The price of oil should be high. Although many think the price of oil should have been increased through taxation twenty - thirty years ago, with the public finances used to stimulate technological advances for energy alternatives to oil, at least the markets have finally done what the politics could not. Unfortunately, the surplus earned from the increases for the cost of oil are not going to technological research for alternatives, but at least the higher prices are starting to reduce consumption and stimulate private searches for alternatives.

The American public didn't like this movie when it was called "The Jimmy Carter Presidency".

Now, granted, Carter was facing more than just the oil crisis, and the rationing and gas lines probably piss people off /more/ than just high prices. But still, The Onion is right: "Kill the bastards" is a much better campaign message than "let's think about conservation".

Heck, I don't even like the fact that every trip in my car, I think "is this trip really worth $3 to me"?

the bush years have clearly shown how simple answers to hard problems turn out, don't you think?

it shouldn't be too difficult for someone to craft that message.

Any candidate supporting capntrade will face a buzz saw. He/she will be cut to ribbons, economists from all spectrum will be proving the absolute absurdity and waste in the concept, as currently proposed.

The argument in favor is not Europe, but the SO2 emissions deal that cut acid rains. But GHG capntrade needs a thousand deals, just like that one, way beyond the capability of government to manage.

Dead weight losses will exceed 2 or 3% of the economy, that is my bet, and that dead weight loss will mostly go up in co2 smoke.

Kevin, how do you think people will go "back to their old driving habits" if they aren't making more money?

We are at a tipping point. No amount of drilling anywhere in the world will bring down oil prices significantly.

Time for the planet to rapidly transition to other energy resources.

I vote for genetically bacteria that can make ethanol from woodchips and agricultural "waste."

McCain is nuts to think that offshore drilling and ANWR will "relieve" our pain at the pump.

Forget Peak Oil, what we are witnessing is far more real, far more impactful on the global economy.

Cheyney's energy policy was all about profits, not real solutions!

I think you need to wrap it up into a bigger conceptual package, kind of the equivalent of the "War on Terror" except as an initiative to deal with the energy/environmental/economic situation. FDR had the New Deal as a response to the Depression; Obama should have something like it to deal with a worldwide crisis on all three fronts. Then cap-and-trade would just be a piece of the larger whole, and people could accept the sacrifice as part of a big push to make the future better.

Having an umbrella concept means you wouldn't have to get all wonky about the separate pieces, and if the thing were packaged in a forward-looking and inspirational way then the momentum of the whole would give synergy to all the parts.

I suggest a halfway approach. Criticize McCain's position for the fraud it is (allowing off shore drilling that will result in $.02 cheaper gas 10 years from now) but wait to make the case for even higher energy prices until after you've won the election.

Tom N: McCain is nuts to think that offshore drilling and ANWR will "relieve" our pain at the pump.

Probably, but he's not nuts to think a lot of people will fall for it.
I would respect Obama tremendously if he did as Kevin suggests. But it would probably cost him the election. Remember what happens to Presidents or Presidential candidates who tell the truth about energy. See "Carter, J."

I don't know what is politically advantageous for Obama.

But on the merits of the energy issue, he should tell Americans the truth: we need to phase out ALL fossil fuel use as quickly as possible to prevent an anthropogenic global climate catastrophe and ecological meltdown that is an existential threat to human civilization. Moreover, we need to do this anyway because we are exhausting the world's supplies of cheap high quality fossil fuels -- the days of cheap, abundant oil are simply over, period.

Therefore we need to encourage the rapid, large scale deployment of existing alternative energy technologies, principally concentrating solar thermal power plants, wind turbine "farms", and distributed solar photovoltaic power; we need to electrify our transport system, primarily by developing electric rail transport and secondarily by transitioning to electric cars; we need to make "green buildings" (including "net zero" buildings that generate as much energy as they use) the standard for all new building construction; and we need a large-scale campaign to retrofit older buildings for maximum energy efficiency.

