Different universities will come up with a variety of scenarios and "solutions", out of which different states, cities, towns, families, industries can draw.

While I believe that, given a 50-year time horizon, the question should address all fossil fuels rather than just oil, I'll confine my comments to the oil question originally posed. Given that only about 7% of our oil consumption is as an industrial feedstock, and I believe our use of oil for space- and water-heating is declining, the question basically comes down to transportation.
  • The most obvious approach to encouraging change -- high gasoline and diesel taxes -- probably doesn't work at a state level. Assuming you get such taxes passed and keep them passed, jobs and people would tend over time to "vote with their feet" and move to neighboring low-tax states.
  • The state could indirectly discourage some of the most onerous private practices. Make auto/truck registration fees for private individuals proportional to the vehicle's gas milage, rather than its value. Natural gas or electric vehicles should be almost free to register, since their "gas" milage is very high. Levy heavy "transportation" taxes on commercial buildings where large numbers of people are employed if they are located somewhere without public transportation, or far from housing. Note that this may suffer from the same voting problem mentioned previously.
  • The state could find ways to encourage alternatives to physical transportation for as many jobs as possible. Encourage firms to use teleworking from home. Southern California seems to be having some success with getting companies to use "distributed" offices where some people use space located near where they live, with broadband communications to make the arrangement as seamless as possible.
  • The state could attempt to jump-start certain markets, getting around the chicken-and-egg problems that exist. If the state is committed to operating a fleet of electric vehicles, it may provide the incentive to get the private sector involved in selling/servicing/fueling such vehicles.