Balance in Drilling and Conservation

Today's Thomas Friedman's column, Thomas L. Friedman: Making America Stupid and a review of his most recent book, 'Hot, Flat, and Crowded' (great excerpt). Review, A Chilling View of Warming is interesting.

My 2 cents, Mr. Friedman is getting too strident, I believe there needs to be a balance. Mr. Friedman is full of great ideas and his analysis of the Middle East is excellent. I agree with him on the need for alternate energy expansion in the US, the question is what is the best method. In his latest book, he is suggesting forcing it by having higher prices for fuel, such as a gas tax. As well as expanding the solar market through subsidies, that would then produce greater cost efficiencies as production increases.

My opinion is the US needs to:

• Expand drilling offshore, such as in California, as well as allow offshore windmills.
• Set a floor on Gasoline, such as at $4 a gallon. For lower income families, have a rebate so this tax does not hit the poor unfairly.
  
• Make gasoline taxes a percentage of the price of gasoline, instead of being fixed. This allows the transportation budget to stay constant.
• Establish prizes for solar and wind efficiencies.
• Use federal financing to create an interstate DC Power Grid.
• Allow use of oil from oil sands in Canada.
• Establish higher mileage requirements for cars and trucks.
• Establish a plan to wean the US off of imported oil.
• Increase standards for building efficiencies.
  
• Establish tax credits that energy efficiency, unfortunately many businesses unless there is a one year payoff will not do the investment. I admire WalMart's quote, we are not green, it just makes business sense.
• Require solar thermal water heaters on all new houses where it makes sense (South West of the US for example).
  

On subsidizing the solar, wind, and other industries it depends on the cost. There is a learning curve that with increased production, there is a decrease in production costs. I believe every time there is a doubling, costs come down 10%. The issue is how to do this to limit the negative economic impact. And has the previous alternate energy taxes made faster a reduction in solar costs? Germany's huge demand on solar actually seems to have increased the cost of solar cells on a short term basis, especially the cost of silicon. Companies do need have a secure environment in order to do investments, or have a high rate of return. With the price of oil and natural gas being so unstable, this is an issue for investments. What is important is to have stable funding for R&D, instead of every time the price of oil goes up, R&D into alternatives goes up, and when the price of oil goes down R&D crashes. Just think where we would be if the R&D started under President Carter had been continued till today.

Past Related Posts:

• What If - Carter's Energy Policy
• Oil Production, Demand, Technology, and Prices
• Al Gore's Energy Plan
• Solar in the News