Saturday, October 10 , 2015, 4:02 am | Fog/Mist 68º

Tam Hunt: Significant Solutions for High Gas Prices Are Right Before Us

At a time of severe pain at the pump at home, a ban of U.S. gasoline exports could have a dramatic effect

By Tam Hunt |

It is common knowledge that “there is no quick fix” for high gas prices. It’s going to be a long-term effort to reduce our reliance on oil and we’re probably in for higher prices no matter what we do in the short term or long term because we’re facing a number of macro trends, such as systemic tightness in global supplies (peak oil), ongoing international tensions with Iran, etc., and perhaps also some amount of speculation in oil prices.

But is it really true that we can’t do anything to bring down gas prices in the short term? Maybe not. There are in fact a number of policies that could have a rapid impact on demand and possibly even bring down gas prices dramatically.

One policy, in particular — banning U.S. exports of gasoline — could result in significantly lower prices for gasoline almost overnight. As far as I can tell, this policy is not being talked about at all, and it should be.

The United States became a net oil-product exporter in February 2011 for the first time since 1949. It’s important to stress, however, that “net oil products” refers to refined oil products, not to crude oil itself, which dwarfs net oil products. We still import about half of the liquid fuels we consume each year and, as I wrote recently, we only produce about 6 million barrels of crude oil per day and we consume about 19 million barrels of all liquid fuels (including biofuels and natural gas liquids, etc.).

While oil prices are subject to global markets, gasoline markets are far more regional. In the United States itself, gas prices range from $3.62 a gallon to more than $4.22 in California. Check if you’re curious. Regional markets are based on different blending requirements related to air quality and to local storage capacity, local production of oil, and other factors.

In 2011, U.S. companies exported 479,000 barrels per day of motor gasoline, which is up dramatically from recent years (see the nearby chart). This is a significant chunk of the 8.7 million barrels per day that the United States consumes in gasoline.

U.S. gasoline exports.
U.S. gasoline exports. (Source: Energy Information Association)

With gas prices at seasonal records this year, and approaching all-time record prices, why are U.S. refiners exporting gasoline and other oil products? Isn’t there a good rationale for keeping these products here in the United States to drive down gas prices?

Don’t our ongoing economic problems justify some limits on U.S. oil-product exports?  No one can say with certainty how much prices would drop if the United States banned oil-product exports, but it seems that prices would drop substantially.

Higher gas prices have a major impact on gross domestic product. Recent research from Mingqi Li at the University of Utah found that between 1971 and 2010 every $10 increase in oil prices resulted in a 0.4 percent to 1 percent drop in GDP. I haven’t seen similar research on gas prices, but presumably the same significant increase in GDP would result from a proportionate decrease in gas prices — which could be prompted by a ban on U.S. gasoline exports.

There are many other things that the federal government or state governments could do so bring prices down or to otherwise limit the impact of high prices on our economy.

In 2005, the International Energy Agency, the West’s energy watchdog, issued a report entitled “Saving Oil In a Hurry.” As the title suggests, it consists of a number of recommendations for reducing oil consumption when time is of the essence — kind of like now. The IEA arrived at the following recommendations, organized by the highest potential for reductions.

International Energy Agency recommendations for 'saving oil in a hurry.'
International Energy Agency recommendations for “saving oil in a hurry.” (2005)

Clearly, emergency carpool lanes and driving bans would require truly dire circumstances to be put into force and I don’t envision those circumstances happening any time soon. (We also have the Strategic Petroleum Reserve for truly dire circumstances, and coordinated international releases are being discussed by the United States, the United Kingdom and other countries).

The next three categories in the chart above are, however, more feasible as part of state or national efforts to dramatically reduce oil consumption if conditions warrant such measures.

Higher prices and a more efficient economy have resulted in “demand destruction” of 2 million barrels of oil per day since 2009. This change is remarkable and appears to be a sustained trend. We can see the remarkable impact of conservation and efficiency when we compare the decrease in oil demand to the increase in crude oil production in the United States over the last five years. In fact, over the last five years (2007-2011), we have “produced” more oil from conservation and efficiency than from increased production by a factor of three. Conservation and efficiency have “produced” a total of 1.85 million barrels per day of oil since 2007, compared to 0.57 million barrels per day from new production.

Comparing incremental U.S. reductions in oil consumption with incremental increases in oil production.
Comparing incremental U.S. reductions in oil consumption with incremental increases in oil production. (Source: EIA)

It’s clear that the sky-high oil prices we’re seeing in 2012, when combined with the substantial increase in efficiency of vehicle fuel economy and industrial procedures, will result in significant additional declines in U.S. oil demand. We are indeed “drilling” far more oil from increased efficiency and conservation than we can realistically hope to drill from the ground.

Summing up, President Barack Obama and Congress could exert a very significant downward effect on gas prices — quickly — by banning U.S. gasoline exports and keeping that gas here. We could also implement many policies to “save oil in a hurry” — if our leaders are serious about reducing the financial burden that high oil prices have on our economy.

— Tam Hunt is a renewable energy lawyer and policy advocate based in Santa Barbara. He owns Community Renewable Solutions LLC, which focuses on community-scale renewable energy consulting and project development.

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» on 03.19.12 @ 01:30 AM

This is a great idea that will never see the light of day with the obstructionist Congress in place now. They have placed beating Obama over whats best for the country. Just ask Sen. Mitch McConnell-
  “The single most important thing we want to achieve is for President Obama to be a one-term president.”

» on 03.19.12 @ 09:43 AM

We’re traveling in Western Australia and paying about $7-8 per gallon of gas. This is a country-wide cost and about what most Europeans pay. This morning during breakfast at our B&B, an Australian couple asked, “What’s with the fondness Americans have for big gas consuming cars?” They think we’re nuts to use gas so wantonly and have little sympathy for what we pay. I had no answer for them. S

» on 03.19.12 @ 12:38 PM

This is too funny. The margins on gasoline refining in the U.S. now are so bad that refineries are actually shutting down and the author wants to ban gasoline exports which will put more domestic refineries out of business even faster. The net affect will ultimately be higher gasoline prices in the U.S. (and then the eco-warriors will blame on greedy oil companies for the cost increases). High gas prices are the result of expensive crude oil prices, not high refinery margins. Its just another example of a bad government intrusion idea into the free market that will ultimately cost consumers more money. Banning gasoline exports will simply make refineries more unprofitable- they are importing oil to refine and export the products because their domestic gasoline operating margins and capacity are so low. Another example of trying to implement “social justice” in the energy market. To be honest, this is a ridiculous proposal- here’s an example of how bad refinery margins are right now-

“Along the U.S. East Coast, Sunoco Inc. and ConocoPhillips last year idled unprofitable refineries in Pennsylvania with a combined capacity of 363,000 barrels a day, or 24 percent of the region’s capacity, according to the Energy Department. Sunoco has said it will close its 335,000-barrel-a-day Philadelphia refinery by July if it can’t find a buyer.”

» on 03.19.12 @ 01:58 PM

Is that right? I heard the refineries being idled were the obsolete ones that can’t use natural gas in the cracking process. Now that nat gas is unexpectedly abundant, the refineries that do use it are incredibly profitable.

That helps explain the high profits seen by major players in the oil industry.

» on 03.19.12 @ 02:13 PM

Tam, stop Obama from printing currency. Quantitative Easing (a fancy way of saying we print more money to cover our debt) is at the root of the problem here. Obama is devaluing our currency abroad drastically and the effect is it cost more to buy oil. Ironically that does not effect the one thing Obama is not doing and that is encouraging domestic production of oil. Hmmm, so really your man is screwing us twice and then shrugging his shoulders and saying there is little he can do to change that.

As for your idea all that will do is cause domestic refiners to shut down ops and scuttle production, just what we need, less manufacturing. Yes let’s do that and screw us three times over, huh?

» on 03.19.12 @ 03:09 PM

Its real simple- according to API stats: Total imports in February 2012 accounted for 56.6 percent of U.S. oil demand, up from 55.7 percent a year earlier.

If we implement the “Tam plan”, then the U.S. will import a little less oil and export less gasoline which will then reduce US refinery operating capacity and margins. This will make refineries less profitable and cause more refineries to close. This gives the US less tax revenue, less gasoline and fewer jobs. But no problem- we can just put the squeeze on Helicopter Ben Bernanke to print more money to make up the difference while we run the 200+ million GAS burning cars on US roads with algae biofuel and cellulosic ethanol for the next 20 years till EVs are actually economical.  Tam- conservation is great, efficiency is great, NG vehicles are great, developing renewables is great (and inevitable). But this doesn’t give stupid policies a free-pass just because you put a “green” sticker on them.

