King For a Day: All the MONEY, All the POWER, All the Headaches - We Ask YOU To Solve Our Problems

Dinner with friends on Friday night spurred the question I am going to pose to you today, and I think it fits well with other topics we have discussed and argued about here on AutoSpies.com.  In case you haven’t noticed, we as a country are in a little bit of an economic slowdown (I’ll even grant you a recession if you insist) and the price of everything is going higher and higher it seems almost daily.

Of course one of the most noticeable items is the price of a gallon of gas.  Even when adjusted for inflation, the cost of gas is higher than it ever has been with the exception of the early 1900’s when the automobile was in its infancy.  Whether you like the fact or not, oil is the lifeblood of our economy.  It makes the world turn, it makes our economy turn and without it we would catapult ourselves back into a depression that would make the 1930’s look mild by comparison.

And therein lies the question.  Everyone and their mother seems to think they have a solution to the problem, but the truth is there really isn’t a great solution out there.  T. Boone Pickens has been running commercials touting wind energy coupled with an increase in natural gas usage.  Others in Congress have been pushing for off shore drilling.  ANWAR has been a battleground for years as different politicians have looked to increase domestic production while decreasing our dependency on nations who for the most part hate us.

Now let’s be really clear here, this is not a discussion on politics, this is a forum for the discussion of ideas.  If you were President of the United States, what steps or proposals would you take to solve the current energy crisis and to prevent a future energy crisis from occurring?

As we sat around and ate dinner on Friday night, the topic of gas mileage came up.  Seated at the table was a friend of mine who although technically retired, still dabbles in his trade as a chemical engineer.  He is one of the best at what he does, so he still travels frequently as part of his “consulting” role he plays.  He drives a Mercedes E350 averaging 20-MPG.  Another friend seated at the table who was wildly successful in business traded his Mercedes S-Class for a Honda Civic.  Bragging about the 32-MPG he averages he declares that fuel-efficient cars are the future.  I am the lone man out seeing as the M3 I currently drive has a hard time breaking into the 17-MPG arena, and as such I spend a lot more time at the gas station fueling up.

So here is the question, If you were King for a Day (or a week, month or multiple years) what steps would you take to solve the current energy crisis?

Notice I made you King as opposed to President.  A King rules supreme, the President has to go through Congress and the Senate; as such I am giving you a fast track ticket to solutions versus current political posturing and rhetoric.

The thing to remember is just like they say, Rome wasn’t built in a day, you can’t fix the problem overnight.  Mandating everyone switch to small cars or hybrids or public transportation is fine, but remember there is a cost that must be absorbed by someone, and in doing a mandate like that don’t forget all those who still owe on current cars or who simply can’t afford something new.

So give it some thought (it won’t hurt, I promise) and throw some ideas out here.  I am not saying the readers at AutoSpies.com will solve worlds problems, but a good discussion with some good ideas can go a long way to helping see the problem from others perspectives.  And who knows, there just may be someone with some authority reading who can help make a change.

If YOU were King for a day, what steps would you take to sole the current energy crisis?

M53R - 7/27/2008 9:46:48 AM

0 Boost

They owe you money? I dont remember them asking for help... All I remember is some country tried playing hero ( as usual ) and got their a**es kicked.

EnnNorak - 7/27/2008 6:22:03 PM

+2 Boost

You don't need 50 years to develop synthetic fuel. The technology is already here. In a few more years we will have much cheaper solar cells and microbially produced biofuels made from non-food plant material.

We should line the Nevada desert with solar cells today (even if they are expensive) because that would produce enough energy to significantly reduce world oil and coal demand and therefore drop prices to the point where the oil and coal companies will panic. Guess which politicians will be against this idea?

M53R - 7/27/2008 9:56:43 PM

+1 Boost

I dont think I need to read any news when I have it live.

thisismyname - 7/27/2008 9:40:58 AM

-2 Boost

well when your "king" is getting his and his families pockets stuffed because they see an end to oil dependency... You are right there is no supply/demand issue, it is simply a case of the typewriter salesman jacking his prices because the computer is coming..

Bush and the BinLadin's families are buried in in oil, do you really think they will allow natural the progression to happen? Our oil dependency keeps their families alive... Take away oil dependency and where does that leave the middle east? Not a bunch of princesses getting rich off the rest of the worlds money, they may have to actually do something for themselves, instead of living off North American money.


