Tuesday, June 20, 2006

Hyman: Don't Worry, Drive Happy

Mark Hyman’s a bit schizophrenic when it comes to the issue of oil and gas prices. A few months ago, he claimed that $3.00 a gallon gas was no big deal and didn’t have an appreciable effect on most Americans’ pocketbooks (most Americans disagree with him, but what’s new?). Last month, he was calling for a serious long term energy policy to help alleviate our dependence on expensive foreign oil (he didn’t, however, give any idea of what such a policy might be). His most recent editorial goes back to saying that the record profits of oil companies this past year are nothing major—just normal supply and demand ups-and-downs.

He might be right. While oil companies’ profits did spike to record levels, this doesn’t necessarily mean price gouging. The growing demand for oil and gas from countries like China and India are stretching the oil supply more thinly around the globe, and that’s going to raise prices.

But this explanation is far more frightening than price gouging. Fixing prices is illegal, and couldn’t go on forever without it being caught and remedied. The increasing demand for oil, on the other hand, can go on forever (or at least until the oil runs out) and won’t be remedied without a major change in priorities on our part.

Part of the problem is that oil companies have been allowed to merge into behemoths, reducing the competition among them. This is another example of what I call corporo-socialism—the reduction of competition by putting supply into the hands of a shrinking number of entities that are increasingly protected from the capitalist imperative to offer higher quality at lower prices and to continue to innovate.

But that’s a drop in the bucket compared to the larger issue of our reliance on global oil. If you haven’t already, I highly recommend seeing Al Gore’s An Inconvenient Truth. It lays out in stark and incontrovertible detail that our dependence on oil and other fossil fuels is not simply costing us more at the pump, but is a national security and health issue—indeed a *global* security issue.

Here are just a few, off-the-top-of-my-head, ideas that might help out. How about a tax rebate of 25% of the purchase price for hybrid vehicles? How about mandating fuel efficiency standards that catch up with the rest of the world (even China has tougher standards than we do)? How about aggressively funding alternative energy research? How about doing away with policies that increase, rather than decrease, our dependence on oil (such as drilling in ANWAR)? How about ending our national embarrassment and signing on to the Kyoto treaty?

Just a few ideas, none of which are likely to meet with Hyman’s approval. But if he doesn’t like these, perhaps he can offer some reasonable alternatives himself.

I won’t hold my breath, though.

And that’s The Counterpoint.

Hyman Index: 2.59


At 11:54 PM, Anonymous Herbert Birdsfoot said...

Hyman is almost correct (in a broken clock way) that the price of gas is determined by supply and demand. Where he is wrong is in implying that we are in the upside of a cycle. In reality, we will see greater upswings in price than down, due to oil production peaking and demand continuing to increase. I honestly believe that the free market is what is determining the price, but as Ted mentioned, this is not good news. We can't just lower the price as that would create a disincentive for conservation, we will have to come up with a way, as a nation, to use less fossil fuel in the future, since biofuels can only replace a small portion of the fuel we use. There are a lot of different ways this can happen. One would be to drive smaller cars, live in smaller houses, and re-structure our cities to require less driving, another way would be to reduce a growing portion of our population to abject poverty,with very little energy use, while another class continues to live in huge houses and drive huge cars through the urban sprawl. I wonder which method Hyman would choose.


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