America Wins: Fuel Prices

Dealing with high fuel prices isn’t going to be easy, but it can be good.

Getting the answer right will set up the triple play of this American century.

Breaking our addiction to oil can:

• Improve the national security of the United States as we stop funding terrorists with our gasoline purchases.
• Create jobs in South Carolina as we develop and deploy fuels of the future.
• Clean up the air as we switch to the clean fuels of the future.
  

It’s not going to be easy. It’s as though we’ve been on the couch for 35 years since the 1973 Arab oil embargo, and we’re thinking about getting up and exercising American creativity. Painful? Yes. Profitable? Amazingly.

Here’s a plan:

1. Reinvent the Car

a. Start by conserving fuel with higher fuel efficiency standards.

• Deploy technology like low rolling resistance tires, a Michelin invention that saves gas.

b. Use clean diesel.

• BMW will soon be making cars in Spartanburg with 35 mile per gallon clean diesel engines.

c. Expand tax incentives for gas-electric hybrids.

• BMW has announced that its first gas-electric hybrid will be made in Spartanburg!

d. Create incentives for plug-in hybrids.

e. Develop cellulosic ethanol, moving away from corn-based ethanol which has fuel competing against food.

f. Make a moon shot, within-the-decade commitment to:

• Better batteries that charge within minutes; hold charge for hundreds of miles; and are made of elements found within the U.S.
• Better solar panels that more efficiently convert sunlight into electricity.
• Hydrogen – the most magnificent portable fuel.

2. More Electricity

a. Extend President Bush’s renewable energy tax credit.

• If the renewable energy tax credit is extended, we will overtake Germany as the No. 1 producer of wind energy by the end of 2008.
• GE is the No. 2 installer of wind units in the world. Much of that work is done at their Garlington Road plant in Greenville.
• GE is looking for 200 more engineers to work at their Greenville facility. Eureka! There’re jobs in the wind!

b. Build more nuclear power plants.

• Coal-fired plants belch carbon dioxide 24/7.
• Nuclear plants have a waste issue, but they produce no greenhouse gasses.
• Advanced nuclear reactors may be the most efficient way to split water to create hydrogen for transportation.
• Construction power houses like Fluor Corporation will construct some of those plants. Stainless steel welders (you need lots of those to build a nuclear power plant) can make $150,000 a year.

c. Continue to develop solar energy.

• Fully implement net metering so that homeowners and commercial building owners can profit from installing solar units.

d. Develop clean coal technologies.

• Deploy clean coal processes that burn hydrogen separated out of coal. Capture and sequester the carbon.
• Because sequestration is not possible everywhere, continue research on other ways to capture the carbon. South Carolina firms are studying ways to feed carbon dioxide to algae and then use the algae for biodiesel.

3. More Oil and Gas

a. Drill safely for oil and gas offshore.

b. Build more refineries.

c. Save some oil for when we really need it. Some pharmaceuticals and plastics can only be made from oil. Rather than just burning up reserves in special places like ANWR, why not hold on to those resources for when oil is really hard to find?

• After a 10-year construction/drilling project, ANWR may produce 1 million barrels of crude oil per day. By then, the U.S. will be consuming 27 million barrels per day. So it would constitute 1/27th of our supply. That’s why T. Boone Pickens, the Texas oil tycoon, says it’s “ridiculous” to think that ANWR can solve our problem.

4. Better Buildings

a. Buildings use 40% of the energy we consume.

b. Act locally to require better insulation and better design in new buildings.

5. Avoid quick, easy and wrong solutions

a. After sitting on the couch for 35 years, there’s no pill we can take to cure our problems. We’ve got to get up, shake-a-leg and stop eating so much fuel.

b. Examples of quick, easy and wrong solutions (what not to do):

• Not! Suspend the gas tax for the summer – just means we deficit finance road construction and repair.
• Not! Stop filling the strategic reserve. During Hurricane Katrina gas was almost gone in the Upstate. The reserve is there to keep us ready for natural storms and oil storms (the kind caused by terrorists).
• Not! Just drill more holes. (Bring me some more nachos. Don’t forget the cheese.) We have only 2% of the world’s known oil reserves, but creativity is our stock-in-trade. “Get me more oil” just prolongs our addiction. As the former head of the CIA told the Foreign Affairs Committee a while back, if we want to ruin the day of the Iranian oil minister, we’d have GM announce that it’s bringing to market a 500 mile per gallon plug-in hybrid.
• Not! Excess profits tax on the oil companies. Re-live the 70s; make Jimmy Carter Secretary of Energy in a Clinton administration. He’ll bring back platform shoes, disco dancing and excess profits taxes!