» on 03.19.12 @ 10:06 PM

What Common fails to note is how a few of the bigs have consolidated their chokehold on refinery capacity.By driving smaller independents out , refinery capacity now comes under control of fewer, bigger companies such as Exxon and BP. Can you say PRICE MANIPULATION ? Lets see…. withold supplies from the market and just watch the zeroes start adding up .

» on 03.20.12 @ 05:28 PM

Willie they did not do that on purpose. Just like over regulation by SB city and county drive the cost of doing business up so high here that mom and pops cannot survive let alone compete with large mega corporations the same is happening all over the country to all businesses. It is the unintended consequence of trying to bust industry’s balls with regulations that have little positive impact and a huge negative for the little guys.

I know you guys on the left think the big guys need clobbering, it’s in your DNA but little consideration is ever given to the broader impacts. Cut the red tape and onerous environmental regulations that cripple the small guys and they will come back, we after all a competitive country. But the knee jerk reaction to the consolidation, mark my words, will be even more regulations that will, as it has done time and time again, drive that refinery capacity offshore.  Then you will be paying $10 a gallon making Tam very happy and sending the economy into yet another tail spin.

» on 03.20.12 @ 07:41 PM

AN50, I’m not sure where you get the idea that recent oil price increases are due to a weak dollar. Let’s look at the facts. The dollar has gained steadily on the euro in the last year:

And the yen gained in strength but then dipped in the last nine months:

And the British pound has lost ground steadily to the dollar:

So you’ve got it exactly backwards: the dollar’s strength over the last year has in fact mitigated the impact on the price of oil.

» on 03.20.12 @ 09:50 PM

So Professor Know It All, you see no possibility of price manipulation by the bigs consolidating refinery capacity? Sorry if I can’t share your trust .
  I believe Hunt is on the right track when he calls for reduced refined petroleum product exports. Exporting oil (gas) benefits the bottom line of the bigs, but does little to benefit Americans at the pump. Of course nothing of the sort will happen, especially if it would mean a boost to the economy. We all know that the right wants a flat economy, at least til November.

» on 03.21.12 @ 01:24 PM

Tam- Just think of the exported gasoline as value added services. We import millions of barrels of oil per day. Think of some of the oil tankers coming into port as having stickers that say “to be refined and re-exported” with a made in the USA label. Because our refineries have surplus capacity, they are simply taking unused capacity to refine and re-export the gasoline and other oil based products. Your suggestion wouldn’t save any oil, nor make any more gasoline available to local markets, it would only reduce refinery profits and increase our value added trade deficit. People need to stop thinking of oil as some special entity, the laws of supply and demand and free markets work on oil just like any other commodity. If you think it through, as the US continues to reduce gasoline consumption, US refineries will actually increase the amount of gasoline exported because more and more refinery capacity will go unused- unless you forbid them to export the excess capacity- in which case even more refineries will close and lay more people off. And on the subject of carbon, last time I checked, CO2 was plant food, not a pollutant. A simple example of GW spin last week was Obama saying the warm winter in the Midwest was a concern because of “climate change”, which NBC and ABC repeated to scare the viewers, yet if you just look at the current global temperature maps, every other part of the planet was colder than normal AT THE SAME TIME. Its kind of pathetic. The public also gets some of the blame for believing some of this nonsense.

» on 03.21.12 @ 05:26 PM

Tam, you are confusing exchange rates for intrinsic value, a common mistake. All oil in the global economy is traded with US dollars, so it makes no difference to our economy what rate of exchange the currency has with other markets, just its value relative to oil. Since your man is trying to pay for his spending binge with printed money he is flooding that global oil market with more dollars, meaning they are worth less, thus the explosion in oil prices we see here. As SB Common Sense points out your solution will not only not help but make the problem far worse by increasing the other major dollar devaluator, our enormous trade deficit.

We can help stop the decline in the dollars oil purchasing power in two ways, STOP PRINTING MONEY and of course expanding domestic production thus increasing supply and easing the trade deficit. Not too hard to understand when you stop hyperventilating over the AGW panic.

» on 03.21.12 @ 09:51 PM

Want to guarantee a reduction in your future fuel costs? Get more fuel efficient cars on the road. Get with the smarter party and support the 56 mpg by 2025 proposal.Below are some of the projected benefits-
“1. Save consumers over $6,000 per vehicle in gasoline costs over the vehicle’s lifetime (compared to vehicles that meet the 2016 standard);
2. Double the fuel economy of new vehicles between 2008 and 2025;
3. Cut gasoline consumption by one-third;
4. Ensure U.S. car companies will be competitive in the U.S. and globally;
5. Substantially reduce our dependence on foreign oil;
6. Achieve widely accepted greenhouse gas reduction goals (40% by 2030);
7. Offset any increase in vehicle cost by immediate savings at the pump;
8. Stimulate competition, keep costs down and promote product diversity;
9. Ensure consumers will have vehicles they want (If they want SUVs they’ll have them, but much more fuel efficient versions); and,
10. Provide a long-term approach (14 years from now) which is both sensible, achievable, and allows for a gradual adjustment by automakers and consumers.”

» on 03.22.12 @ 12:38 AM

GeeWally- odd how you forgot # 11-
Drill.  The latest estimates are that the US has 1.4 Trillion recoverable barrels of oil. The claim that the US only has 2% of the world’s oil reserves is laughable. That’s proven reserves, not probable reserves. In 1940,
The US had 20 billion barrels of proven reserves, and since then the US has produced 160 billion barrels. See a trend here? Read and learn-

» on 03.22.12 @ 02:44 AM

First off, hydrocarbons are a world market.  We have more capacity to refine than we have demand so we sell the higher value added products where there is a market.  If we don’t allow our excess refining capacity to be sold on global markets our refiners will lay a bunch of people off increasing our social welfare costs and reducing our tax revenue which increases our deficits.  It also would increase our trade deficit.  Splendid idea.  I have a radical idea, why don’t we just let the market work without all these geniuses trying to control the uncontrollable.

Our refineries are already being squeezed without limiting their customers.  A huge east coast refinery is shutting down:

Now, as to monetary policy having nothing to do with the cost of oil, that is wishful thinking.  Oil is priced in dollars.  Printing more dollars like we have the last several years doesn’t make them worth more, it makes them worth less.  Here are some interesting charts showing monetary policy vs. price of oil:

Another explanation:

Our money supply has exploded without the commensurate increase in value of our economic output.  We are devaluing the dollar which makes oil more expensive.  Despite the recent runup, oil has declined in value relative to gold about 8% over a year.  Gold, in theory anyway, a constant store of value.

You want to lower energy prices?  Bring more supply online.

» on 03.22.12 @ 06:30 AM

We all know that history will eventually prove petroleum to have an end date as our main source of energy. That point is inarguable. Our gluttonous rates of consumption are not sustainable. That point also cannot be argued. Why then the steadfast and stubborn sparring over increased mileage standards. Conservation (ew, theres that word again)is not just one answer, it will eventually prove to be the only answer.
  Our great great grandkids will study our avarice and wonder why we were too greedy to leave some for them.

» on 03.22.12 @ 01:44 PM


I know those of you on left think that humans are the problem and are destroying the planet like some kind of virus, but the fact of the matter is in the last couple of years we have discovered more new sources of oil and gas than we have consumed and found up until that point.  Our reserves now are much higher than they were when all these peak oil predictions were made. 

Move over OPEC, here we come:

We have a lot of oil, enough to last us a very, very long time while we develop other technologies and sources of energy.  The earth produces the stuff naturally after all and as technology improves we will undoubtedly find a lot more.  If you environmentalists would let us use nuclear power we could make the known hydrocarbons last for many centuries.

This chicken little sky is falling stuff is getting really old.  The man-made global warming stuff has proving to be much hysteria about something we don’t really understand and can’t do much about regardless, and this oil issue is a self-created problem by the same people who gave us the AGW fraud.  Let us drill, let us exploit our own resources and let the market work.  We’ll be just fine.  Why don’t you spend your energies solving real problems like disease and hunger?

» on 03.22.12 @ 01:55 PM

Willie the pump price is too damned high. You like Tam see this through the eyes of someone who can afford to run out and buy an over priced Volt or Prius. The common folks (the 99%) don’t have those resources. They are being creamed at the pump, creamed by the banks and screwed by excessive taxation on the rich who pass it on to the consumer. Everything you suggest hits that 99% hard and where they can least afford it.

The solution would be to encourage cheaper transportation, either through much cheaper fuel or less expensive vehicles neither of which will be met by fleet fuel mandates.