All of which, by the way, will create millions of high-paying, high-quality jobs that cannot be off-shored.

This program needs to be the central organizing principal of ALL government policy, both domestic and international, for the next 10-25 years.

McCain's proposals -- massive expansion of domestic oil drilling; exploiting costly and ecologically catastrophic resources like "shale oil" and "tar sands"; so-called "clean coal"; building nuclear power plants -- are a bunch of BS that will do nothing for our energy situation, nothing to address the climate crisis, and everything to enrich McCain's financial backers, the same people who brought us CheneyBush, and Obama should say so.

The gas tax holiday is a ruse, at best. First, it is completely incorrect to think that the retail price of gas will be lower by the amount of the tax. So, the middle men (women) will take some off the top. The consumer will get a bit, but not all. Then, worse, the consumer is stuck with less $ for actual road infrastructure work such as bridge repair. BTW - The cost of asphalt is way up (with the cost of oil). So the consumer is the one that ultimately pays by either poorer infrastructure or even higher road maintenance costs down the road - this make no sense.

A sensible approach is a windfall profits tax that is rebated to consumers. Include a surtax on profits for oil speculation profits.

Tom Nicholson wrote: "McCain is nuts to think that offshore drilling and ANWR will 'relieve' our pain at the pump."

Who knows what McCain "believes"? Like Bush, he reads whatever is put in front of him on a teleprompter, or recites whatever talking points he's coached to recite by his "handlers".

But certainly neither McCain nor his puppeteers "believe" that "offshore drilling and ANWR will 'relieve' our pain at the pump" -- let alone that squandering billions of taxpayer dollars on building nuclear power plants will do so.

They just believe that a lot of voters are stupid enough to believe it.

Most Americans are familiar with the phrase and meaning "You can't handle the truth". Obama should cople "telling" the truth with a statement that he, unlike the republicans think "Americans CAN handle the truth"

Excuse me, Kevin, but where have you been? John McCain is a maverick. He doesn't pander, except on taxes, immigration, women's rights, entitlements, health care, and the environment. Aside from that, he's the most genuine leader in America.

Gas prices are not coming down. Obama needs to talk about how wages are going to rise.

Let me see if I have this right...Kevin is suggesting that Barack Obama should tell the American people to vote against the guy who promises them a blow job and for the guy who tells them that oral sex is a sin?

Right! Can't see how THAT one could possibly fail!

As much as we need to find alternatives to oil, the simple spin is gas prices are high and republicans want to drill for more oil to reduce them while democrats want to tax you more and further increase the price of a gallon of gas.

The average voter will understand this perfectly well and will never hear Kevin's (or anyone's) more detailed explantion of why the republican position won't work. The media will not provide the info. And Joe voter doesn't care - he just knows that it costs him $100 a week to get to his job and he now has to figure out what other trips to cut out, including a vacation.

McCain knows full well his "policy" won't work. But, he knows it'll go unchallenged and will get him votes.

This is, of course, no help to Obama, but Joe voter does not want to hear about all the great things you're going to do when you raise the price, a price he can barely afford to pay now, to $5 per gallon.

As much as we need to find alternatives to oil, the simple spin is gas prices are high and republicans want to drill for more oil to reduce them while democrats want to tax you more and further increase the price of a gallon of gas.

Mike is right. That's why I think that coming up with a lot of schemes to make gasoline even more expensive than it would be otherwise is political suicide. Cap and Trade, carbon taxes aren't going to fly. Now that Joe Six Pack is light a hundred bucks or more for transportation fuel every month, with CNT or carbon taxes, utility bills will soar even higher than they are already going up. NOT GONNA FLY.

The best thing that can happen is for the Peak Oilers to be RIGHT, and hope like hell that oil prices stay high, but don't rise so high so quickly that it totally snuffs out economic activity or triggers wars. Then we will see general acceptance of the situation and a consensus on alternative energy without more taxes and cap and trade boondoggles.

