The case for higher gasoline prices

For those of us who live in the United States, the prices at the gasoline pump haven’t been so low since 2009, about $2.50 per U.S. gallon as of January 5 in the New England area.  It sure comes as a relief, but of course, our good fortune won’t last very long and maybe it shouldn’t.  Here’s the thing: we, yes, you too, WE are way too dependent on fossil fuels.  As a nation, we drill and frack the earth with such ferocious greed and disrespect for our natural and finite resources that it’s a wonder there’s anything left. The irony here is that all this voracious plundering of the earth has produced a market in the U.S. where there is more supply than demand which has helped to drive OPEC prices down.  But rather than cutting back supplies, OPEC is all in with hopes that declining oil prices will stop the U.S. from continuing to explore alternatives.  The end game for OPEC is to restore its monopoly, so that it can hike the price of oil back up and make more profits.  The end game for the U.S. is to make the big oil companies even more profitable than they already are.  And we consumers are the pawns in the game.

As a person concerned about the environment and how we leave it to future generations, I advocate for a sound and responsible energy policy that does not include fracking and that ridiculous X-L pipeline. And unless the U.S. and other like minded nations ramp up investments into sustainable clean energy sources, we will forever be dependent on fossil fuels, our own or OPEC’s.  In some ways, a world with higher fuel prices is preferable because it encourages people to consume responsibly, to walk and bike more, take public transportation and carpool.  It encourages hybrid technology and the use of clean electric, solar and wind power.

As is, with prices at the pump on the decline, automakers are producing and selling more SUV’s and pickup trucks and other gas guzzling models.  Come on people.  Show some respect for mother nature. Consume less and appreciate nature more.  Do your part.

Fact Checking Cat Blasts Holes in GOP Chart

Great Depression Food Line (Photo credit: Kevin Burkett)

Warning:  If you are sick and tired of politics, don’t read this post.  Disclaimer:  I am sick and tired of politics and don’t plan to blog anymore about the elections until after November 6.  I just felt the need to respond to a right wing anti-Obama cheap shot.

I’ve seen this graph put out by an outfit called Being Conservative:

This is from the group’s facebook page which has over 2 million likes.  The graph above has been shared some 77,000 times.  And it’s misleading.  Here’s why:

First, let’s look at unemployment.  For a little historical context (because that’s what is lacking in the chart) in late 2008, the U.S. economy crashed under George W. Bush’s leadership.  When President Obama took over in 2009, he inherited the worst recession since the Great Depression.  I repeat, inherited an economy on the brink of utter collapse.  Thanks to the TARP bailout and ARRA stimulus spending, the economy has recovered, albeit slowly.  At the end of 2009, the unemployment rate was 9.3%, 9.6% in 2010, 8.9% in 2011 and now down to 7.9%; it is not 8.3% as the graph indicates.  For comparison sake, in the Depression Era from 1930-1939, the unemployment rate averaged 18.34%.  But get this, in years that would not be considered depression-like, the unemployment rates under Republican leadership were also high.  President Gerald Ford finished 1975 with an unemployment rate of 8.5%.  Under President Ronald Reagan, the unemployment rate at the end of 1982 was 9.7%; 9.6% in 1983.  At the end of 1992, under President George HW Bush (the elder), unemployment was 7.5%.

Now let’s look at gasoline prices. The graph shows that when the President took office, the price at the pump was $1.84; actually, the average price was $1.787.  It shows that the current price is $3.82 but that’s wrong too – it is, for the record as of this writing, $3.712 and for the year $3.684 on average, about 16 cents higher than it was in 2011.  For the sake of comparison, in June and July of 2008, under President George W. Bush, gas prices surged to over $4 nationwide.  I’m not making this stuff up.  To be fair, what is forgotten in all this is that the President has little direct influence on daily gasoline prices, which are largely a product of global events and global demand, that is higher now than ever before with India and China’s growing consumer class increasingly dependent on fossil fuels.  Now it is true that a comprehensive energy policy could impact the demand equation, but drilling isn’t the solution to lower gas prices.  Becoming less dependent on fossil fuels is the long term answer to a more sustainable planet.  As demand for oil decreases, so too will the price at the pump.  Investing in clean alternative energy sources not only could help us break our dependence on oil, it would reduce the amount of CO2 we spew into the air and slow down global warming and climate change, something I pray is not too late to do – I mean the ice is already melting and I believe it was Governor Cuomo who said, and I am paraphrasing, that we are seeing 100 year storms every two years.