As I said before, stop the damned printing press, encourage domestic production of fossil fuels and watch the dollar and revenue to government rise and the trade deficit and costs to the consumer diminish. The efficiency in vehicle transportation will happen due to market forces. Hybrid cars that run on fuel cells rather than batteries will replace the all electric or battery powered cars now being produces at a significant cost to the environment. These new hybrids will use batteries only in the braking energy recover systems and would burn hydrocarbon fuels as cars now do. However they will be 8 to 10 times more efficient than ICE or battery powered hybrids are today. They will also be far more powerful and much safer to drive.

Unfortunately the AGW nuts are screwing this much better way of powering transport by pushing carbon free fuels. Yes we will run out of fossil fuels and we should look at ways to make them synthetically. That would require massive investments in far cheaper renewable supplies like geothermal and hydro. That investment would have to be paid for from massive extraction of current fossil supplies.

In other words there is a way to do this but its not they way we are doing it now or the way you suggested.

» on 03.22.12 @ 04:01 PM

Faith based energy policy:

» on 03.22.12 @ 05:39 PM

Obama Plans Won’t Cut Oil Prices For Decades, If Ever:

» on 03.22.12 @ 10:38 PM

Wireless , your opinion means less than zero to me. As Petry, prior to your reincarnation as Wire, you told us ” Greed is good. I love greed.” That silver spoon sticking out of your mouth helps us understand your perspective.
  An50 , your great grandkids will see those pictures of you, with your pal Petry , standing in front of his Hummer and ask ” What were they thinking?”

» on 03.22.12 @ 11:58 PM


Charming, just charming.  We’ll take that little tantrum as an admission you’ve lost the argument, which you have.  As usual.  Small minds resort to personal insults and attacks when they can’t win on the merits.  You know why you never can win an argument on the merits?  Simple, the facts aren’t on your side.  Why don’t you take this opportunity to educate yourself on some facts for a change and argue from a fact based position instead of an emotional one?

BTW, I’m not Petry. 


» on 03.23.12 @ 12:16 AM

President Obama’s Clueless, Contemptuous Energy Speech

Lots of good data in here for those of you on the left to digest.

» on 03.23.12 @ 07:56 AM

No argument to lose with obstinate contrarians who believe it our providence to overconsume.

» on 03.23.12 @ 01:18 PM


So its Wally’s decision and judgement as to constitutes “over consuming”?  Who empowered you and your lefty pals with this all knowing ability to decide what the rest of us need?  Or want for that matter.  Where does this authority come from exactly?

This is the problem with those of you on the left.  You are authoritarians.  You think your good intentions give you the right and authority to run everyone’s lives.  You get to decide what kind of cars we drive.  You decide what kind of electricity we have to use.  You decide what health insurance we have to buy.  You decide what health care we are allowed to have.  You decide what kind of light bulbs we have to use.  You know what: screw you.  Leave us alone. 

You leftists seem to think your pursuit of utopian fantasies gives you the right and authority to control our lives.  Sorry, we aren’t taking it anymore.  It’s called individual liberty, you can actually read about it in our Declaration of Independence and Constitution. 

The market rations products far more effectively and efficiently than a bunch of know it all statists/progressives.  We’ll take our chances on the free market, it seems to be finding plenty of resources.

» on 03.23.12 @ 01:36 PM

Sorry Willie you make no credible points, make no effort to refute an idea or an argument. Just slam the messenger and repeat dopy left wing talking points.

Do you disagree with my assertion that gas prices are too high?

Do you disagree that one of the biggest reasons for this is the devaluation of the dollar in oil trading due to excessive quantitative easing?

Do you disagree with the assertion that the poor, that part of the 99% seldom considered by AGW advocates, cannot afford to go out and buy high priced “green” technology?

Do you disagree that we are investing in the wrong transportation fuel advocacy because of anti carbon activists?

Do you disagree that we should fund more permanent renewable energy sources that are more steady state with revenues from fossil fuel extraction on our own soil?

If you do disagree with these points I made please tell us why and no, insulting me, republicans, conservatism or spewing dopy leftwing talking points is not a valid argument.

» on 03.23.12 @ 02:14 PM

AN50, on your comments about quantitative easing and oil prices, your argument is tautological and meaningless.

You argue: the price of oil is higher because the dollar is weaker from quantitative easing. I agree that the price of oil is denominated in dollars around the world (for the most part), but I’ve already shown you that the dollar has in fact strengthened against other currencies in the last year. So to state that the price of oil is going up because the dollar is going up when compared to the price of oil is completely tautological. It’s two ways of saying exactly the same thing, so holds no meaning.

Now, quantitative easing certainly has added more dollars to the US and global economies - that’s its purpose. And I agree that it is essentially no different than printing money. But it is not the case that printing more money automatically makes commodities like oil go up in price. Under that logic, gold should have gone up in the same way, but gold is at a four month low, which corresponds well with the recent spike in oil prices.

So what’s happening? Yes, we’ve got more dollars, but more dollars need to be invested wisely. It’s not the case that more dollars translates into higher prices of everything. Investors are (generally) rational and will place those dollars where they think they will gain the most value. Hence the oil market is seeing more investment, as well as the stock market. Expectations are, based on NYMEX forward prices for oil, that oil prices will continue to rise. CNBC had a story yesterday about expectations of $200 a barrel oil. Why? Because of a fundamental imbalance between supply and demand.

So, no, it’s not QE I, II or pending III that is behind today’s record high oil prices. It’s a combination of structural imbalance between supply and demand, concerns about Iran and other global tensions, and some increased investments looking to capitalize on the first two trends - as I state in my article.

» on 03.23.12 @ 02:20 PM

Wireless, your Contrary Investor article’s charts are what is called a “spurious correlation.” Yes, there is a good correlation between printing money and higher oil prices. But as I just explained to AN50, there is no automaticity about this trend. If there was, all commodities and other investments would also go up when the Fed prints money. The reason oil has gone up often in tandem with dollar devaluation is because of the fundamentals of the oil market: it’s been a very attractive investment area in recent years. And as the peak oil meme has spread, it’s become more attractive.

So the correlation the charts highlight is caused by a different set of causes. It’s not that A (dollar devaluation) causes B (higher oil prices), it’s that C (fundamentals) is partially causing both A and B, along with other obvious economic factors leading the Fed to quantitatively ease.

» on 03.23.12 @ 02:38 PM

AN50, the point that you refuse to acknowledge is that a more efficient and renewable economy is good for all consumers. In fact, if you really do care about the poorest among us, you would be championing the same causes I’m championing.

Improving energy efficiency (using better technology to do the same amount of work with less energy) is a hands down economic winner. I think we agree on that. For example, using better engine technology to get more fuel efficiency in vehicles at the same or lower cost. Or using lightbulbs like CFLs, which use about 20% of the norm for the same amount of light, to replace incandescents.

Conservation (behavior change that allows the same amount of work to be done with less energy) is also a hands down economic winner. For example, deciding to get out of your car and ride a bike to work, or take the bus, or carpool, are all examples of price-induced conservation. This is really our ace in the hole in terms of protecting ourselves from higher energy prices. Governments can help this trend by improving public transit and other options for conservation.

As we wrote in our regional plans for weaning ourselves from fossil fuels, while I was at the Community Environmental Council, and as we’ve discussed before, we should lead with energy efficiency and conservation in all energy sectors.

This doesn’t mean we lead with Chevy Volts and Nissan Leafs for the masses. I agree these cars are too expensive for the masses at this point. But you’ve entirely missed the point if you think that’s what I’ve argued. I’ve made very clear in all my writings that we lead with energy efficiency and conservation.

The point of subsidizing batteries and EVs is to get these technologies to the point where they are cheap enough for the masses. Check out Amory Lovins new book, Reinventing Fire, on why we should lean toward electrification in order to save money and wean ourselves from oil. The Chevy Volt’s battery has already dropped from $12k to $8k in just four years (since it was originall planned) and Argonne National Laboratory projects that batteries will cost 1/5 what they cost today by 2015.

The broader picture is this: we are clearly in an era of increasing fossil fuel energy costs. Natural gas is the contrary trend right now, but I don’t think it will last (just look at the number of new gas wells being drilled, and the decline rates of those new wells).

Oil is also a much bigger factor in per capita energy spending than natural gas and we are in a high price environment now and will probably remain in a high to low price cyclical trend for decades, as we bump up against the structural supply deficit each time our economies recover from the last oil super price spike.

For us to get off this roller coaster of extreme economic damage, we need to invest now in improving energy efficiency, conservation and new technologies that can eventually wean us from fossil fuels.