If I was King, screw the 10 million prize for low milage gas run cars.. We give the saudis over 200million a year for gas, throwing ten million dollars out for a competition is a sham... 500 million dollar prize, world wide audience, natural energy prize.. Thermal energy, harnessing wind, water, air pressured engine, etc...

They are trying to figure what controllable resource they can shift energy development to, it's not a problem getting free power... It's getting the people to pay for it on a regular basis. Where would the oil/energy companies stand?

This is like the days of the Pony Express, there is no more use for you oil companies anymore... Do you think they will let their 100's of millions of dollars leave that easily?

09CTSVforMe - 7/27/2008 10:35:40 AM

+4 Boost

"There is no supply/demand issue"

Really? Do you really believe that? Do you mean domestically, because if you can't see that as a real, global issue, then I am definitely not voting for you to be King (apologies to Monty Python).

NARunner - 7/27/2008 10:45:55 AM

+6 Boost

Enough with the conspiracy theories. Based on your comments you obviously have no idea how energy markets and the economy work. The Saudis aren't just "lucky" that they stumbled upon some of the largest oil reserves in the world. They have parlayed their oil money and businesses into different industries (banking, retail, real estate, etc.) and become savvy business people who have reinvested a lot of their oil money in AMERICAN companies. Your simplistic and naive views are just that: too simple and too naive.

NARunner - 7/27/2008 10:36:06 AM

+2 Boost

00J,

Thanks for spurring an interesting discussion on this site for once. It's a welcome change from the bickering and arguing over brand names (not necessarily the result of your articles, but just in general).

That being said I agree with the push toward fuel efficiency. I think fuel prices and the oil "crisis" has been blown wildly out of proportion. We aren't out of oil, not even close. We may be close to the end of cheap and easy oil, but there is still plenty of it out there. It will take some time to utilize the technology to tap these other sources affordably (shale, oil sands, etc.), but the oil will be available. In addition, the gov't will end up giving the OK to drill domestically.

That's not to say in the long-term that hybrid, hydrogen, electric, and NG power aren't good sources of energy, but I think we should let economics play this situation out.

It will be an interesting time for the energy industry. Oil companies may be forced to diversify depending on consumer energy demands. If they don't, it leaves the door open for small outfits run by entrepreneurs to break into the industry, which is something that is hardly possible in an oil-dependent economy with the high barriers to entry. All in all, I think we're in an exciting time in terms of energy...not necessarily a "crisis". Then again, I am an optimist. The best time to buy is when things look darkest.

09CTSVforMe - 7/27/2008 10:46:54 AM

+1 Boost

I'll presume you mean King of the USA and that this is meant to address the issue domestically.

Gas is still cheap here (ask the Canadians and Europeans). I would do the following three things:

1. Tax gas an additional $1.00 per gallon. In addition to the Guvmint getting the extra $$$ instead of the oil industry, this will accomplish reduction of use and increase national income to pay for...

2. Significant investment in public transportation and rail infrastructure to give folks an alternative to drving their car. Subways, trams, and trains modeled after Germany. Already here in Dallas you can see the impact on the highways that has resulted from many more people cramming into the DART transit system. Expand it now and fast!

3. Lose all the crap regulations regarding domestic drilling and (even more so) nuclear energy. Face it, these things take time to accomplish, but so will implementing a useful alternative energy. Generate electricity via nuclear plants, and there is no need for wind farms (although I am not against them). Cheap electricity along with Tesla-like auto development (and design!) can take over the auto industry by the time the oil runs out (or China & India buys it all).

I know there is more to it than this, but these ideas would have a profound impact.

09CTSVforMe - 7/27/2008 10:52:49 AM

+3 Boost

Addendum: If we find an alternative way to get around, by the time we develop the domestic oil production, we can make a fortune selling it to the rest of the world in 50 years when all the other wells dry up. We'll sell them all our oil for $2000/barrel and when that is used up, we'll sell them our alternative transportation technology. This will ensure US economic superiority through the 21st century & beyond.

