Thursday, March 15, 2012

Bart's Back

In a prior post I mused about the President's Bart Simpson like attitude on the economy and on gas prices.

Here is a quote from a speech he gave on March 7 -

“Now, because of these new standards for cars and trucks, they’re going to — all going to be able to go further and use less fuel every year.  And that means pretty soon you’ll be able to fill up your car every two weeks instead of every week — and, over time, that saves you, a typical family, about $8,000 a year.”

Interesting, the president evidently thinks he CAN have an effect on gas prices.  Two problems though.   First, the figure he mentioned in the speech in N. Holly North Carolina, is about the savings produced by energy efficiency standards that his administration is trying to promote (55 miles per gallon) but over the life of the car not in a year.   With gas at about $4 per gallon and the typical driver going just under 13,500 miles per year and the average fuel efficiency of about 20 miles per gallon - that means the average driver spends about $2700 per year.   From my view it is pretty hard to save $4000 per year based on $2700 per year expenditure.   His math on the alternative (with a 55 MPG standard) is also faulty - net savings would be a bit more than $17,000.   

But here is the other problem - even more fundamental.  Just how does the federal government compel auto makers to establish a 50 MPG standard?  What technologies can they offer to help the advances necessary to improve mileage standards?   What technology do they bring to the table?  Or is the assumption that if this administration continues to encourage increases in gas prices, people will actually reduce the number of miles driven to produce savings based on fewer miles?    What this really sounds like is pie in the sky, economy wrecking logic of this administration.


Garry Ladouceur said...

This is what I think.

It seems, an argument is developing that the election will turn on the price of gas.

America, since Eisenhower, have decided that access to oil is worth every outrage. I suspect that this policy still drives foreign policy.

America is getting soft however, now it is not only oil, it is cheap oil.

The only trouble however is that America is not as tough and strong as it once was so there is the problem.

How to shift out of the Eisenhower dicta into another strategy that does not involve so much war, which is fundamentally costly. A new stategy must be able to guarantee results, i.e. keep oil available but also cheaper oil.

Canada to the north has nearly an endless supply of oil. It is cheap. But you can see the problem. Under Eisenhower, you would go in and compromise Canada and get the oil. Now, Americans themselves would frustrate this plan because Canadian oil is dirty and besides there are no pipelines.

Dr. Tax in Sacramento said...

While I do not completely agree with the characterization about oil being worth "every outrage", there is a good case to be made for the notion that oil is important in our foreign policy.

But there are two places where I have slightly different point of view. First, one of the key policy questions is whether we should continue to rely on petroleum products as an energy source. The Obama Administration clearly believes that either in the short or long term that we should reduce our reliance on petroleum. They propose a bunch of strategies (including carbon taxes-raising the price, limiting the exploitation of existing proven reserves - in things like the offshore ban, and alternative energy technologies - things like Solyndra.

The second issue is, depending on how much petroleum we will use in the economy- where should it come from? The past couple of administrations have not worked hard to develop US or North American supply, relying instead on oil from the Middle East. That presents a number of problems. As my reader has suggested - Canada seems to have an almost limitless supply. But Ditto for the North Dakota discoveries. With new technology our two countries could be awash in oil in a very short time. Unfortunately, the Administrations naive beliefs on the reasonable use of petroleum until the mostly speculative alternatives become cost effective has caused us in turn to revert to the use of supplies from the middle east - that is bad on many fronts.