Next, let’s look at the National Debt.  From Reagan through Bush I and II, the national debt increased by 12 trillion. This is not a misprint.  My cat Ella fact checked it.  How did they manage to rack up 12 trillion in debt? Well, it was a combination of reduced revenue from tax cuts, increased defense spending, unpaid for wars and ever expanding entitlement obligations, oh, and there is the not so little thing of the interest on the debt.  President Obama inherited this mess; he did not create it.  And he’s trying to work on the revenue side by raising taxes on the wealthy and ending corporate welfare, but with no cooperation from the Republicans who have all taken the Grover Norquist no taxes pledge. On the spending side, the President has ended the two Republican initiated wars (which of course had the full approval of Congress) and recommended reductions in military spending.  Now with the sequester set to trigger automatic cuts, there is hope that a balanced deal on revenue and spending can be negotiated.

And finally, declining wages.  Consider this:  The Republicans have blocked attempts to raise the minimum wage and voted against the Lily Ledbetter Fair Pay Act.  And corporations have been making record profits, as they have outsourced jobs and begged for more subsidies, arguing that the uncertainty is “killing” them and accounts for their reluctance to hire.  Notwithstanding this “uncertainty”, the rich have gotten richer and the middle class and poor even poorer.  Extending the Bush tax cuts didn’t help much.  An inherited wrecked economy that has recovered slowly, hasn’t helped things either.  Partisan gridlock has made matters even worse, that and the heightened rhetoric from the right questioning the need for a social safety net and blaming the poor, homeless, elderly and infirm for not taking responsibility for themselves.  The point being that the President is not solely responsible for declining incomes among the middle class.

I just wanted to give this graph a little context to show how misleading it is.  And now I am done.  The end.

Related articles

• Unemployment and Obama’s election prospects – Los Angeles Times (latimes.com)
• Big Spending Republicans (forbes.com)
• Okay, It’s Time For Some Actual Facts About Our Economic Recovery (businessinsider.com)
• A report card for Obama’s economy (bangordailynews.com)
• Consumers give US economy a lift before election (miamiherald.com)

Clean Energy? Obama’s Carnegie Mellon Talk

In a speech at Carnegie Mellon University, President Obama warned of the dangers of our oil addiction and made the case for clean energy, but he did so without mentioning some of the cleanest and safest energy of all, renewable solar and wind power.  Instead of condemning offshore drilling all together, he suggested that it should continue to be part of the equation at least temporarily as we shift to safer, cleaner energy.  But shift to what?  According to Obama, “it means tapping into our natural gas reserves” .  I’m a little suspicious of the word tap.  Sounds like more drilling to me.  Isn’t natural gas a fossil fuel? Aren’t we addicted to fossil fuels?  It’s like taking methadone to kick heroin or oxycontin to treat pain, both “remedies” are highly addictive.  And what happens when the tap runs dry.  Unless we reduce our consumption of fossil fuels considerably, the nation is in for a serious case of the DTs.

The other “clean” energy the President mentioned is nuclear.  If an offshore drilling rig can blowup due to human error, what about a nuclear power plant.  Remember Chernoybl and Three-Mile Island?  Pretty messy. I have this image of Homer Simpson at the controls.  Not only is nuclear power a potentially dangerous pursuit, it’s an expensive one.  Plants cost billions to build and very few, perhaps fewer than 2% have ever been built on time and on budget.

I agreed with some of his plans, such as “putting a price on carbon pollution” and requiring cars and trucks to be more energy efficient.  He didn’t say how efficient, but I say bring the standard up to 55 mpg.  Nor did he say anything about a speed limit.  I’d say bring it down to 55 mph, and save some lives in the process.  He mentioned investing in technology to help the U.S. be a lead player in hybrid battery production, which is not a bad idea, but let’s sell some electric cars too – it’s time to get the “Government Motors” Chevy Volt on the road.