» on 03.23.12 @ 03:22 PM


You aren’t making much sense here and you are also helping me make my points about economic liberty. 

Printing more money without the commensurate rise in the value of economic output just devalues the currency.  An indisputable fact of life.  We clearly have been doing that.  Many other currencies have been engaged in a competitive devaluation and also printing money which is why the dollar has increased in value against some other currencies.  That and the US is still considered safe, hopefully that will continue. 

The key is the value of oil relative to a fixed measure of value like gold.  Oil has devalued against gold over the last year.  In the US our demand for gasoline has decreased, just this AM it was announced that we used like 4.5B fewer gallons of gas over the last year compared to before.  This is one reason we are selling refined products abroad. 

Demand and supply internationally are tight and as you have correctly pointed out, that increases volatility to the upside.  We can’t control the demand, but we can impact the supply.  And we should.  The price will control the demand.

Nobody is against more efficiency.  Nobody wantonly wants to waste energy as Wally childishly asserts.  But new efficient technologies need to be economically justifiable and cost effective.  The problem we have is forcing the use of uneconomic energy sources or compelling consumers into buying or using specific products that you leftist busy-bodies think we need to use.  The market will guide these decisions and these technologies will be adopted when they make economic sense.

As I pointed out to Wally, just because you left wingers seem to think your pure intentions allow you to make our decisions for us, they don’t.  The market will make the decisions, not a bunch of self-appointed know-it-alls.  Stop jamming this stuff down our throats.

» on 03.23.12 @ 03:51 PM

Wally, and Tam,

Here is a great example of what I’m talking about with regard to the government forcing “efficiency” or other compelled compliance.  In this case CAFE standards:

Here you have our President making absurd claims when the actual economic reality is quite different:

“The Environmental Protection Agency estimates that the compliance costs of CAFE standards from 2011 to 2025 will be about $210 billion, or $3,100 per vehicle by 2025. The U.S. Energy Information Administration predicts that new cars under $15,000 will be “regulated out of existence.” The National Automobile Dealers Association (NADA) further predicts that as a result, 6.8 million licensed drivers will be unable to qualify for the necessary loans to finance a new car.”

Never mind that these lighter weight vehicles are more dangerous and result in more deaths, but that is another discussion.  If the EPA is estimating $210B cost to comply with new CAFE standards it is likely much higher if history is any guide.  But regardless, the mandates will cost most people more money than they will ever save.  This is economic nonsense and it is diverting scarce resources to uneconomic purposes.  Just like solar panels.  Knock it off already, leave us alone.  We are perfectly capable of making our own decisions thank you.

» on 03.23.12 @ 04:51 PM

Thanks Wireless, you took the words right off my key board. Tam, if Wireless explanation doesn’t gel with you then I can add nothing more. It is pure fantasy that you make “value” with a printing press. As for efficiency, Wireless said it for me, its cost Tam. The poor pay for those damned subsidies indirectly through passed on costs. You give them nothing. As I have said all along, the best way to help the poor is by adding more value to the economy and buster, borrowing and confiscating is not adding.

It is mind numbing how you have economics so damned backwards. You have through your numerous articles proposed putting the proverbial cart before the horse just as Obama is now by borrowing and printing. The research, the debt pay down, the investments cannot be borrowed for. You have to friggen earn it Tam. There are only three ways to do that and you cannot cheat no matter how much your Harvard economists love to obfuscate and that is either extracting your own resources, growing them or making valuable stuff from them. We do precious little of all three now which is why we ship half a trillion dollars offshore every damned year.

Tam and Willie, this not a friggen us versus them partisan rant for crying out loud. It is a wake up call to logic and reason. It is a call to get out of this suicidal 4 decade long ponzi scheme called the American economy. We can start right now by drilling for our own damned energy, building friggin dams and using the revenue stream to usher in a geothermal energy paradigm that doesn’t depend on friggen batteries, sun shine or a windy day. Come on guys! This isn’t some dopy political game we are playing it is the survival of our country at stake and that is far more important than some fantasy about humans controlling climate, whether we can pretend to be nanny coddle Europeans or indulge ourselves in a friggen get rich quick ponzi scheme called Wall Street.

» on 03.23.12 @ 05:45 PM

The proverbial environmental radical chickens are coming home to roost. Sunoco’s refineries are shutting down largely due to new EPA compliance costs which cannot be recouped in the price of the product due to reduced demand.  So they are losing money and they exit the market.

The radical environmental left has succeeded in creating this crisis.  By preventing more exploration and exploitation of resources and adding costs with ill considered rules, the supply has constricted relative to where it would be and we all get to pay.  For no good reason.  These high costs are going to slow our wheezing economy even more.  A 10% increase in gas prices supposedly knocks about 0.25% off GDP. 

We keep hearing how we can’t drill our way out of our problems, yet had we done the things people wanted to do a few years ago, like drill in ANWR and off our coasts, we would not be in this mess as all of that new supply would be in the market now.  Nice work.  I hope you environmental radicals enjoy the fruits of your labor.

Obama deserves plenty of blame for this fiasco, his EPA is out of control at his behest.  He is and will get the blame and it is yet another nail in his increasingly well sealed coffin.  Can you say schadenfreude?

» on 03.23.12 @ 07:04 PM

Wireless, as usual your facts are simply wrong because you’re relying on dishonest right-wing sources.

Here’s the link to the EPA report your article cites:

See page vi summarizing the costs and benefits of the PROPOSED 2025 CAFE (they’re not finalized yet).

EPA calculates the net benefits of the program to be $311 BILLION by 2025, averaging $22 billion per year.

Wow, that’s a bit different than what your article states. I wonder what happened? Oh yes, they’re dishonest over at the National Review, as they are WSJ, IBD, Forbes, etc. They have no interest in the truth.

Now, we can debate EPA’s calculations, and that’s an honest debate. But let’s get our facts straight.

Moreover, the proposed CAFE rules for 2025 are actually more sham than reality. They include, as currently proposed, a 2017 mid-term review, which includes a check on cost-effectiveness and will allow industry to lobby for five years (starting now) to prevent the higher standards from kicing in after 2017.

As with Bush’s proposed CAFE rules, which never were finalized, Obama’s more ambitious rules are also riddled with loopholes. I’ll be writing an essay on this soon.

» on 03.24.12 @ 02:04 AM


This is rich.  So sources that don’t agree with Tam are all biased and unreliable but Tam’s sources, which more often than not are articles Tam writes, are objective and reliable.  Please.  You’ve got to be kidding me.  So Tam who uses his own articles or green blogs or studies from groups that promote and stand to financially benefit (like Tam) from advocacy are wonderful, but newspapers and magazines, well respected, long standing publications, are totally biased and unreliable.  Right.

So, you like to accuse me of intellectual dishonesty?  My, my.  Look in the mirror.  The article I linked to stated 2011-2025 costs and you give me an EPA study from 2017-2025 and say the article is wrong.  Tsk, tsk.  Just doing a simple linear regression you get the numbers the author quotes.  I hope you prepare better for your legal cases.  See if you can find where that number the author quotes comes from.  I did.

Surely you must be aware that the EPA’s cost estimates and benefit estimates are the subject of tremendous controversy.  The EPA, at least as it is currently constituted, is hardly an objective referee.  They have become extraordinarily agenda driven, like our President.  Here is an example of some of the problems with EPA studies:

Here is a study of NHTSA conclusions regarding CAFÉ standards from 2011-2015.

Note they conclude that when cars get better gas mileage people tend to drive more which essentially erases any fuel saving benefit.  That is conspicuously absent from the EPA reports.  Gee, I wonder why?  Net net, more stringent CAFÉ standards yield a net negative “benefit”.  I know, the Heartland Institute is just another source that doesn’t drink the green Kool-Aide so they are immediately discounted.  Why don’t you actually read it, I think you will find it is well reasoned.

In any event, I am happy you at least acknowledge the CAFÉ standards are BS, but for different reasons.  CAFÉ standards are one of the reasons that Detroit got in trouble.  They are forced to make small, money losing cars in order to get their fleet average in line so they can actually make money on SUVs and Pickups and larger cars that they are good at making.  The government should not be in the business at all of setting these standards.  Let the Japanese, who can make small cars profitably, serve that market segment and let other companies serve the other market segments if that is what they choose to do.  Its a business decision.  People should be free to buy the cars they choose.  This manipulation of the market is destructive.  Here is a CATO article that talks about the utter nonsense this is:

CAFE standards also seem to result in more deaths:

I know, they are all right wing deniers and naysayers.  Deal with it.  The information is generally well sourced, usually from government sources.  Just because it doesn’t comport with Tam’s agenda doesn’t make it wrong.  Nice try.

