Peak gasoline

Another example of our vastly changed energy landscape is the fact that we a have passed “peak gasoline.” We did this way back in 2007 and it looks like we will never again burn as much gasoline as we did in that year. So, we are producing more oil and gas and using less gasoline. Who would have predicted that ten or twenty years ago. Our CO2 emissions are also dropping quickly. This is good news for almost everyone, but it creates a problem for highway maintenance. Highways are maintained by gasoline taxes. Less gasoline burned means less money.

A simple solution would be to raise the gasoline tax, although this is a dynamic equation. As you raise the tax, you get less use and in the medium and long run less revenue. But raising gas taxes is politically very difficult, especially in a political season and in the last few years the political season never ends.

These developments continue to amaze me. Coming of age in the 1970s, we were told that we would run out of oil and gas soon, that there was no way people would burn less gasoline w/o draconian measures, maybe rationing and that the energy future would be a bleak succession of shortages and decline.

Today we have achieved success beyond that wildest dreams of the experts of the 1970s. If we could go back in time and tell them what happened, the experts would think we were crazy or worse. The "worse" would be that you would be an energy crisis denier. Everybody hated them. but they were right.

It goes to show how unpredictable things really are and why the only real way to plan is to let lots of options be tried. No central solution works for very long and usually creates trouble. Imagine if we had been able to implement those "expert" solutions of the 1970s.

We used to talk about peak oil back in the old days. That is a meaningless concept. Turns out, however, peak gasoline makes a lot of sense.

Posted by Christine & John at August 16, 2013 7:07 PM
Comments
Comment #369476

Perhaps the most effective approaches taken in the 70s in response to the oil and gas crisis was the implementation of conservation and efficiency measures. The federal CAFE standards for automobile manufacturers established in 1975 led to dramatic improvements in fuel economy in addition to a “gas guzzler” tax passed in 1978. If it wasn’t for the SUV “light truck” exception, we would be further along the road in fuel economy for general transportation.

It wasn’t just transportation fuel economy that benefited from improved standards for energy efficiency, it was housing, commercial buildings, air conditioning, heating, etc.

With all the mania and controversy over oil and gas exploitation, pipe lines, alternative energy sources, etc., we forget that the biggest bang for the buck has come from more efficient energy use.

It has always struck me that this most important leg of energy independence has suffered from the manner of presentation. It has always been presented as a sort of sacrifice, e.g., turning the heat down in the winter, driving less miles, going slower, etc. Better to have emphasized the concept of efficiency with the same functional outcome.


Posted by: Rich at August 16, 2013 9:51 PM
Comment #369479

Rich

Those methods were imposed not by policy but by price.

The CAFE standards had little effect, since as cars became more efficient, people drove more miles. It is not that they are bad ideas, but they are not in themselves sufficient to have much of an effect.

Our energy efficiency has been improving year by year. It increases most when prices are higher. Our goal should be to make costs easily apparent to the person making the decision to use energy. The big mistake of the 1970s was to try to control the cost of energy. This, BTW, is the big sin of many developing countries that subsidize energy or control prices with disastrous effect.

I agree about the sacrifice meme. It was stupid. That is one of the reasons Jimmy Carter was such a tool. He wanted to emphasize the wrong things.

RE “gas guzzlers” - this term is misguided. What matter is the amount of energy you use. A person with a Prius who drives all the time and burns 100 gallons a week is worse than a person who drives a less efficient vehicle but drives less and burns 10 gallons.

We should always identify the core problem, which is the energy itself. Identifying the problem with “gas guzzlers” is one thing that prevented better conservation, as people drove more efficient vehicles and felt justified in driving more.

RE energy independence, we will never achieve this and should not try. We are the world’s biggest exporter of food, but also a big importer. I expect the same with energy. It might be better, for example, to export gasoline from the Gulf and import it to the NE. The costs of keeping it all in the U.S. exceed the benefits. Autarky is expensive. I know you understand that and are using the energy independence term more generally, but I think it is important always to point this out.

Posted by: CJ at August 17, 2013 8:34 AM
Comment #369489

Our CO2 footprint should decrease further as fleet transport, city buses, etc shifts to natural gas. This shift, over time, should lead to regular vehicles using natural gas.

Posted by: Roy Ellis at August 17, 2013 5:35 PM
Comment #369494

Roy

They will shift rapidly and reach a tipping point. Many buses already use natural gas and now rail is doing so too.

The gas revolution is really a great thing. There really are no serious downsides.

Posted by: CJ at August 17, 2013 6:42 PM
Comment #369500

“The CAFE standards had little effect,…”

C&J,

Somewhat disagree. Sure, the market has and will be the most effective mechanism in producing more efficient vehicles. However, the CAFE standards are important in providing a sort of long run discipline in continued development of more efficient vehicles. The temporary gluts of oil and gasoline and exceptions from the standards, i.e., SUVs under the light truck exception, can and have lead to a proliferation of inefficient vehicles on the road and detract from the goal of overall energy efficiency, reduction of pollution and contribute to global warming.

I must say that I had a good chuckle on your Jimmy Carter comments. As I was writing my comments, I had an image of Carter with his sweater in the White House delivering his national address on energy and conservation. To me, he was spot on with his remarks and his policies. Its a shame that he couldn’t convey his policies in a more positive manner. He initiated de-regulation of energy development and funded many initiatives that eventually proved most successful (unconventional natural gas drilling, etc.).

Posted by: Rich at August 17, 2013 7:22 PM
Comment #369504

Rich

I think crediting Carter with unconventional energy is real reductionism. It is like those attempts to prove that some less known figure (today usually a woman or minority) “really” invented … you name it. You can always trace things back almost as you wish once you know the destination.

Nobody is a complete success or failure and the same goes for Carter, but generally his approaches failed. And we can thank God he did. Back in those days, everybody thought CO2 was a harmless thing. Synfuels would have been made with high CO2.

RE Carter (2) - I think Carter did more for Republicans than anyone else in my lifetime. I voted Carter in 1976. Four years later, I would have voted for a yellow dog before I voted for him. Fortunately, we had a great choice in Ronald Reagan.

RE CAFE - It is always hard to figure these things out, since changes in one thing affects behaviors in others. There has been no correlation between CAFE standards and conservation. Correlation does not prove causality, but lack of correlation almost always indicates its lack.

higher standards can work with lots of things, such as most appliances. If your refrigerator uses less energy, you will probably not be tempted to keep more things cold. You also are often unaware to how much it is costing you. A car is different. You acutely feel the cost of gas and your willingness to use the vehicle will be affected.

I well remember the big fuel cost rises of a few year ago. I was trying to get some of my staff to telecommute and many were resisting. When the prices went up, they changed their minds. Beyond that, we saw people change their minds about buying houses in far away suburbs.

CAFE may work, but prices work much better. Again, you are getting at the real deal if you go after energy costs.

Posted by: CJ at August 17, 2013 8:01 PM
Comment #369508

Alright then, lets just increase the tax gas. It will serve many purposes: increasing consumer demand for more efficient vehicles; providing revenue for transportation infrastructure repair and development; reducing CO2 emissions and reversing urban sprawl. It is a tough sell in the US, though.

Posted by: Rich at August 17, 2013 8:57 PM
Comment #369509

Rich

I have always been in favor or higher taxes on gas, providing they are revenue neutral, i.e. we reduce taxes on other things.

Charles Krauthammer proposed that we tax carbon and offset the taxes with across the board reductions in payroll tax.

Posted by: CJ at August 17, 2013 9:02 PM
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