In the wake of the BP oil disaster which may have irreparably damaged the Gulf Coast economy and environment , I expected the President to make a better case for clean, safe and renewable energy.  I also expected that he would blast big oil and demand a moratorium on deep offshore drilling and somehow link clean energy to clean up.  Let’s replace “drill baby drill’ with “clean baby clean” or “clean up baby clean” or “clean baby green”…or something.

That Oil Spill, What A Mess

What a god awful mess out in the Gulf Coast thanks to the good folks over at British Petroleum affectionately known as BP. I can’t believe they still haven’t capped the oil spewing from the hole on the ocean floor.  200,000 gallons of the stuff a day.  BP seems less worried about cleaning up than capturing and cleaning the oil for future use.  They do that.  Suppose to be a fairly straightforward purification process.  They will profit from this mess yet, even as the spill wrecks the fragile coastal environment and the tourism and fishing industries of the Gulf Coast.

That the Obama administration has yet to denounce drilling as an unsafe, and unwise practice is completely baffling to me.  It comes as no surprise however that the Republicans and some Democrats too – Senator  Mary Laundrieu for example, whose top legislative priorities are energy security and coastal issues –  have tried to minimize the catastrophe to protect the oil industry.  Well, we should be securing clean energy policies, not risky policies that dirty and destroy our fragile coastal areas and vital industries.

If there is any silver lining in the massive environmental disaster it would be that dead jellyfish have started to wash up on shore.  I’m serious.  Those destructive creatures have multiplied to the point that their numbers are simply out of control, as they reek untold damage to fisheries, and the tourist industry.  They sting.  Do they ever, and some stings are deadly.   The only other possible good thing that could come from the disaster is that our political leaders could wake up and realize that “drill baby drill”  is suicidal.  I agree with Bill Maher who said, and I’m paraphrasing, that we are our own worst enemy.

BP.  Get it together.  Cleanup.  Pay Up.  And get out.  No more drilling for oil anywhere.  Time to move on to clean, renewable energy – and not coal.  There’s no such thing as clean coal and it’s not renewable.  Think about it.  Wind, electric, solar, bio-fuels, and leg power.  That’s all we need.  Okay, a little nuclear sprinkled here and there with a smattering of geothermal exploration and hydroelectric tinkering.  Let’s also run some stuff on recycled vegetable oil for good measure.  Depending less on foreign and our own oil is the key to a safe and sane energy policy.

Foreign Oil Addiciton Dropped 1975-1985

Barack Obama made another good decision in naming Rahm Emanuel as his White House Chief of Staff.  In an AP article by Adam Goldman, Senator Hillary Clinton praised Obama’s choice saying Emanuel “gets things done” and is “determined and effective”.  These are exactly the characteristics Obama needs in a key adviser.

I’m pleased with the choice too.  That said, I do take issue with a statement Emanuel made recently about our response to the energy crisis of the 70’s.  In a NY Times article Obama Team Turns to the Economy, a reference was made to an interview in which Emanuel said, “you don’t ever want a crisis to go to waste; it’s an opportunity to do important things that you would otherwise avoid…In 1974 and 1978 we never dealt with it, and our dependence on foreign oil never changed.”

Actually, we did deal with it, but we just haven’t followed through.  Emanuel is talking about the 1973 Oil Embargo and the Energy Crisis of 1979 immediately following the Iranian Revolution and the subsequent war between Iran and Iraq in which oil production dropped significantly as did the supply of Middle Eastern Oil to the U.S.   In 1973, Congress took swift action to pass the Emergency Highway Conservation Act which President Nixon signed on January 2, 1974 establishing a national maximum speed limit of 55 miles per hour.  In 1975, Congress passed the Corporate Average Fuel Economy (CAFE) standards which required automakers to increase fuel economy to 27.5 for new cars by 1985.  With a flood of fuel efficient Japanese cars on the US market beginning in the early 70’s, US automakers began rolling out some impressive cars of their own – remember the Dodge Colt, Chevy Vega and Ford Pinto?  Ok, maybe the Vega and Pinto had a few issues, but they got good gas mileage.  From 1975-1985, our dependence on foreign oil actually declined from 35% to 27%.

Congres responded swiftly and effectively to the energy crisis of the 70’s, but these initiatives never became permanent.  Our cars are less fuel efficient now than in the mid 80’s and we drive them at high speeds – over 65 mph on most highways.  I’ve seen some roads with 75 mph maximums.