» on 03.24.12 @ 08:07 AM

Despite the profluence of antiquated arguments to the contrary , there are two paths mankind is traversing that will eventually intersect. The first path is our rate of consumption. Note on this graph that we out consume the next four countries below us, combined. 
Apparently that is not cause for alarm to some people.
The other path is called OIL IS A FINITE RESOURCE. Even the U.S. military can see the eventual collision course and is making contingency plans and issuing warnings. Maybe it doesn’t happen in our lifetime and that seems to be the only concern of our fusty old friends Professor and Wire.

» on 03.24.12 @ 03:32 PM

Tam, the value of oil is the higher due to demand, flooding the market with more dollars makes the dollar less valuable against those things traded in DOLLARS, like oil. That is not a tautology you twit. What is a tautology is thinking that making more paper for the same value somehow magically makes more value. Where in the hell did you learn logic buster?

Willie this is getting old and useless. I have always maintained as Tam has that oil is finite. Never said any other thing. What I have said is that the current leftist solution is ass backward, putting the cart before the horse. We need a new energy paradigm but you cannot pay for it with borrowed money or carrying a massive debt that you are simultaneously screwing your self out of the ability to pay off.

First you have to earn the cash to pay down your debt, then you need to earn the cash to pay for your research, then you need to earn the cash to pay for the transition. Any solution that lessens earning power is a disaster and thwarts progress. Any solution that adds costs lessens earning power. Thus, more energy cheaper is the rule. What Tam continues to propose is a paradigm that can only succeed if energy is more costly. Thus the disaster, as California’s bankrupt economy demonstrates for all those willing to pull their head out of their ass and see.

Come on guys we will lose unless we realize wealth is not some magic produced at a printing press or confiscated from doers. It has to be earned and that means making more than you consume, whether energy, goods or services. That is why we push for oil, coal and natural gas, pure gold sitting under our feet, ready to do work and pay off our debts. Yes it will run out but if we are ever to build a new energy paradigm then we need that gold now to fund it.

» on 03.24.12 @ 04:44 PM

AN50 and Wireless, a few final thoughts as I wrap up my involvement on this thread:

- I’ve already discussed the effect of quantitative easing on the price of oil. Neither of you have acknowledged what is a fatal flaw in your argument: if QE leads automatically to higher oil prices, why don’t all commodities and other investment vehicles also rise automatically? Of course they don’t because - again - investors are rational and look for the best place to park their money. Oil is going up primarily due to fundamentals and concerns about loss of supply from Iran, etc., NOT because of QE. Get that through your heads. It’s an important point. Saying, as Wireless does, that oil is cheap compared to gold, which is the “real” value holder, is simply making an assumption about what should be considered real value. Value is entirely subjective. It’s all about what people think is valuable. If rather than gold we had historically used aluminum, aluminum would be the “real” value that you’re suggesting in an atavistic manner should be the underlying real value. The dollar now floats, so the value of gold is certainly part of the mix, but there is no intrinsic reason to view gold as a better value holder than any other investment vehicles. And as I’ve noted already, the value of gold has in fact gone down in recent months, again contradicting your views on the effect of QE on oil prices.

- It is indeed tautological to argue that oil prices are going up because of QE and the fact that oil prices are denominated in dollars. Think about it. All else being equal, QE would lead to a rise in oil prices, but all else is NOT equal, and that’s my point. Investors are generally rational and they will pick and choose investments base on perceived current and future value. Bubbles do always form, but these are rational in the short term too. It’s only when bubbles burst that we look back and decry the irrationality of the market. Markets aren’t perfect, far from it. They can’t predict the future. But they are a way for the collective opinion of investors to reveal the current value of whatever is at issue. Bubbles bursting are simply a discontinuous revealing of collective opinion on the appropriate value.

- As for creating value, I’ve also demonstrated that energy efficiency and conservation are creating value now by allowing us to do the same work (or more) with less energy. That’s creating value. Renewables can sometimes create value now, in terms of being cost-effective with status quo sources of energy, but are sometimes not strictly cost-effective (particularly with natural gas prices at very low prices right now, but probably not in a sustained manner). The point of incentivizing renewables and electric cars (and offshore drilling or nuclear, for that matter) is to spur technologies to get to scale and provide better energy sources than we have today. Subsidies for renewables and EVs are working as planned as we are seeing regular and remarkable price declines in these technologies. Nuclear and oil, to the contrary, are simply getting more expensive. We could frame this as “smart subsidies” versus “dumb subsidies.”

- Last, please do read Amory Lovins’ new book, Reinventing Fire, or Peter Diamantis’ book, Abundance. These books do a great job of showing (particularly Lovins’ book) how the transition to a more efficient and renewable future can, and should be, led by business for profit. This transition will save $trillions, according to Lovins, and will allow us to become energy indepenent and more affluent, as well as protecting the environment and providing new jobs.

» on 03.24.12 @ 04:45 PM

Actually, a final response on the issue of CAFE standards and compliance costs. Wireless, what we’re debating is a factual issue so there should actually be a real answer here beyond your or my opinions.

Your National Review article states that compliance costs of CAFE from 2011 to 2025 is projected by EPA to be $310 billion. They don’t link to the source of this figure, or provide a name, so I can’t track down the actual figure they’re referring to.

However, the 2016 CAFE is not very stringent - most of the real work was pushed to the 2017-2025 standards. Even though the face value is an increase from 27.5 mpg to 35 mpg by 2016, there are numerous loopholes and flexible compliance mechanisms that make it very doable to meet. For example, Hyundai complied with the 2016 standard in 2011:

The report I linked to from EPA concludes that program costs from 2017-2025 will be $138 billion, and it is extremely unlikely that the compliance costs for 2016 standards will be the balance of the $310 billion the National Review article cites. So something’s wrong here.

More generally, the National Review is being obviously and egregiously dishonest because they’re ignoring EPA’s own, far more important, conclusion about net benefits from CAFE. As I’ve already stated, the Nov. 2011 EPA report concludes that the 2025 standards will SAVE us $311 billion by 2025 because of fuel savings ($347 billion) and other benefits ($101 billion). So to cite the projected costs without citing also the savings is the height of intellectual dishonesty.

Can we at least agree on that?

» on 03.24.12 @ 05:52 PM

I made a mistake in my previous comment: the National Review article cites a figure of $210 billion for CAFE compliance between 2011 and 2025. This actually does make some sense in light of the $138 billion figure EPA calculates for 2017-2025, so it looks like National Review combined two different studies for their figure.

But the broader problem remains, National Review simply ignored the calculated benefits from CAFE, including $347 billion in fuel savings and $101 billion in other savings, for a NET savings of $311 billion from the 2017-2025 standards.

This is, again, the kind of intellectual dishonesty we see day in, day out, from those on the right.

» on 03.24.12 @ 06:56 PM

Tam, first let me say that even though most of the time I think you are full of it, at least we can have these discussions in an intelligent manner devoid of the usual pedantic crap flying around. We will learn more this way and I believe we are.

Now the reason other commodities are not rising in price is that they are not necessarily traded in dollars, making exchange rates very important. It also forces other sovereign economies to devalue their currencies to protect exports. In fact many currencies are being devalued very quickly now to bolster a sagging dollar adding to the promise of a world wide recession and enormous inflation. Again, you cannot make value with a printing press.

Also I said the QE was one of the factors not the only one. But if you are going to print money and devalue your currency then all the more reason to boost exports. That means drill baby drill, refine baby refine and sell that stuff to other economies, thus adding value to the currency you printed and stabilizing the inflationary affect of QE. The idea is to not form bubbles to prop up a president’s office or candidacy, which is not acceptable or “smart”.

On efficiency we are in agreement and I have stated in the past that I do a lot of that type of analysis for industry (thus driving support for commercial roof top solar PV). My objection is to government mandates. These are often too broad, too general and fairly ineffective. A competitive market is the best form of incentive. On EV’s I have made it abundantly clear that batteries as an energy storage medium are the least effective or efficient. Until you can make a battery with the energy density of gasoline you are barking up the wrong tree Tam, plain and simple and that is really “dumb”. Further as I have said before subsidies are not free and the ones who pay for them are the poorest among us. All added costs Tam, trickle down to the bottom, either directly through fees and taxes or indirectly through higher cost products and services.

Like I said before, you are putting the cart before the horse and that will fail. I am not against renewable energy and I believe Hydro and Geothermal should be our first choices with solar, PV, wind and bio as last resort conservation supplies. But damn it man we have to have a strong, surplus economy to pay for them. Otherwise you end up sucking the life out of the poor and middle class sending them backward and downward, something the white liberal elite just don’t seem to grasp. The rich will never pay Tam, ever; otherwise they wouldn’t be rich in the first place.