If Obama proposed higher gas prices (taxes) it would kill him either before or after the election. I like Tom Nicholson's idea, above, of a "New Deal" umbrella approach to the energy/global-warming crisis (somebody come up with a catchy title). Big Picture (long term) solutions including tax credits for alternative energy R&D, tax credits for conservation R&D and implementation, tax hikes on frivolous energy consumption (vehicles, not gas). Taxes will always be seen as a form of punishment, so don’t punish the common man just trying to get to work. Gas prices are already doing that. Punish the wasteful, and give breaks to the conservationists and innovators. They are the heroes of this new “New Deal.�

John McCain pretty clearly believes in the pander approach, but what about Barack Obama? He seems to be sticking to his energy guns so far, but there's a lot of people who think this is a political loser. The public is pissed, this storyline goes, and it doesn't want airy wonkery. It just wants lower gas prices.

Not according to the polls. Sure they want lower gas prices, but they are finally putting 2 and 2 and 2 together to understand that the war, world wide consumption and big ass vehicles here all have, are contributing to record oil prices.

David M wrote: "I like Tom Nicholson's idea, above, of a 'New Deal' umbrella approach to the energy/global-warming crisis (somebody come up with a catchy title)."

A catchy title, eh?

How about the Apollo Alliance?

The Apollo Alliance is a coalition of business, labor, environmental, and community leaders working to catalyze a clean energy revolution in America to reduce our nation’s dependence on foreign oil, cut the carbon emissions that are destabilizing our climate, and expand opportunities for American businesses and workers.

Inspired by the vision and technological achievements of the Apollo space program, we promote policies and initiatives to speed investment in clean energy technology and energy efficiency, put millions of Americans to work in a new generation of well-paid, green collar jobs, and make America a global leader in clean energy products and services.

Or how about the Oil Endgame?

This independent, peer-reviewed synthesis for American business and military leaders charts a roadmap for getting the United States completely, attractively, and profitably off oil. Our strategy integrates four technological ways to displace oil: using oil twice as efficiently, then substituting biofuels, saved natural gas, and, optionally, hydrogen. Fully applying today's best efficiency technologies in a doubled-GDP 2025 economy would save half the projected U.S. oil use at half its forecast cost per barrel. Non-oil substitutes for the remaining consumption would also cost less than oil. These comparisons conservatively assign zero value to avoiding oil's many "externalized" costs, including the costs incurred by military insecurity, rivalry with developing countries, pollution, and depletion. The vehicle improvements and other savings required needn't be as fast as those achieved after the 1979 oil shock.

The route we suggest for the transition beyond oil will expand customer choice and wealth, and will be led by business for profit. We propose novel public policies to accelerate this transition that are market-oriented without taxes and innovation-driven without mandates. A $180-billion investment over the next decade will yield $130-billion annual savings by 2025; revitalize the automotive, truck, aviation, and hydrocarbon industries; create a million jobs in both industrial and rural areas; rebalance trade; make the United States more secure, prosperous, equitable, and environmentally healthy; encourage other countries to get off oil too; and make the world more developed, fair, and peaceful.

There are plenty of solutions. The obstacles are political -- the entrenched power of the fossil fuel industries, and their death-grip on national energy policy -- not technological or economic.

The whole point of cap-and-trade is to provide political camouflage for higher energy prices, so people who object to these won't have a clear shot at politicians who support higher energy prices. Urging supporters of cap-and-trade to tell everyone they're doing it to increase energy prices is like urging supporters of Social Security to tell everyone they want to transfer wealth from young people who don't vote to old people who do. It's advice to make a factually correct statement that makes no political sense.

If you want to raise energy prices, then raise energy prices. That's what taxation is for. Now, if you want to make sure in addition to extend comprehensive government regulation into every aspect of the operation of every private business, by all means say that, and support cap-and-trade.

The answer is to have a media free event where you can pander to one constituency using one face, and another event for pandering to the opposing constituency.