09CTSVforMe - 7/27/2008 12:07:25 PM

+1 Boost

Not if it provides them an alternative to the lifestyle they are stuck in. The idea is all about putting our national money to better use. Gas will be $5/gallon at some point. If that extra dollar only goes to the oil companies, they will be screwed. If it gives them a ride to work on a clean, pleasant transit system, they won't have to pay any tax and their expenditures can go to food or rent or whatever.

I've been poor, my friend. There are lots of ways even low-income folks can spend better. Many of them just don't realize it or make an effort.

09CTSVforMe - 7/27/2008 12:11:32 PM

+1 Boost

Looking back, the title of the article says "all the money" so in this hypothetical situation, there would be no need to add taxes.

There does need to be some inhibitor or incentive to drive people to reduce consumption though...

cdoke - 7/27/2008 1:40:11 PM

+2 Boost

This is probably not going to make me popular. I would do- essentially nothing. I am not without reasons for such a statement however. First, let’s get some things straight- 00J mentions the spike in real prices for oil, however, aside from temporary spikes in the 1970’s and now, the price of oil in real terms is slightly declining with time. If you apply the quality correction to the deflators then, depending on the degree, the real prices are essentially constant. The reason for the decline has to do with technology. This is demonstrated to an even greater degree for metals (except gold- gold is special), so while we have increasing scarcity, the prices are declining. Economist who study such things will tell you that we won’t be produce all the oil (as a heterogeneous resource it is not even subject to such an end) and won’t be frantic for it at the end either, we will stop producing oil because it will literally be worth NOTHING.

The spike that we have has is the result of the fact that oil companies, which operate under a fixed-stock constraint have to inter-temporally (through time) allocate their production in order to maximize their value. What this means though is that when unanticipated growth occurs, such as was the case with China and India, this forces suboptimal production of the resources and prices to spike. This occurs by virtue of nature and there is nothing anyone can do about it. Any information help that can be provided is already done by the EIA.

Forcing, and I do mean forcing, the production of our domestic oil is an absolutely horrible idea that will not help anything- it will exacerbate the problem and prolong higher prices. The path of least cost and maximum social benefit is one that produces the least cost, first. Any deviation from that scheme will cause systemically higher prices. Stability does not come from the centralization of production, it comes from multiple and varied sources of it, which help isolate it from force majeure. As a note, most of the United States’ imported oil comes from Canada. If then, at some future time, something largely unanticipated does happen, the United States has a massive (and it is massive in terms of the resource base) stockpile of oil. The nice thing about it is that it is effectively a stockpile, at least at the moment, because the technology involved in producing much of it has not been developed to the point to make it reserves. Although I would look into the permit approval period for the BLM and see if they need more employees, although they just received a personnel increase about a year ago.

As far as pushing through particular alternatives, the market is perfectly capable, by the time one funded by the government arrives it will have been beyond the oil market re-equilibration period effectively rendering it useless, except under very specific situations, and subsidies destroy social welfare. Furthermore, local markets have entirely different maximum solution

cdoke - 7/27/2008 1:42:38 PM

+2 Boost

by virtue of their physical location or other factors. The market is working away as we speak, people are buying more fuel efficient cars, and every email I have received from Oil and Gas Financial Journal states that crude prices are declining. Granted, there is a lopsided effect between crude prince increases and gasoline prices and crude price decreases, but I won't get into that. The only time is history that the market has failed to handle scarcity issues is when the government sets price caps. Incidentally, the market, as such, is not its own entity; it is an emergent behavior that results from free peoples perusing the betterment of their lives. As far as mileage standards for cars, I think the car companies have received the hint, the ones that were most reliant on larger vehicles, are in the most trouble. Some genuinely need larger vehicles while others do not.

Let it all be done as written.

-HRH Cdoke

AgentOrange - 7/27/2008 3:30:50 PM

+1 Boost

1. Build as many Nuclear Power plants as may be required to produce all of the energy needs that can be supplied through electricity.
2. Build all vehicles from here on out with dual power capacity (hybrid) - gasoline (or diesel) and batteries.
3. Kick off a 10 year Manhatten project to develop a practical, efficient, cost effective and safe hydrogen
power cell for homes and vehicles.