So, drill baby drill, refine baby refine, sell baby sell and watch the revenues poor in. the sooner we get rid of ass backward thinkers like governor “moonbeam” and get this country earning again the sooner we can start funding the new energy paradigm from that surplus wealth rather than on the backs of the poor and middle class and let a free and competitive market drive efficiency, not dopy government mandates driven by some stupid AGW religion.

» on 03.24.12 @ 08:36 PM

The basis of Tam’s article was if you ban gasoline exports, you can lower gasoline prices. Since its obvious oil tankers bring oil into the US and some of the oil is in effect exported as value added gasoline, it’s silly to claim banning gasoline exports would do anything except reduce US value added exports and have no positive effect on domestic gasoline prices. His assertion doesn’t pass the economic or energy literacy test. Isn’t that kind of obvious?

» on 03.24.12 @ 08:52 PM

The Spanish people finally voted out the progressive Socialists who spent the most in Europe per capita on Tam’s beloved green agenda. In Spain’s case, it took unemployment reached 23%. Hopefully the US will smarten up before that happens. Spain is now considered at risk of defaulting on its debt and is saddled with billions in energy subsidy debts.

» on 03.24.12 @ 10:31 PM

So Professor Know It ALL says- “So, drill baby drill, refine baby refine, sell baby sell and watch the revenues poor in.”
Umm….. Exxon pays zero(0) federal corporate income taxes.
  Topping that is this gem from the all knowing professor- 
“Further as I have said before subsidies are not free and the ones who pay for them are the poorest among us. All added costs Tam, trickle down to the bottom, either directly through fees and taxes or indirectly through higher cost products and services.” Hmmmm… that must mean the professor supports the Presidents proposal to roll back subsidies to big oil. Great ! Billions of dollars annually to help pay down the deficit. Good plan , Professor!

» on 03.25.12 @ 12:02 AM

Technology works for fossil fuels, as well as renewables. That’s why the free market works better than top down faith-based solutions. And the whole AGW scaremongering is pathetic. Here’s another example of free market success-

“Energy companies in search of oil riches rivaling the biggest finds from Brazil to Angola are flocking to Texas shale, where new wells have triggered a 230- fold increase in crude output in three years.”

» on 03.25.12 @ 09:35 PM


The source for that $210B was actually in the same paragraph but the way it was written could lead one to the conclusion you drew.  It is actually from the National Auto Dealers Association and a study they did.  They know better than anyone what sells and what doesn’t, which is why they told GM to stop shipping them Volts because they just sit on the lots.

However, on another point regarding supposed benefits from CAFE standards it is obvious you didn’t look at the NHTSA report that showed the fuel savings are grossly overstated because people simply drive more when they get better mileage.  It is also undeniable that CAFE standards have resulted in lighter cars and more deaths.  Secondly, the EPA’s conclusions on these types of studies are hugely controversial, I would not use them as a source to justify any policy.  Great recent example are the MACT rules on coal fired power plants.  They conjure up these mythical health benefits with zero basis in reality to try and justify the enormous costs they are leveling on the industry.  To the point we will be taking 10% of our generating capacity off the grid.

As to printing money and that not devaluing the dollar and creating inflation in commodities, it is hard for me to understand how anyone with a basic understanding of economics could make those arguments.  Go back and read a couple of the articles I linked to earlier.  Gold has been a relatively stable store of value throughout human history, it didn’t suddenly become more valuable, doubling in fairly short order, for any other reason than the dollars it is priced in have become less valuable.

» on 03.25.12 @ 09:59 PM

Here in CA we have an enormous potential.  The Monterey Shale formation is projected to hold 500B or more barrels of oil.

New commercially developed technology has really opened up the recoverable resources we have for hydrocarbons.  Why do you lefties fight it so much?

» on 03.26.12 @ 12:51 PM

Because the Lefties are faith-based. They’ve declared you can’t “drill your way to freedom from foreign oil” and “the debate is over!” for AGW. So they can’t admit that technology works for fossil fuel extraction too, and the shift to renewables will take longer than they thought, and the AGW theory fell apart. Its their religion. Where free market economics doesn’t work, and where Nobel prize winning physicists that assert the AGW scaremongering is a fraud are vilified as “extremists”. Its sad what’s being taught at the Bren school. Its indoctrination into a cult.

According to a Wall Street Journal report, Giaever declared himself a dissenter in 2008, “I am a skeptic… Global warming has become a new religion.”

» on 03.26.12 @ 01:12 PM

Willie, leave the angry, white, wealthy, elite liberal crap to Rambler. If you disagree with actually paying for things with stuff we either extract, grow or earn ourselves then please enlighten us all as what you propose as the solution. So far all I have read from you is a lot of rage against the right, but no cogent solutions of your own.

» on 03.26.12 @ 05:35 PM


Where on earth did you get that Exxon pays zero income tax?  The oil companies pay a massive amount to tax and have the highest effective corporate tax rate of any industry group.  Exxon, with a 45% rate, tallied $21.6 billion in worldwide income taxes for 2010.

Let me guess, you got it off some left wing site like think progress didn’t you?  No wonder you are so misinformed.

» on 03.26.12 @ 09:54 PM

Don’t give a damn what Exxon pays in international taxes. What does matter is the curtailment of subsidies, just as you said - “Further as I have said before subsidies are not free and the ones who pay for them are the poorest among us. All added costs Tam, trickle down to the bottom.” An50 3/24/12
  “Over the past two years, ExxonMobil reported $9,910
million in pretax U.S. profits. But it enjoyed so many
tax subsidies that its federal income tax bill was only
$39 million — a tax rate of only 0.4 percent.
  Exxon paid no taxes at all to the U.S. federal government in 2009 on domestic profits of nearly $2.6 billion. It appears that they avoided the tax man that year by legally funneling their profits through subsidiaries in countries like the Cayman Islands.”
  Your constant sniveling about paying down the debt is totally disingenuous . It’s a crooked argument to be against subsidies for emerging energy markets and angling to continue subsidies for big oil, the money which should be put to paying down the debt.

» on 03.27.12 @ 12:00 AM


Where are you getting this?  That article I linked to said in 2010 Exxon paid $3B in US taxes.  Here is a little background info that might help you understand:

BTW, you need to educate yourself on these “subsidies” for oil companies.  They are standard business expensing rules that apply to any company, These so-called “subsidies” consist of allowing oil companies to use the same tax depreciation rules as other companies.  Maybe this will help you get a little more perspective, Big Oil sends more money to Washington than to shareholders:

Debunking the big oil subsidy myth:

End big oil subsidies?

There is lots more, as usual you don’t know what you are talking about.  I might suggest you expand your sources of information so you stop embarrassing yourself like this.

» on 03.27.12 @ 01:59 AM

AN50, one last thought: I agree with you entirely re the potential of enhanced geothermal. I studied this fairly extensively a few years ago when I wrote our regional energy blueprint. I also agree that today’s enhanced oil drilling technology is paving the way for EGS (see the major MIT report on The Future of Geothermal if you haven’t already).

BUT - EGS is still years off and it makes no sense to put our eggs in that basket when we have good alternatives today. The US installed enough wind last year alone for about 2 million CA homes and enough solar for about 700,000 homes. EGS: zero homes. EGS has huge potential, but to ignore the amazing growth rates of wind and solar now, and their steadily declining price curves, is foolish.

I’m hoping that EGS becomes economically viable within ten years, which is the time when many grids around the world will start really needing baseload renewables to back up intermittent renewables like wind and solar (once intermittents get to about 15%, back up power starts to become an issue).

Last, please stop misrepresenting what I write. For example, drop the ridiculous line that I and other progressives are trying to force people out of their cars. It’s hard to take you seriously when you make such statements. I do think we will be better off if we all drove less. I work at home but still put about 12,000 miles a year on my Prius. I take the bus occasionally and I should buy a replacement bike for the one that got stolen. But I’m not trying to force poor people out of their cars. If you understand a thing about peak oil, you’ll understand that the price trends we’re in now are here to stay (with cyclical ups and downs), and that creating an infrastructure and policies that allow low income people to still get around affordably when gas is $5, $6 or even higher per gallon, is the best thing we can do for low income families - and the economy more generally.

» on 03.27.12 @ 02:12 AM

Wireless, the National Review article states very clearly: “The Environmental Protection Agency estimates that the compliance costs of CAFE standards from 2011 to 2025 will be about $210 billion, or $3,100 per vehicle by 2025.” So it’s the EPA they’re citing, not the National Dealers Association. And, again, it’s intellecutal dishonesty of the worst kind to cite only the projects and not at the same time cite the far higher benefits the same report calculates.