This is what McCain is doing on illegal infiltration: having secret events for Hispanics in which he promises amnesty and citizenship for illegal aliens to wild cheering, and then playing the guy who's seen the light when he is among patriotic Americans.

Nit: an era is commonly understood to be a long time. Last year gas was $3, next year it will be $5 or $6. This is the end of the oil era.

Those that think there's no winner in the peak-oil /die-off sweepstakes are taking a strictly human-centric view.

The Earth's been gang-raped by, what, six-and-a-half billion people. Time to give it a rest, no?

The gas tax holiday is a ruse, at best.-George

Not true! I got a really nice pair of shoes out of it.

I vote that BO make SecularAnimist the next Secretary of Energy. So becoming SecEn instead of SecAn.

As the trees disappear on Easter Island, the two candidates for chieftain argue about what to do:

Candidate A says we must forge ahead with the statue-building at all costs, even if we have to steal trees from other islands. He also wants to encourage more tree growth, even though it will take many years, and the trees are disappearing faster than that.

Candidate B says we should perhaps build slightly smaller statues, and quickly find some as-yet unnamed alternative to trees (perhaps some large-bladed grass). He will also appoint a committee of experts to study the problem.

Neither candidate is willing to question the whole statue-erecting basis of the island's society.

Or perhaps, "go ahead, drill ANWR before it melts", a combo of:
- the arctic is screwed anyway;
- depriving the assholes of an issue;
- protecting the oceans (drill ANWR first, so we can see the gas prices come down before we let you mess up anything else);
- let the oil companies deal with the consequences of global warming up close and personal.

Add to that, a short list of "what big corporations/people are doing":

- VCs are investing in battery/electronics and biofuel startups;
- big companies (like ADM) have been paying for climate simulations for years;
That is, these guys are betting on expensive energy and climate change.

It might also be worthwhile to grab the "market solutions" language -- expensive gas is a signal that we should buy less of it. (Expensive corn is a signal that we should yank the biofuels subsidy.) The oil companies are not asking for a market solution, they are asking for a handout, the right to drill on some of this country's LAST OIL, on federally owned land, in some cases in the middle of a wildlife refuge. When that oil is gone, then what? Is this just another problem we're handing to our children and grandchildren?

And if anyone decides to point the CO2 finger at China, mention one-child-per-family, and ask if anyone thinks we've made a remotely similar sacrifice. India, they've been doing major birth control for years (vasectomies for soccer tickets, I think I once heard).

As for the pointy-headed liberal elite (that would be me), I'm biking lots more. If you're not motivated by climate change, expensive gas, oil wars, health benefits, the jerks who refine and drill our oil -- well, what the heck would motivate you? Talk is cheap.

Since SecularAnimist also has political experience, I was hoping Obama would select SecularAnimist for VP.

As is my wont - I prefer full attack mode!

Here is a recent letter to the editor that I submitted to my local newspaper:

The current effort by President Bush and presidential candidate John McCain to push more drilling for oil in environmentally sensitive areas is a smokescreen and is really a cheap and reprehensible attempt to falsely portray environmentalists as the cause of high gasoline prices, when nothing could be further from the truth. The facts are these: The United States consumes about one quarter of the world’s oil but only has about three percent of the known recoverable oil reserves, even if you count Alaska and the offshore continental shelf areas surrounding the U.S. Oil companies already have leases on these areas but are not drilling there, primarily because limiting supply is in their best interests, in order to keep prices high. Finally, oil refineries in the United States aren’t even operating at full capacity, so all of this misinformation about not being able to build new refinery capacity because of “tree-hugging liberals� is utter nonsense. More refinery capacity isn’t even needed! The real cause of high gasoline prices is increased world-wide demand by emerging economies such as India and China and the severe devaluation of the U.S. dollar caused by Bush’s reckless and irresponsible borrowing to fund a crippling, pointless war in Iraq and unnecessary tax cuts for his wealthy friends and campaign donors.

I vote for genetically bacteria that can make ethanol from woodchips and agricultural "waste."

