Ed:
Yes, Sir! You did an excellent job of adding a more technical explanation to my point. YOU GOT MY VOTE!
I do want to clarify a few things. I am not opposed to conservation. I am in the water business, in the PNW, no less, and I advocate wise use of all resources, even renewable ones.
But conservation is not necessarily gonna get us where we want to go, which is less expensive gas. If we succeed in driving the price down through conservation, then demand will increase because of the lower price. And then the price will go back up. So, in a macro sense, conservation will not work towards meeting our objective. Now, in a micro sense, it works great. The less of an expensive resource you use personnally gives you more money for other things. But I would be willing to wager that almost all of us would drive and/or fly more if gas were less expensive.
As a side note ... a recent study was conducted of the total societal costs of two vehicles, a Prius and a Hummer. The Hummer was actually less expensive, in terms of total life-cycle costs, than the Prius. The environmental costs of producing those batteries are incredible!
In response to the Hummer being a totally pointless vehicle, so what! So is a privately owned airplane used for nothing but pleasure flights!!! This is the US of A and I am FREE to own any kind of vehicle I want and can afford. I don't want a Hummer, so I won't buy one, I'd rather have an airplane. And I own an airplane, which I sure as heck don't "need". And if I could afford it, I would have an airplane that uses even more gas than my 150! This is a FREE country, where I am, or at least should be, FREE to be as silly as I want to be! So STUFF the arguement that nobody "needs" a Hummer.
Taking a deep breath and moving on ... using tax policy to influence social and/or economic activity is anathema to my way of thinking. It is my firm belief that, in a free country, taxes should have only one function, and that is to raise revenue. Taxing something in order to control consumption or direct behavior grates on me worse'n fingernails on a chalkboard.
Tax breaks for a favored activity are only mariginally more acceptable. One of the problems (aside from the philosophical issued raised above) I see with that approach is that it is very nearly impossible to know, in advance, what technologies might experience a breakthrough. We might throw a whole bunch of societal money at promising techonologies that end up being dead ends, while some little guy in a backroom lab somewhere, working on an entirely different problem, comes across the "one thing" that will break our dependence on hydro-carbon fuels.
I have an abiding faith in the market. If there is a promising technology out there, somebody is going to invest in the research in an effort to be the first to bring it to market and make a killing. This has happened before, and now is a propitious time in our history for it to happen again, given the unprecedented amount of capital in search of investments out there today.
Another problem I have with conservation is the use made of it by the politically correct. In my business, I am constantly hearing about the use of conservation in order to increase supply. The theory propounded, and they seem perfectly serious about this, is ... if you have five oranges and you conserve one, then you can add that one back into your supply and end up with six oranges. Yes, I have questioned proponents of this theory closely (though the units are acre-feet of water, not oranges) and they really believe that the theory works. They seem to think that I am some kind of neanderthal that I can't understand it. I guess this is new math. My theory, that you can't consume more than you have, no matter how much individuals might conserve, is considered old fashioned.
The problem with the conservation arguement today is that it is not being used to extend the utility of resources, it is being used as a vehicle to control people's behavior.
One other point in the demand side of the discussion... the demand for crude is not driven exclusively by energy needs. Crude oil is now a foundational resource for a lot of other products. Just about everything produced today has some level of plastics in it. And almost all of those plastic materials are derived from petroleum products. So even if we manage to find an alternative to hydro-carbon fuels, our dependence on oil will not go away.
And, on the subject of unintended consequences... the recent increase in the production and use of "biofuels" is in the process of creating a new worldwide crisis. The US is the major supplier of livestock feed worldwide. The major ingredient in cattle feed is corn. The demand pressure being put on corn as a result of the increase in production of biofuels is raising the cost of feed, worldwide, dramatically. These increases are having an apalling impact on third world substance farmers.
There are no easy answers ...
Reg