» on 03.27.12 @ 02:51 AM


I actually contacted the author and asked him directly where he got those numbers from.

Here is the basic explanation.  The $210Bn figure is actually from the EPA estimate of the effect of the fuel efficiency (MY 2011 is ~$1.5, MY 2012-2016= $51.5, and MY 2017-2025= $157).  Even that figure is probably way low. On the benefit side, it’s equally murky (the EPA has to predict everything from the price of gas to the change in consumer preferences between cars and trucks). I think the guesswork that goes into these #s is the most important point.  NADA apparently added up the various EPA estimates of the different rules as they got the same answer.

It was my mistake, not NR.  When researching a response to your post I found an article quoting the NADA using that same figure and since the author had referenced them in that sentence I mistakingly assumed that was the source.  I had contacted the author for clarification and it took a couple days to hear back from him.  So my bad, not the NR so you can blame me.

So, get you panties out of a wad.  The NR isn’t lying or disingenuous, that is a cheap cop out for you to dismiss all of these outfits that disagree with you as cranks, they aren’t and you know it.  At least you should.  Everyone makes mistakes, including you, but this was my fault not theirs. 

You seem like an earnest guy and well intentioned, albeit a zealot, and you present your arguments well, but the weakest part of your presentation is the dismissal of groups that don’t agree with you.  Insulting the WSJ, Forbes, IBD, AEI, Heritage, etc. is not a serious approach.  If they make mistakes refute them but waving them off as universally not credible just devalues your credibility.  These are serious, well respected publications and organizations that have been around a long time and you would do well to take them seriously.  If they are presenting information you can’t refute, maybe you need to refine your arguments or change your views.

» on 03.27.12 @ 03:33 AM

Wireless, again, the egregious behavior in the National Review article was not their citation of EPA’s estimate of $210 billion for compliance costs, but their leaving out the net $310 billion fuel savings and other benefits from the same standards.

So you made an honest mistake in citing NADA as the source for that figure, and I respect you more for recognizing that mistake.

But, again (for the fifth or so time), the far more serious distortion in the article is leaving out the net benefits from the proposed standards.

And this is what I see time and time again from the right-wing sources you like to cite as gospel. If you want to be a serious student of energy policy, avoid the right-wing sources you keep on citing to. They’re not serious. They’re political and they ignore any facts that don’t fit their political agenda. This is not to say they’re always wrong, or always get their facts wrong - just generally.

» on 03.27.12 @ 03:44 AM

Here is another one of the dreaded National Review articles on the EPA and CAFE standards and is worth the read.  I don’t think folks really understand how radical this outfit has become and how the Obama Admin is circumventing the legislative process to institutionalize this nonsense.

EPA Power Grab:

Tam, this should keep you busy for awhile trying to discredit all these points and links.  All the liberal sacred cows are called out in this one. Lots of inside baseball of how manipulated and fundamentally corrupt the EPA regulatory regime is.  The punchline is that the EPA is imposing global warming/greenhouse gas regulations on the US that would never, ever pass an elected regulatory body.  This is so corrupt and destructive it is difficult to grasp.  This is a train wreck and is damaging our economy more than people realize.

» on 03.27.12 @ 03:50 AM


The “net $310B” in supposed benefits is an absolutely fictional exercise.  As I pointed out with the MACT issue and coal power plants, they will conjure up benefits to justify their new rules.  We have some idea what the costs are and little real idea of what the supposed benefits of these laws are.  You may as well stick your finger in the wind.  If your tactic is to try and discredit opponents with these lame attacks you will lose.  Deal with the facts as presented, if you can’t, change your argument or viewpoint.

You remind me of the old legal adage:

“If the facts are on your side, pound on the facts, if they aren’t pound on the table”

Stop pounding on the table Tam.

» on 03.27.12 @ 01:35 PM

Global warming models wrong again:

Relax Wally, we’re going to be OK.

» on 03.27.12 @ 03:38 PM

This is interesting.  The requirement to have so many individual gas blends around the country contributes to the cost.  Naturally CA rules drive up cost the most:

» on 03.27.12 @ 03:46 PM

Its Deja vu all over again.  Obama refuels Jimmy Carter’s failed energy policies:

» on 03.27.12 @ 06:03 PM

Tam, glad to hear you are supporting geothermal (or as you call it EGS), but your investment in wind and solar have an impact on your bias. Its only natural so don’t take that as an offense. I am not invested in any one technology so I have a bit more open mind. I believe that EGS would be more aggressively pursued if we were to give it the press and glamour the other renewable sources get. That was my point. As for the wind and solar investment you mention, sounds impressive but these are not base load supplies and thus are not suitable replacements for oil. Conservation yes, when they become cheaper.

As for the quip about the poor, you cannot escape that label I’m afraid. Your attitude that these people should be relegated to mass transit because of high fuel costs is proof positive of your elitist attitude. It’s just deplorable. If your attitude was lift all boats rather than sacrifice the living standard of the poor then I might leave you alone.

Like I have been saying Tam, all along, its quantity and price, more, cheaper. Energy is pure gold for any economy no matter who is in charge, private or public. Massively complex energy schemes that rely on higher consumer prices will not work and will only serve to reverse the upward mobility we have seen here and globally due to cheap abundant petroleum.

More, cheaper Tam. Not carbon or no carbon, not big hydro or small hydro, not nuke or no nuke, more cheaper. When that becomes your motivation, providing an abundance of cheap reliable energy, which allows even the poorest among us the opportunities once only afforded the very wealthy, then you will see what we are on you about and we will all be serving the same cause. But as of yet your true motivation has been an anti nuke, anti carbon and anti anything you see as an environmental concern even if those concerns are not grounded in reality. Hence even those of us supporting the renewable cause find reason to argue with you.
More, cheaper, Tam. If you want to get rid of carbon fuel, then you better do far more, far cheaper right now.

» on 03.27.12 @ 11:35 PM

Kudos to the Professor for his concern(cough)for the effect of rising energy costs on the poor. This “concern” is conspicuous in it’s absence in ALL of the Professor’s other incongruous arguments.
  A superior alternative to his more, more , more mantra will ultimately prove to be conservation.With 70% of our energy demands going to transportation , improved mileage standards are an obvious choice .

» on 03.28.12 @ 01:54 AM

Exactly. AN50, everything I’ve been writing about here over the last few years is about more, cheaper. You just don’t get (or don’t agree) that the new energy era we’re in is not some temporary phenomenon. Better fuel efficiency standards, better electricity efficiency standards, and incentivizing the technologies that can replace today’s fossil fuel-dependent technologies are all about better, cheaper. Not everything in this arsenal I’ve listed is cheaper than fossil fuels today, but they will be soon as fossil fuels continue to increase in price (natural gas being a notable exception for now, but probably not for long). Government does indeed have a role, though I would prefer that states take the lead rather than the feds, in spurring new technologies that can make a major difference. Insulating lower income people from higher energy prices by ensuring that they have access to transportation is in fact a major benefit for lower income folks (and all other incomes too), not some nefarious lefty plot.

» on 03.28.12 @ 02:59 AM


What you have been pushing is all betting on the come.  A fantastical world of clean green and, at the moment, unaffordable energy.  Solar, wind, waves, etc.  All very interesting and intriguing but not cost competitive.

Unfortunately, we all live in the here and the now, and right now all of your future bets are just that, future bets we get to subsidize now with borrowed money our kids get to pay back. 

I have a modest proposal:  How about we use our existing, proven sources of realistic and accessible cost effective oil, gas and coal based energy and I’ll be willing to compromise.  We’ll keep throwing research bucks at solar and wind and biofuels if you let us drill and build some more nuclear power plants.  Deal?

» on 03.28.12 @ 01:14 PM

This is a very scary article.  The Federal Reserve is buying over 60% of our government bonds as there is no demand for it, at least at the rates we are paying.  i.e. monetizing our debt.  And you wonder why gold has doubled, more accurately the dollar has halved, over the last few years:

This is absolutely suicidal.

» on 03.28.12 @ 01:48 PM

Tam, its not cheaper if current prices have to INCREASE to make it so! My God man read what you just wrote. This is what I have been on you about. ANY INCREASE is BAD, period. There are no market schemes that support price INCREASES, that don’t spell doom down the road. And because all pricing in our economy is predicated on labor and energy, if you increase one the other has to drop, otherwise you have inflation, devaluation and a subsequent drop in living standards.

