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?