The SF story years ago on this topic had bacteria converting plastic to ethanol, but your version is more topical.

The one fly in this ointment is what happens when that bacteria gets loose in the wild?

Sure we'll party like 1999 for awhile but the hangover will be a doosy!

I hate to death the fact that in politics one cannot bring up any difficult problem unless one has an easy, happy solution. Thus the elephant in the room grows and grows and grows.

SecularAnimist seems to have the best comments:

Whatever we do, we have to make the main stress being a "with all due speed transition away from oil
-and somewhat further down the line fossil fuels in general". If opening up ANWR was done in a manner that facilitates the transition then I (pretending I am BO) might be able to support it. Any attempt to simply drill our way out won't produce enough extra oil to make a difference, but the distraction from the serious business of the transition will only make matters worse.

A talking point. I say we had opened up ANWR ten years ago, we might have an extra million barrels/day today. All else being equal we would have delayed the oil crisis by about six months. But all else wouldn't have been equal, we would have squandered the excess on buying more and larger SUVs, and would be facing an even more daunting transition. We need to be smarter than the cat in a tree, who in his fear of falling can only climb higher. We need to note that the worlds one and a half million hybrids have made as much of a difference to the supply/demand situation as ANWR would have (had it be done a decade ago) -and we still have that oil in the ground should our children decide to use it.

Gaiai,

This is the end of the oil era.

More precisely this is the end of the cheap energy era.

Doc,

The best thing that can happen is for the Peak Oilers to be RIGHT,

There is absolutely no doubt the Peak Oilers are RIGHT. The only real question left is "when," since that depends on human behavior and global economics.

Oil will never run out. It will just get so expensive that it isn't worth it anymore.

"This program needs to be the central organizing principal of ALL government policy, "

I hear this a lot. Our 535 congressmen now allocate fossil fuel demand for government, and this poster would have them allocate supply for the same government agencies and initial supply for the rest of the private sector. The extra conflict of interest would be more than congress can handle. Already, Barney Frank is preparing a supplemental package for local governments, precisely because they cannot adapt to efficiency fast enough. He will pay for it from efficiency gains in the private sector via cap income.

So, congress will eventually set the caps high enough that they can work efficiently, and that is still higher than optimum.

The absolutely worse thing we can do is tie the efficiency of the private sector to the efficiency of congress.

As painful as it is to fill up these days, I'm all for higher gas prices. So far, SUV's are becoming scarcer on the road and the freeway traffic in Los Angeles are starting to lighten.

I'll take a little pain at the pump if we can keep that.

I like to think of the US energy policy as being like digital music. The demand from consumers was there for downloading individual songs. Record Companies decided to dig in their heels and fight for a dying business model. Record Companies lost the battle both on a financial level and a public relations level.

We in the US have dug in our heels trying to save a dying energy model instead of rising up to meet the future. We can either continue to defend a dated business model that no longer works in the 21st century or we can get ahead of the problem create a new business model going forward.

Matt,
Congress is inefficient because the laws of thermodynamics dictate that entropy rules.

Attacking McCain for the gas-tax-reduction-proposal is valid and probably won't hurt Obama much. Attacking McCain for starting to change his position on more drilling and exploration in the US is going to be a political loser- especially if McCain can ever get around to making his arguments internally consistent; and openly supporting cap and trade or new carbon taxes is going to be political death.

We in the US have dug in our heels trying to save a dying energy model instead of rising up to meet the future.

Art,

To be fair there was an awful lot of good that we have all gotten from cheap energy. Sure some of it was squandered but things like feeding 6.5 billion people was a good thing, even if it is not long term sustainable.

On the other hand many people have become lazy and fat and out of shape. We will find that doing more things physically will not be that hard and actually good for us.

I think there is a good balance somewhere in the middle and I hope that is where things finally settle. Sadly I think the transition period will hurt a lot of people and a lot of people will die, too.

$4.00? It's currently around $4.58 here in San Jose.