Sheesh I don’t know how much more clear I can be. Everything you have written so far is predicated on more expensive energy. That is BAD, Tam, very bad and will hurt the poor more than anyone else. I have no argument with new sources being developed and understand the initial costs are high. I have no argument with increasing efficiency as long as it does NOT include government dictating lifestyle or living standards.

So the best way to pay for the R&D, NRE and upfront development of new sources of energy WITHOUT screwing the poor, is to increase the supply of existing cheap fossil, nuke and hydro supplies, flooding the market with cheap energy would release trillions of dollars in new capital, raise the living standard of the poor and fund the new energy paradigm.

Willie, mileage standards only increase the cost of transportation to the poor. This is a ruse to hide higher energy costs which only benefits the rich. I see you have joined Tam as the 1% out to screw the other 99%.

» on 03.28.12 @ 01:52 PM

Wireless, I’m not sure you even read what I write. I just wrote about leading with vehicle and electrical fuel efficiency. These are not betting on the come. They are cost-effective here and now. And I just wrote about some renewables being cost-effective here and now (even ignoring externalities), but needing to subsidize (with smart subsidies instead of dumb subsidies) those technologies - like solar and enhanced geothermal - to get them to the point where they don’t need subsidies and can help transition us away from fossil fuels.

» on 03.28.12 @ 01:54 PM

Wireless, can you say 1000% inflation? These lunatics know this will be a disaster, they know it. So if they are not actually suicidal, lunatics then what is their motivation? Destroy the American economy so thoroughly that it must be rebuilt? The question then is how do you do that with zero natural resources and no other America to bail you out?

» on 03.28.12 @ 02:19 PM

AN50, last comments and I’m truly done with this thread. I can only assume that you’re being wilfully obtuse. As I’ve written numerous times, and you have sometimes agreed and sometimes disagreed, energy efficiency improvements are cheaper now. Now.

As for higher fossil fuel prices, they’re going higher whether we drill more or not, if you believe the IEA, the EIA, and every other serious organization that studies this issue. Get it?

So ensuring that even higher prices don’t hit our economy, or lower income people, by working on improving energy efficiency and long-term replacements for fossil fuels, like renewables and electrification, is better for everyone than the status quo, as well as better for the planet.

» on 03.29.12 @ 12:00 AM


I do read what you write, painful as it sometimes is.  Again, if these things are economical now then we no longer need subsidies, that is wonderful news.  I’m just curious as to why the free market isn’t embracing these things without coercion or incentives?  In any event,  I’ll look forward to an article from you advocating for ending subsidies.

As to the cost of hydrocarbons rising regardless of what we do, that is an interesting economic argument.  Did I miss the law of supply and demand being repealed?  If what you say is true, why have natural gas prices collapsed as new supply and reserves come on line?  Why exactly won’t the same thing happen with oil? 

Even if we accept your assertions that oil is going up in price regardless of what happens, surely you must acknowledge that more drilling and more supply would at least help keeping prices from rising as much as would otherwise.  Of course it would.  Therefore, we should be aggressively pursing and bring more supply on line.  Even you must acknowledge that basic economic reality.

» on 03.29.12 @ 01:23 AM

The EPA’s latest adventure and their first greenhouse gas rule will basically kill coal powered electricity over time:

How are we going to replace this electric generation capacity exactly?  Gas probably, that means we need to drill more.  And Frack more.  Such a dilemma.

» on 03.29.12 @ 02:18 AM

The revolt continues!  States have had enough.  First over half of them filed suit over Obamacare which looks very shaky after this weeks Supreme Court hearings.  Now they are demanding their federally seized lands back—- to drill!  Much to the dismay of the environmental leftist radicals who are being steamrolled on all fronts.

Isn’t Federalism great?

» on 03.29.12 @ 02:25 AM

Hey Wally,

Climate refuses to cooperate with global warming alarmists:

We’d hate to have you continue to worry about us baking ourselves to death.  Get some rest, all is well.

» on 03.29.12 @ 03:59 AM

Notice how Tam never disputed that his article suggestion banning gasoline exports wouldn’t lower gas prices and is actually a ridiculous policy proposal. Tam- you should really try to understand basic economics if you’re going to write or teach in the public domain. Renewables still need to operate in the real economic world. This is a realization the Spanish government is now discovering.

» on 03.29.12 @ 12:56 PM

Common sense, real world economic realities aren’t the strong suit of leftists.  Especially environmental radical leftists.  Their “good” intentions are all that matter, the money to pay for it will come from the “rich” I guess.

» on 03.29.12 @ 03:33 PM

Look at the increase in our money supply here:


» on 03.29.12 @ 04:18 PM

No Wireless, it will come from us and the poor, like I keep trying to point out to Tam. The rich didn’t get that way by allowing every gallivanting, radical activist that comes along with “good intentions” to vacuum their pockets. Tam still does not get that. He as his president does, believes that the wealthy will just roll over and give it all up. They should have a conversation with their major funding source George Soros.

» on 03.29.12 @ 05:19 PM

Here is some background on the EPA and how they generate all of these “savings” estimates.  They are nonsense mostly and certainly nothing that is admissible in court.

So when the EPA says that CAFE standards are going to give us all these benefits and that new coal rules are going to cut health expenses know they are full of it.

» on 03.29.12 @ 06:51 PM

Wireless, the tireless, it is ironic that science fiction writer Michael Crichton also noted the scare a day tactics of the environmental movement and wrote about it in his novel ‘State of fear’,  something I discovered as a young environmentalist in the 70’s. All these fear mongers and propagandists need to succeed is a small piece of truth on which they can expound with a million half truths and lies. Something a poorly educated and gullible society can be manipulated and tortured with.

Tam, if you are still reading, I don’t believe you to be a malevolent person. I don’t believe you are using pseudo science or lies to manipulate anyone. I believe you truly are concerned about the environment and truly believe that you have the answers. I also believe you are wrong. That what you propose is dangerous and more so than the things you are against. I believe there are enough scientific analysis, enough data and enough logical and reasonable intellect out there to make that case. I have not though and must work harder to do so.

To that I appreciate that out of all the liberals, democrats and leftists I have argued with you have at least had the civility to discuss and throw out ideas and arguments without dragging this into the mud. I’m sure others who comment here would agree.

Wireless, keep those links coming! I read and enjoy them and it really helps, particularly when Tam does the same.

» on 03.30.12 @ 02:02 PM

Here is some good news on getting our out of control EPA under control.  Slapped down in Texas:

» on 03.30.12 @ 02:41 PM

Tam- Please listen to Prof. Happer (Princeton physics professor) and tell us why he’s wrong. He also wrote the WSJ editorial a few days ago I’m sure you read. If Happer is correct (and the data supports his view and Prof. Lindzen’s (MIT)), then the whole AGW agenda of climate disaster claims is a fraud. You see, its all about gaining power over people and creating a socialist agenda using the environment as cover. The unwitting foot soldiers (and students who are told what to think)for people like Al Gore and Pelosi are just pawns in the global power game. I and many others support renewables development in the context of real science and economics, but we never got fooled and used as a pawn in the socialist AGW agenda. Fraudulent science is no better than a cult religion. Are you a free thinker or one of the pawns?

» on 04.01.12 @ 09:50 PM

The solar loan guarantee train wreck:

Very hard to defend this nonsense, yet Tam will try…...

» on 04.02.12 @ 06:49 PM

Well, another day another stimulus solar energy failure:

Solar Trust, which received a $2.1 billion conditional loan guarantee, filed Chapter 11 bankruptcy in Delaware Monday. The company did not qualify for those Energy Department loans after failing to meet several goals placed upon it by the agency. 

Fortunately these guys cratered before they got their hands on our tax dollars.  Solar Trust of America’s Chapter 11 filing on Monday listed assets between $1 million and $10 million, and liabilities between $10 million and $50 million.  What on earth were we doing guaranteeing a $2.1B loan to a company with less than $10M in assets?  This is madness.

» on 04.02.12 @ 06:54 PM

This is interesting.  Interior department fast tracking solar projects and bypassing environmental rules:

I guess all those endangered species aren’t that important when you are pursuing polically correct projects.  I wonder if they’d waive all this stuff for a new nuclear or conventional plant?  Somehow I doubt it.

Tam, any thoughts?

» on 04.06.12 @ 07:07 PM

Don’t forget we need to save the polar bears from Climate Change. Didn’t we see a lot of save the polar bear ads?

Unwelcome news – for the drowning polar bear myth believers:  Not only are the bears not drowning, they are thriving instead.

In case you forgot, the polar bears were all to drown from an increased loss of ice cover claimed to result from mankind’s burning of fossil fuels.

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