BMW995 - 7/27/2008 5:47:00 PM

-1 Boost

Multiple solutions are required for this problem:
Immediately add $0.15/gal as tax and increase this at the same rate for 10 yrs. This would keep a portion of the $$s in the U.S. rather than the oil-producing nations.
Dramatically increase the gas-guzzler tax for low-mileage vehicles (meaning SUVs). The U.S. has 4% of the world population and we consume 25% of the world's oil production. Kind of arrogant on our part.
Lower the emission standards for vehicles. The current standards penalize high mileage cars such as diesel unfairly. The latest emission standards are too strict for what it costs to achieve them.
The Pickens Plan for transfer of natural gas to transportaion and increase wind farms is a good start, but not enough.
Start reducing the weight of vehicles. Weight creep is around 3.5%/yr for auto weight. Rediculous for mfgs to keep inflating the mass of cars every year - a lot, though is due to govt. safety stds which may have to be relaxed somewhat. An eight yr old Geo Metro gets 55 mpg highway - let's go back to making cars like that, except updated.

gooch - 7/28/2008 9:10:01 AM

+1 Boost

It completely baffles me how people think just because the US consumes more oil than any other country that it makes us "arrogant."
How are we arrogant? Dammit, we're the only superpower left!
How did we get to be a superpower? Because we have more industrial might than any other country in the world.
How did we get all this industry?
Because industry drives the world, literally, and much of our citizenry has benefited from it.
Now, I'm not saying that we should sit and do nothing -- quite the opposite, as a matter of fact. As your king, I would mandate the immediate build of solar and wind farms on royal lands in the deserts of Nevada and California, while opening up the ANWR to exploration and drilling (but ensuring the flora and fauna are not harmed). I would also open up coastal waters for exploration, heavily fining any company that suffers from spills.
I am not an advocate of mandating Geo Metro-type vehicles just because they get good gas mileage. Face it, those things are horrid to drive, and driving is why all of us are on this site. Instead, I would mandate city planners to make public transportation better and more easily accessible for everyone, with enough trains and buses to make overcrowding a non-issue (hopefully).
I am not an advocate of lowering speed limits either. Instead, I will mandate real driver education, with an emphasis on safety and an understanding of the fact that sometimes, you get where you're going faster if you go a bit slower. My mandate is that all interstates widen to three lanes on both sides to help alleviate traffic, and six lanes within 20 miles of major metropolitan areas. Face it, all you goobers who yammer on about gas guzzlers, blah, blah, blah -- when you're sitting in 0 mph traffic, you in your car, the Prius next to you and the Hemi Charger on the other side of you are all getting zero mpg. When traffic is flowing, everyone is doing 2000 percent better.
In fact, I would raise the limit to 80 on rural interstates, because traffic flow is more important than everyone creeping along at 60 with road rage. However, at 80, there will be a hell of a lot of troopers enforcing it (creating more jobs), so if you find that 80 is too slow, then be prepared to pay.
I could get a lot deeper, but I won't.

gooch - 7/28/2008 9:11:28 AM

+1 Boost

When I asked "How did we get this industry?" I should have actually answered the question -- we got that industry by using cars, trucks and buses to tranport people, goods and services to places where none existed.

chewy - 7/27/2008 11:39:50 PM

+1 Boost

more rail, it's obviously not possible to deliver everything by rail, but maximizing rail transport can save energy. it's many times more energy efficient than a semi

electric rail is even better as it removes most of the emissions

michal1980 - 7/28/2008 8:46:17 AM

+1 Boost

The simple plan would be:

1) Allow domestic drilling just about anywhere with 2 conditions. The country is allowed a cut of the oil, thats above the cost of drilling. And compaines need to set up a fund (not an iou fund, real money) to restore the land back, after the oil has been used.

1b) along with oil drilling, i'd allow more coal mining, oil shale mining, etc, using the same conditions as 1.

2) use money from 1 to help set up new sources of electricty generator, a massive combination of wind, solar, geothermal, nuclear, tidal, etc. areas should just be set up as energy areas, I'd say ignore the birds, let them EVOLVE to ignore wind turbines, etc.

3) use money from 1 to help fund research of renewable bio-waste, / non food crop, sourches of 'fuel'

rocker - 7/28/2008 2:36:32 PM

+2 Boost

I would say that I would need to build a time machine and go back to pre 1973. The only way to get this completely under control is to return to a time before all this began.

Threepoint1415926 - 7/28/2008 9:27:31 PM

+1 Boost

ditto!