Yes, that's for regular.

Making friends instead of mortal enemies of the owners of oil might help, too.

So how many nuclear plants is Obama going to build? Or is he going to reveal his peak oil doomerish philosophy and get impeached? I'm pretty sure advocating a "6 billion dieoff" is going to be VERY unpopular for Obama. I know the rest of you buy into that.

As soon as George Bush is Good agrees to eat the nuclear waste, I will approve of new nuclear power plants.

John McCain is going to get annihilated in November.

Making friends instead of mortal enemies of the owners of oil might help, too.

Isn't that why the US leadership is trying to make its friends the owners of the world's oil?

the surplus earned from the increases for the cost of oil are not going to technological research for alternatives

The surpluses earned for the current high cost of oil are going into political slush funds and media companies to continue the propaganda onslaught that America must make war for oil.

Funny cmdicely.

The "full monty" of telling people what they don't want to hear isn't going to work unless the public is offered palatable, commonsensical alternatives.

As a city dweller, Obama is in a good position to promote making cities and inner suburbs more attractive to middle-class families. (He can shoot the spots in his own Chicago neighborhood.) Seriously address crime and school reform and you reduce the perceived need to live in outer suburbs and endure long commutes to and from work. Improve public transportation and promote telecommuting and you reduce the need to drive. Promote lower speed limits and stricter enforcement of safe-driving laws and people won't feel they have to drive gas-guzzling tanks for their own protection. Reward research in and use of alternative energy sources.

However many holes we drill, gas isn't going to get appreciably cheaper. The growing economies of China, India and other emerging countries will consume all the extra production, and then some. The challenge now is to maintain the living standards we've enjoyed without an endless supply of cheap petroleum.

June 20, 2008 at 3:37 PM wrote:
"More precisely this is the end of the cheap energy era."

Really? We've got a fusion reactor sitting 93 million miles from us, transmitting a steady stream of energy that's abundant, reliable, *free*, and available for the next five billion years (now that's an era!).

How about GWOO--the Global War On Oil?
Oil is NOT cheap energy. We've just buried the real costs in another column (like 'the military').
energy use is not the problem: oil use is--both in terms of expense and in terms of greenhouse gases.
The one message that people will not buy is 'all yo middle class people will have to be poor now.'
It's not necessary and not true.
'You people will have to get different cars and new furnaces'? Tough, but the idea of transitioning to new technology is better than 'retreat.' Especially when the new technology is measurably better.

Orwell --
you can drill all the holes you want, but will the oil flow? We're quibbling over scraps. It's not quite clear when we'll run out, but we know two things:

1. eventually, we WILL run out.

2. the cheaper oil is now, the sooner that day will come, because the cheaper it is, the faster we consume it.

It might be different if "peak oil" were predicted to occur 1000 years from now, but that's not the case -- some people say it's already happened, others are claiming, no, not yet, it's 10 years out, but essentially nobody believes that we've got enough oil to last 100 years at current (and plausibly predicted) consumption.

If you add to the price of oil all its externalized costs (those not included in its list price), the case for reducing consumption only gets more compelling. Oil's not as bad as coal, but burning it produces plenty of GHGs. Oil is drilled and sold by some countries that are not exactly our pals -- Russia, Saudi Arabia, Venezuela. If it were not for oil, we would not be in Iraq, nor would we have had bases in Saudi Arabia (which is what inspired bin Ladin, and his gang of mostly-Saudi highjackers). It's probably going to be a source of some conflict (diplomatic, trade, not necessarily military) with China in the future for access.

As far as the quality of life that results from oil consumption, I don't see that there's any particular correlation with cheap oil. People in Europe pay much more for gasoline than we do, and their CO2 footprint is half ours. They also live longer, healthier lives -- a decent metric, if you ask me -- and tend to get more vacation time. Arguably, the highly taxed fuel causes their improved health by encouraging people to get more physical activity outside of their cars (that, or universal health care, choose your "poison"), but it surely is not a significant negative factor.