America Wins: Food Prices

Food prices are tied to fuel prices. Getting more refining capacity in the near term and getting cars off of oil in the mid-term and long-term will help farmers with diesel and fertilizer prices. Breakthroughs in cellulosic ethanol (the kind that comes from switch grass and wood chips rather than corn) will make corn and other grains more available and more affordable as food. We should stop competing fuel against food.

America Wins: Immigration

Solving the problem of illegal immigration is one of the simplest challenges we face. All it takes is a little bit of courage.

1. Tighten up the border, building fences where necessary, using the military where necessary.

2. Require employers to E-verify Social Security numbers before offering jobs.

3. Tighten up proof of legal status for drivers’ licenses and license tags.

4. Limit social benefits to citizens.

5. Deal with the estimated 12 million illegal immigrants here in the U.S. by:

• Offering a limited stay – not the indefinite stay of the Z visa proposed in the Senate immigration bill, but a temporary worker permit following payment of a substantial fine.
  

• Following the temporary worker permit with the opportunity for a green card if the worker returns to home country to apply from there, pays an additional, substantial fine and proves proficiency in English.
  

• Following the green card with an opportunity for citizenship provided the applicant can pass the citizenship test and provided the backlog of legal entrants has been cleared. (Clearing the legal entrants is expected to take 8-13 years).

America Wins: Climate Change

Far from a doomsday scenario, acting on climate change is a fabulous opportunity for can-do America:

• Market push. The market will drive innovation once a price is attached to carbon. We won’t be doing science projects then! If I lose the gift of belching carbon into the air, my old-technology company may be beaten by your newtechnology firm. But look what competition has brought us with computers, cell phones and every kind of gadget. Anybody pining for the days of black and white TV?

• Strengthen manufacturing. China and India must be subject to carbon restrictions. If they don’t comply, let’s put a carbon tariff on their goods as they enter the U.S. Ah, one less reason to manufacture overseas! China has 1.3 billion people. India has a billion people. It’s fine for them to have the advantage of cheaper labor. It’s wrong for them to have the advantage of cheaper air.

• Improve national security. While we’re cleaning the air and creating jobs with new technologies, we’ll also be improving the national security of the United States. Homemade fuels will break our addiction to foreign oil, and we’ll stop funding terrorists when we buy gasoline.

• Improve our image. When you’re the world’s only superpower, you need to act more like Roger Milliken and less like Donald Trump. Mr. Milliken is the only billionaire who’s ever been to my house. He’s a gentleman and he’s generous. On climate change the world is asking: “Are you Americans more like Milliken or Trump?” The answer will have a direct effect on our military budget.

Science Committee trips to Antarctica have convinced me that climate change is real, that humans are contributing to the problem and that we need to take action. A number of people aren’t convinced just yet and think that it’s all a natural cycle that we humans can’t affect. But if we can take action and actually improve our lives, why wouldn’t we want to act?

America Wins: Iraq

America’s incredible volunteers have won three campaigns in Iraq.

• Phase 1. We asked them to take out a madman suspected of plans to use weapons of mass destruction. America’s best took him out.

• Phase 2. Once deployed in Iraq, we asked them to disrupt terrorist networks. There being no further attacks on the United States since 9/11, America’s best succeeded again.

• Phase 3. The President asked our troops to surge to create a security space for decision making by Iraqi politicians. America’s best took to the streets of Iraq and won that security space.

Iraq must now decide if it wants freedom. Our fallen heroes have died for the people of America and only incidentally for the people of Iraq. American national security is our objective in Iraq, not nation building. Because it’s in our national security
interest, we seek to be a supporter of their democracy; we must not make the mistake of becoming a guarantor of their democracy. Freedom isn’t free. Iraqis must pay for it.

Iraqi politicians and the Iraqi people must be held accountable for progress toward reconciliation goals. It’s not time to withdraw,but it is time to establish a series of success checkpoints to measure progress on dividing the oil fairly among Shia, Sunnis and Kurds; on reintegrating former Baath Party members into positions of public trust; and on amending the constitution to ensure Sunni rights. Those success checkpoints should be accompanied by a progression of larger to smaller “carrots” (rewards) followed by smaller to larger “sticks” (consequences).

America Wins: Health Care

Affording quality health care is America’s most complex challenge. It’s going to take careful thought to design systems fit for America. Too simply stated, we should:

1. Make prevention especially affordable and readily available
   a. Annual physicals
   b. Aggressive management of chronic conditions
   c. Aggressive encouragement of smoking cessation and weight control
   d. Emphasize nutrition and exercise
   
   

2. Get every American covered by health insurance
   a. Would reduce “cost shift”
   b. Large risks should be shared; small risks should be owned
   
   

3. Use technology to improve efficiencies and outcomes
   a. Electronic medical records
   b. Better use of diagnostic tools
   
   

4. Understand the competitive disadvantage we’re causing American industry
   a. Private insureds and individual payers are making up for the bargain purchases the government is getting through its low reimbursements to Medicare and Medicaid providers.
   b. Health insurance should be owned by individuals; not by their employers.
   