The Energy Bill of 2007 sets a 35 mpg standard for automakers to achieve by 2020.  The big 3 are set to receive 25 billion in loans to help reach the benchmark, but they have lobbied for a bailout and have some key supporters.  Speaker Pelosi and Senate Majority Leader Reid have called on Treasury Secretary Paulson to use his authority to help the ailing U.S. auto industry.   But I say no bailout for the big 3.  Retool and start making better cars.   As to energy policy, 35 mpg in 2020?  Come on, cars from the late 70’s and early 80’s were getting up to 47 mpg.  See my previous post Bring back the Datsun B210.  I say 50 mpg by 2010 and 55 mph now!

Bring Back the Datsun B210

Remember back in the summer before the economic meltdown when gas prices were at 4.00 per gallon?  I sure do.  This summer I spent a fortune on gasoline driving my daughter around to visit college campuses in the Northeast.  And I drive a fuel efficient car, the Nissan Sentra – about 35 MPG highway.  Hit rewind and let’s go back twenty seven years.  My sister’s first car was a 1981 Datsun/Nissan 210 that got 47 MPG highway; a car more fuel efficient than a 2009 Honda Civic Hybrid!

I was surprised to learn that a gallon of gas in 1981 cost on the average 1.378.  By the way, there is an excellent data set from the Energy Information Administration on historical gas prices dating back to January of 1980.  So, 1.378 sounds cheap, right?  Not so.  Adjusted for inflation this is equivalent to 3.143 per gallon.  By comparison the cost of a gallon of gas is a bargain today at 2.505, 1.960 if you happen to live in Kansas City.   I don’t.

So why were cars so fuel efficient back in the 70’s and early 80’s?  To understand, we have to examine a bit of history.  In the 70’s, OPEC oil production and exports to the US fell sharply.  The Oil Embargo of 1973 caused gasoline rationing, long lines at the pump and severe price spikes.  In late 1973 through 1974, the stock market crashed.  The Dow Jones declined 45% in one of the worst bear markets in history.  Sound familiar?  The 1979 energy crisis hit the U.S. after the Shah of Iran was deposed during the Iranian Revolution.  Iranian oil production dramatically decreased as did exports to the US.  And the following year, war broke out between Iran and Iraq further interrupting the flow of oil to the West.

Then as now, our leaders warned that we were too dependent on foreign oil.  As a result, in 1974 Congress passed the 55 mph federal speed limit, which also yielded some environmental benefits.  This law was amended in 1987 to permit higher limits on rural roads and in 1996 repealed altogether.  Prior to 1974, most states had maximum speed limits between 70-75 miles per hour.

In 1975, Congress enacted legislation that required the big automakers to conform to fuel efficiency standards.  During this period, Japanese cars flooded the U.S. market with small, affordable fuel efficient offerings like my sister’s Datsun by Nissan 210.  She bought the manual version without even knowing how to drive a stick because it was $500 cheaper.   Other notable subcompact cars included the venerable VW Beetle (which had been around since the 60’s) the once omnipresent (and explosive) Ford Pinto, the Dodge Colt, the Honda Civic, The Toyota Corolla, and The VW Rabbit.

So is it time to go back to a federally mandated 55 mph speed limit?  According to one website, drive55.org, during the period the 55 mph speed limit was in effect from 1974-1986, our dependence on foreign declined sharply to 28%.  Today, according to the same source, our dependence on foreign oil is up to 60%.   Obviously there are other factors involved including failed energy polices, increased consumer demand, relatively stable gasoline prices over a period of time and the SUV craze.

So why can’t automakers engineer fuel efficient cars like those of the 70’s and early 80’s?  One reason suggested by several posters on the web log Metafilter is that today’s cars are heavier.  Cars weigh more because of safety standards like airbags, fortified frames, anti-lock brakes, traction and stability control systems, and other optional equipment.   Another reason is that until recently, there hadn’t been much demand for fuel efficient cars.  The SUV reigned supreme.  Now, as we move toward a greener future, hybrid vehicles are starting to catch on but still represent only a tiny fraction of total automobile sales.

In conclusion, I have this to say to our next President: 55 MPH; 50 MPG.

And Nissan, enough with the Sentra and Versa – bring back the Datsun B210!