Saturday, June 03, 2006

Titling at Windmills: A 50-50-50 Energy Proposal

America is addicted to oil and that addiction is killing us -- fiscally, environmentally, and spiritually.

We are not fighting the war in Iraq because of WMDs or to spread democracy. That's all poppycock. We're there because Iraq has lots of oil.

At $70+ per barrel, gasoline is averaging 3 bucks a gallon. Even worse, more and more wealth is amassing in oil producing countries like Iran and Saudi Arabia. We're literally funding both sides of the Iraqi war.

America desperately needs an energy policy. Hell, we've needed one ever since the original Arab oil embargo happened way back during Nixon's second administration. We needed one during Carter's and Reagan's administrations. Bill Clinton was just lucky that when he was president, the price of oil was ridiculously low -- sometimes selling for under $1.00 per gallon. How did America react? We bought Hummers and Explorers and various other gas-guzzling SUVs.

But now, with a Texas oil man in the White House, we need an energy policy worse than ever. It could be Bush's equivalent of Nixon's trip to China. Unfortunately, I doubt George Bush is half the statesman Nixon was. Nixon may have been a crook. Nixon may have been a scoundrel. But, historically, he at least tried to do great things (besides opening up relations with Red China, Nixon created EPA -- the Environmental Protection Agency).

Blogging is a lot like self-publishing your own letters to the editor. It takes a lot of chutzpah to believe that putting forth an energy proposal in a blog can have any impact on anyone. Then again, that's okay. I write my blog mainly for myself -- as a personal journal -- a web log. I don't assume anyone else reads what I write.

So, what's my 50-50-50 energy proposal for America?

The first 50 refers to a 50% tariff on all non-North American oil. At $70 per barrel, that would be an added tax of $35 for each and every barrel of oil imported from anywhere except Canada or Mexico. To minimize the impact on the economy, the tax should be staged over a five year period -- 10% the first year; 20% the second year; 30% the third year; 40% the fourth year; and finally 50% in years five and beyond.

What should we do with the windfall from this tax revenue? That's where the second and third "50s" in 50-50-50 apply. I recommend that 50% of the monies collected be used to fund academic research into new, alternative energy resources. The other 50% should be used to help families who earn under $100K per year to heat their homes, and to assist small farmers earning under $100K per year who need fuel for their tractors and assistance paying for higher costing petroleum-based fertilizers.

With oil imported from outside North America costing over $100 per barrel, other forms of energy will hopefully become competitive in the marketplace. Perhaps it will be oil shale from Montana or tar pits in Alberta or corn grown in Nebraska for ethanol. Maybe it will be new roofing materials that include built-in solar panels or almost invisible wind farms off our coastline. What's important is that we need to break our addiction to oil -- especially Middle East oil -- and we need to do it now.


Anonymous Robert Pearson said...

"I write my blog mainly for myself -- as a personal journal -- a web log. I don't assume anyone else reads what I write."
It is very interesting and I appreciate your sharing your knowledge and insights. Wouldn't you prefer a dialog? I would prefer a group dialogue. I love BOF (Birds of a Feather), COI (Community of Interest) and SIG (Special Interest Group) dialogues. If I had been a member of a group then E2EIoD would have been SOA from the start. Almost.

"One Point of Light"
Group Seeks Cross-Party Ticket for 2008 Elections
A new political party called the Unity Party launched this week with the intention of creating a 2008 cross-party presidential and vice presidential ticket combining a Republican and Democrat.
HAMILTON JORDAN comment excerpts:
I think the system is broken; most people think that it's broken. And we think that what we're going to do is invigorate the political system and allow for this country to be turned around.
At this point in time, when you look at the problems and challenges that face our country, I'm an American first. And I think the idea of the Unity ticket, enabled by the Internet, is a powerful idea that can change the direction of our country.

Post your own comment to the article at:

One way to evaluate the possible impact of your very interesting suggestion:
8:30 AM EST Monday, April 3, 2006: At last week's Citigroup private Private Equity Conference, Alan Greenspan said oil will hit $100 a barrel. The problem, said Greenspan, is that oil is not controlled by market forces but by government ones and cartels.
Greenspan said these governments and cartels are living well on the high oil prices. They don’t understand these prices are unsustainable long-term. They think people will go on forever paying these amounts and thus to keep the prices high they have not invested any serious money in oil infrastructure in the last 30 years. Only the Saudis understand that they need to keep prices reasonable to ensure that oil is the main energy source for the world forever -- and not substituted for alternative energies. The Saudis have made some key investments and are making moves to keep prices low.
I started thinking. Oil a $100 a barrel. Not driven by the burgeoning demand of India, China, etc. But by political turmoil After all, oil occurs in some of the world's most unstable countries -- Iraq, Iran, Venezuela and Nigeria. The problem is that the higher oil goes, the more money flows in, the more money the rulers steal, the worse corruption becomes, the more resentment there is, the more likelihood of more terrorism targeting the oil infrastructure, the more interruptions to oil flows, the higher the price. It's an endless cycle.
Nigeria has the eighth largest proven reserves. It exports 2.5 million barrels of oil a day. It is the fifth-largest supplier of oil to the United States; U.S. energy officials predict within ten years it and the Gulf of Guinea region will provide a quarter of America's crude. In 2002, the White House declared the oil of Africa (five other countries on the continent are also key producers) a "strategic national interest" — meaning that the United States would use military force, if necessary, to protect it. It's that serious.

Good Luck...

7:08 PM  
Blogger ITscout said...

I could drive myself crazy if I worried why people don't read what I have to say.

I never want my political commentary to negatively impact my company.

I write my blog because a) I want to write a journal; and b) I think it's beneficial to practice writing.

Anyone can read my blog and share comments. I am not opposed to dialog.

12:43 AM  
Anonymous ian said...

I like your idea for an oil tax, however for a different reason. First, I think we can kiss collected tax money goodbye until we fix our government. Right now it would all go to oil companies in some fashion so that THEY can research alternative energy. If you've seen big oil's latest commercials you'll see they're not oil companies, they're "energy companies".

Where the tax will come in handy is in ensuring fair competition for alternative fuels. Right now oil companies can price their product as high as the cost to develop an alternative. Hydrogen, for instance, would take huge investments in manufacturing, power generation (green preferably), distribution, etc.

Creating this infrastructure is only economically feasible if gas stays above $5 a gallon (OK, I made that number up, but a number does exist). At the point when hydrogen begins to compete with gasoline, oil companies will just lower their prices and their margins to eliminate the competition (a la Microsoft style).

I think this is where taxes can play a role. It would be more like a sin tax than a tariff, but the effect would be to limit the oil company's ability to manipulate the market. A scheduled increase in gasoline taxes would open the doors to an influx of investment in alternative fuels because the greatest barrier to entry in the energy market is risk. Namely the risk that oil companies can instantly make an alternative fuels venture uncompetitive in the marketplace.

One more thing: Is anyone else tired of the mantra "oil prices are high because of demand"? If gas prices were $2 a gallon, would gas stations run out of gas? I have yet to see anything close.

2:13 PM  

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