   

5. Meet the patient at the need
   a. 24-7 clinics adjacent to emergency rooms

America Wins: Education

The federal government should:

- Inspire attainment, realizing that we’re committing our children to a standard-of-living-race in which they will have to run harder, faster and smarter than the rest of the world.

• Oil at $120 a barrel is this generation’s Sputnik.
• Creative, prepared, flexible young people must re-energize freedom.

- Provide a robust system of student aid so as to allow students to go to colleges throughout the U.S.

Local decision makers (parents, teachers, school districts) should manage education.

- Real close to the real solution in education – parents!

- No Child Left Behind was the right concept (accountability) imposed by the wrong level of government (the federal government) and should be repealed.

Dealing with high fuel prices, part 1

Where are most of us feeling the biggest pinch from expensive oil? At the gas station when we're filling up our cars. What's the best way to deal with this? Figure out a way to make those cars need less oil. Then figure out a way to drive on no oil at all. And while we're at it, put those Saudis out of business.

REINVENT THE CAR

a. Start by conserving fuel with higher fuel efficiency standards.

• Deploy technology like low rolling resistance tires, a Michelin invention that saves gas.

b. Use clean diesel.

• BMW will soon be making cars in Spartanburg with 35 mile per gallon clean diesel engines.

c. Expand tax incentives for gas-electric hybrids.

• BMW has announced that its first gas-electric hybrid will be made in Spartanburg!

d. Create incentives for plug-in hybrids.

e. Develop cellulosic ethanol, moving away from corn-based ethanol which has fuel competing against food.

f . Make a moon shot, within-the-decade commitment to:

• Better batteries that charge within minutes; hold charge for hundreds of miles; and are made of elements found within the U.S.

• Better solar panels that more efficiently convert sunlight into electricity.

• Hydrogen—the most magnificent portable fuel.

America Wins!

Continuing on the theme of gas prices and such, here's a snippet from our recently-released "America Wins" action plan, a document so full of juicy ideas it could keep this blog hopping for weeks.

FUEL PRICES

Dealing with high fuel prices isn’t going to be easy, but it can be good.
Getting the answer right will set up the triple play of this American century.
Breaking our addiction to oil can:

• Improve the national security of the United States as we stop funding terrorists with our gasoline purchases;

• Create jobs in South Carolina as we develop and deploy fuels of the future; and

• Clean up the air as we switch to the clean fuels of the future.

It’s not going to be easy. It’s as though we’ve been on the couch for 35 years since the 1973 Arab oil embargo, and we’re thinking about getting up and exercising American creativity. Painful? Yes. Profitable? Amazingly.

Here’s a plan:

But just what is that plan? Well, you'll just have to stay tuned, won't you?

Gambling and Gas

My dad spent a good portion of his debate with William Jeter on Monday night talking about the problem of rising gas prices.

Underlying their discussion was a fundamental question about the relationship between the economy and the environment: are we facing a future in which oil, metals, and other raw-material resources are going to become increasingly scarce – and thus increasingly expensive? If so, the only way we can maintain our standard of living is by investing in technologies that will enable us to do more with less. We have to figure out how to drive our cars and light our houses without burning fossil fuels, how to grow our food without depending on petrochemical inputs, and how to manufacture products that don’t require us to mine new materials.

If not – if resources like oil, copper, and iron are going to remain relatively cheap over time – then maybe it makes sense, at least from an economic perspective, to stay our current course and not worry too much about making our economy more resource-efficient.

Economists are a gambling sort of people, and twenty-eight years ago, two of them placed a friendly bet on this very question. Paul Elrich, of Stanford University, bet Julian Simon, another noted economist, that the prices of five metals – copper, chromium, nickel, tin, and tungsten – would rise between 1980 and 1990.

Elrich lost the bet. The discovery of new deposits of the metals in question outpaced the growth of demand, causing prices to fall over the course of the 1980s. And so, the story of the Elrich-Simon bet became a favorite example for people who like to argue that the world is in no danger of resource scarcity.

What few people realize is that if the Elrich-Simon bet had been extended to today – if it had been a twenty-eight-year bet rather than a ten-year bet – Elrich would have won decisively. Inflation-adjusted prices of the five metals, with the exception of chromium, are now significantly higher than they were in 1980, indicating that they have become scarcer over time.

Do you think this trend will continue? Are we going to run out of new oil fields to drill and new metal deposits to mine, with the result being that prices for these resources will continue to rise?

Put another way, do you think the days of buck-a-gallon gas are gone for good? If not, why? If so, do you think it makes sense to start making our transportation system – and the rest of our economy – less dependent on non-renewable resources?