Strange. Not one single commenter has mentioned the "Enron loophole" as the reason behind the high gasoline prices we're experiencing. (Keith Olbermann the other night on Countdown "got it.")

Only by closing this "Enron loophole" right now would we see a sharp reduction in gasoline pump prices, probably by as much as 25 to 50 percent within a month of the loophole being closed and energy markets (and oil futures speculators) being re-regulated by energy market regulations that worked well for 70 years before Sen. Phil Gramm snuck the so-called "Enron loophole" into legislation in 2000.

All other "solutions," whether from the right or left, do not address high gasoline prices right now, but appear to me (an Independent) to be nothing more than someone using the high gasoline prices as a way to push for their own pet "energy" projects, which will have only a minor impact on energy prices years down the road (opening up currently closed domestic sites for drilling) or will actually increase energy costs (cap and trade).

To repeat, certain people, right and left, are reveling in high gasoline prices because they see these high prices as a hardcore "lever" to leverage their "solution" into a dominant policy position, while at the same time blowing off the one policy shift, closing the "Enron loophole," that would immediately bring down gasoline prices at U.S. gas pumps.

In other words, Democrats in Congress are for "cap and trade," while Republicans in Congress and in the White House want to open up more domestic sites for oil company exploitation, while completely ignoring closing the "Enron loophole."

I'm not fooled.

Sen. Phil Gramm colluded with the late Kenneth Lay of Enron to get the "Enron loophole" enacted in 2000, leading directly to Enron energy speculators being able to game West Coast energy markets in 2001 to the tune of tens of billions of dollars, doubling and even tripling Californian monthly utility bills in the process, severely straining Californian household, business and municipal budgets. Sound familiar?

Since this evil little "Enron loophole" was enacted in 2000, U.S. households, businesses and municipalities have lost hundreds of billions of dollars to increased energy costs, artificially induced by some really, really greedy people, with Enron just being the beginning.

So, close the "Enron loophole" RIGHT NOW, immediately bringing down these high gasoline prices, then we can talk about all the other "solutions."

Oh, right, I keep forgetting. Certain people are looking at the high gasoline prices as a wedge to get their way, so are resisting doing (or even discussing) the one thing that would immediately bring down gasoline prices...thus costing U.S. citizens, businesses and municipalities about the same amount of money each month that Bush's war in Iraq is costing us. Go figure.

Art Eclectic wrote: "I like to think of the US energy policy as being like digital music. The demand from consumers was there for downloading individual songs. Record Companies decided to dig in their heels and fight for a dying business model ... We in the US have dug in our heels trying to save a dying energy model instead of rising up to meet the future. We can either continue to defend a dated business model that no longer works in the 21st century or we can get ahead of the problem create a new business model going forward."

Gaia wrote: "We've got a fusion reactor sitting 93 million miles from us, transmitting a steady stream of energy that's abundant, reliable, *free*, and available for the next five billion years"

I'd like to connect these two dots.

The business model of the fossil fuel and uranium industries is selling fuel to consumers. They must continually extract their product -- from a finite, and thus over time an increasingly costly and dwindling supply -- and sell it to those who use it to produce "energy".

The business model for solar and wind energy is entirely different. The supply of "fuel" -- sunlight and wind -- is, for all practical purposes that matter on human timescales, both infinite and free. The solar and wind industries are in the business of selling devices that can capture the infinite free energy from sunlight and wind and convert it into a clean, highly flexible and useful form (electricity) that the users can apply to whatever purpose they wish. Once you have paid for your wind turbine, photovoltaic roof, or concentrating solar thermal generator, you own a source of endless, free, clean energy and you have no more need to buy "fuel".

The giant fossil fuel corporations stand to rake in trillions of dollars in profit if their business model -- extracting, refining and selling a finite, dwindling supply of increasingly expensive fuel -- remains the dominant model until the last drop of oil and the last crumb of coal has been burned.

