What Our Remaining Oil Supplies Should Be For

It is pretty simple - if oil resources are finite, how do you gauge the value of different oil uses?  Ultimately, a use of oil should meet one of two simple criteria:

1. Does it reduce long term oil usage, as required by the reality of finite-ness?

2. Does it do something that nothing but oil can do?

Robert Rapier takes President Obama's reference to using oil to get off oil and expands on it in a recent column, getting right to the point with a potentially viable compromise:

So I propose a compromise where we open up some of the more promising areas to exploration, and then earmark some or all of the royalties to funding fossil fuel alternatives. Leases on federal lands should also be structured so that governments share in any windfall if oil prices skyrocket. One of the problems with windfall profits taxes is that they discourage investment in projects with marginal economics. But oil companies don’t plan projects with an expectation of $200/barrel oil. A lease that is structured to give governments an increasing portion of revenues at much higher oil prices will be unlikely to impact project economics for an oil company because the possibility of such high prices will be heavily discounted.

With the revenues, we could fund expansion of public transportation. We could provide a tax credit of $1,000 for each person who purchases a car that gets over 45 mpg. We could use these oil revenues to fund wind and solar power, freeing up natural gas that could then be used to displace petroleum in compressed natural gas (CNG) vehicles.

This should be a compromise with attractive elements for both sides. If we don’t agree to such a compromise, then what’s going to happen is that as prices continue to rise, so will the pressure to drill, and governments will eventually cave in to this pressure. But by failing to earmark the money for alternatives, it will just postpone the inevitable day of reckoning for oil supplies.

So, I endorse this suggestion from the President, as long as it is structured in the right way. It can’t be simply a new tax on oil companies that funnels money into alternatives, because that approach will have unintended consequences. By structuring it in the way I have suggested here, it has a good chance of 1). Gaining broad political support, and 2). Achieving the desired goals.

One of the reasons my blog doesn't spend huge amounts of time opposing various environmentally troublesome, high input energy extraction plans - natural gas fracking, shale oil fracking, digging in various hard to reach areas, etc... etc... is this.  First, I think there are lot of people who focus on that, and I'm better off using my resources to help people NEED less energy - that the anti-fracking or anti- drill-baby-drill movements are way light on people who actually will help you how to figure out a lifestyle that isn't dependent on those things.

Second, I'm a realist - as I've always said, we would shovel live baby harp seals into our furnaces by hand, while convincing ourselves that live baby harp seals enjoy it, as long as we feel ourselves without alternatives - the moment we say BUT I NEED IT we are addicts, jonesing for a fix and we'll do anything to keep warm, keep the lights on, keep the plate full, whatever.  In the great scheme of things, I think digging in ANWR and deepwater drilling, or local fracking suck, but the truth is that what is most urgently required is not to NEED them.  Rapier gets right to the point.

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I vote for WD-40

Thought your answer was going to be "Plastics!"

Which is actually better, I think. It's been a mainstay of the science fiction world for decades "my god, this planet is so primitive they BURN hydrocarbons; instead of making durable infrastructure with them..."

It may not be that obvious these days; since many plastic products are now designed to break/wear out; so you'll have to buy a new one. But in the early days of plastics; some were accidentally made well- nearly immortal and eternally useful. And yes, some of those companies did go broke, because of that. Maybe we could learn?

Remaining oil supplies should be used to 1) decommission all nuclear power plants, and 2) address and solve the nuclear waste issue. But this doesn't appear likely to happen.

Sorry. I cannot get past Reagan's "Government isn't the solution to the problem, government *is* the problem."

Every dollar in the American economy represents the energy consumption of someone, often bunches of someones. Each dollar diverted to the government retains that energy-expended burden,and acquires new burdens as government employees are employed, support families, travel from home to work, to meetings, etc. Call it carbon footprint, call it energy burden -- government expenditures can never lead to a balanced budget, nor to a sustainable energy basis. Too many industries depend on the continued *cheap energy* driven flow of government dollars to allow real change.

What I would like to see government do is to revamp zoning laws and provide tax preference to people living within 1 1/2 miles of work and shopping -- that is, a walking lifestyle. I think some changes might be in order, regarding number of people, children and adult, sharing a residence. Building codes that favor energy-neutral homes, homes that are naturally at a near-comfortable temperature most of the year -- as has been done in Europe.

@Brad K -

At some level everything is subsidized, though. And the dollars that represent energy consumption that go to large corporations also retain the same burdens you posit. The question is where those government dollars go.

Also government dollars aren't separate from the rest of the economy. That is, they get spent. Again. that's not much different from what happens anyway, but the difference is I get a vote on where they get spent. I don't get that vote from GE or Amazon or whomever.

Your idea about building codes is certainly a good one -- there are subsidies like that in place already in many cities, BTW, and back in the 70s there was a whole program to replace the old coal/oil-burning boilers that needed the oil truck to come by with more efficient gas units. (My own home was the beneficiary of such; as a kid I was shocked that the gas furnace was 1/8 the size of the old boiler).

And to promote public transportation (for instance) is going to require government involvement and dollars. Fact is, most places in the US have crappy public transit. It wouldn't take a lot to fix it, but it would require a reordering of priorities.

Governor Scott Walker of Wisconsin recently turned down federal money to link Milwaukee and Madison with the rail system; on that alone I'd vote him out of office. (See above about getting a say). But linking those two cities with the hi-speed rail link would mean that you could ditch the use of at least one airport. (It would mean the trip from O'Hare could be cut to a couple of hours to Madison, maybe less, and less than an hour to Milwaukee. You could have the airport in Milwaukee serve Madison). Again: priorities.

And none of this requires particularly high technology, either. The rail trip from North Carolina to NYC takes longer now than it did in 1948. I'm not talking hi-speed rail, I'm talking about technology we had 50+ years ago. And the one from Chicago to NYC is the same way (look up the old timetable sometime, and compare it with the one now). That's just embarrassing to me as an American, and there's no reason for it.

Which gets to the "need less energy" bit. There is that, and there are lots of ways to do that. I don't think most people are going to want to live like the Amish, but you can reduce the energy use of a lot of what we do.

"Also government dollars aren’t separate from the rest of the economy. That is, they get spent. Again. that’s not much different from what happens anyway, but the difference is I get a vote on where they get spent"

And if it is government spending, it comes back.

The government grant is spent, accruing tax payments back to the government.

That money (less the tax) gets spent and THAT accrues tax payments back to the government.

And that money (less the tax) gets spent...

Eventually, as long as the money is spent in the country, every penny comes back to the government.

This is something neo-con pundits refuse to see and why austerity measures, despite causing triple or soon quadruple dips, is being mandated.

"Thought your answer was going to be “Plastics!”"

There are organic sources of polymers that work just as well for almost all plastics.