The last thing they want is for energy consumers -- businesses, factories, farms, households, communities, electric utilities -- to have the technology to produce their own clean, endless, free energy.

Numerous studies going back to the Truman administration and continuing right up to this year have found that the USA has sufficient commercially exploitable wind and solar energy resources to produce several times the current electricity usage of the entire country -- more than enough to supply our current usage and completely electrify our ground transport systems (and make hydrogen for jet fuel at that).

Preventing a transition to a wind and solar energy economy of limitless free energy, and maintaining the death-grip of the fossil fuel "business model" is why the "energy policy" of the United States of America is what it is, and why McCain and Bush are promoting the "energy policies" developed by Dick Cheney's secret "energy task force". It has everything to do with enriching the fossil fuel and uranium industries, and nothing to do with meeting the energy needs of the country.

Since we are re-living California's mismanagement of electricity, let us start with Wiki:

"State lawmakers expected the price of electricity to decrease due to the resulting competition; hence they capped the price of electricity at the pre-deregulation level. Since they also saw it as imperative that the supply of electricity remain uninterrupted, utility companies were required by law to buy electricity from spot markets at uncapped prices when faced with imminent power shortages."

In other words, Enron was created by idiot socialists of the Gray Davis type who figured out that they could manipulate the energy markets.

Enron, like Soros, like Buffet and Jim Gross the bond king do what the very rich do all the time, When socialists promise to give them huge quantities of money via ignorance, the big guys generally take the money.

Oracle, by his economic ignorance of the economy and horrible ideas about government price caps created the energy crises in California, Enron said thank you.

Then Enron went broke, mainly because there were enough states more intelligent than California.

Then secular animist:

'death-grip of the fossil fuel "business model" '

The fossil fuel energy model was based on currently cheap oil. The wind farm energy model is based on currently cheap wind. Both models were the same for the same reason, cheap resources. There is nothing inherently evil about on or the other, except that the one is no longer cheap.

Oracle, and by implication, Secular Animist, imply that the federal legislature can anticipate and regulate future energy technology to change business models. Gray Davis thought this too, but ended up giving away 2 billion of Ca taxpayer money to Enron when the legislatures made stupid decision about predicting the future energy markets.

Matt,

The "Bond King" is Bill Gross, not Jim.

I agree with much of your analysis. However, you're making a false analogy between Enron and the observations that Secular Animist and Oracle are offering. There were a lot of things wrong with the Enron model and the Oracle doesn't even begin to scratch the surface of all the problems caused by Phil Gramm's deregulation of the marketplace.

The whole credit default swap issue, which begat the current credit crisis in the financial sector was made possible, almost singlehandedly, by Phil Gramm's legislation.

You're right about cheap resources,though.

US energy chief: Low oil production drives prices
Associated Press
Posted: 2008-06-22

JIDDAH, Saudi Arabia (AP) - The U.S. energy secretary said Saturday that insufficient oil production, not financial speculation, was driving soaring crude prices.

...Bodman told reporters. "There is no evidence that we can find that speculators are driving futures prices" for oil.

Bodman said that every 1 percent increase in the demand for oil requires a 20 percent rise in price to balance the market.
hilarious....

Re: California mismanagement of electricity Market.

The cap on electricity was similar to the cap on telephone lines when those prices were deregulated. That worked OK, so there was the assumption that it would work OK in electricity. And it may have but for massive criminal activity on the part of Enron, and the federal governments abdication of its oversight responsibilities.

That said, electricity de-regulation was a mistake. The utility model worked pretty well, and should not have been abandoned.

Re: Oil price increase. I talked with a commodities broker recently, and he was pretty firmly of the opinion that hedge fund positions were a large part of the recent run up in oil prices.

And nowadays everyone can invest in oil... USO (United States Oil) is up 110% from a year ago, with a $676 million market cap. A drop in the bucket but ETFs and discount brokers have made the average Joe (or, more likely, the average pension and/or actively managed stock mutual fund) into a speculator.