Can we do it now?

If science can’t perform a miracle

then it’s time to drill.

I’m feeling rather superior right now still driving my 12-year-old 4-cylinder Chevy. It is completely paid for, starts every time I turn the key and routinely delivers 30+ mpg on the highway. Don’t misunderstand, I still get to experience pump-side sticker shock every time I fill that little bugger’s tank. However, I still haven’t broken the fifty-dollar barrier to do so…yet. When I watch the horrified grimaces forming on the faces of my pump mates filling their Escalades, Excursions and Hummers I have little pity. They wanted those bigger more powerful vehicles, hell they demanded them and Detroit delivered.

Men wanted them to be manly, housewives wanted them to be safer, kids wanted them be cool like their favorite RAP star. Now they are all paying for those decisions. Gas was relatively cheap then and consumers wanted what they wanted. The market responded accordingly. Now that gas is no longer so cheap you may be thinking, what can a poor consumer like me do about it? After all, we are unquestionably the final link in the long often-convoluted supply and demand equation. The answer is really quite simple, find a way that works for you to consume less.

That is how a market systems work. Americans are already driving far less than they were just a year ago. According to the Department of Transportation, we drove 11 billion miles less in March of this year alone. That is a clear market response to upward price pressure, others will follow. How soon they will appear is open to debate. It depends largely on how long gas prices stay so ridiculously high. One that will be relatively quick to rear its ugly head is dealer lots filled with SUV’s that nobody wants to buy. Shortly thereafter will be a precipitous drop in resale value of those same SUV’s and their slightly less thirsty counterpart’s mini-vans. No one will want to pay what it takes to feed them.


Demand for smaller more fuel-efficient cars is already escalating but like turning the mighty Titanic away from that iceberg, it will take time for auto manufacturers to swing their ship in this new direction. Those that are the most nimble will profit and the slowest will falter, this is another characteristic of a healthy market system. Government intervention will only interrupt the process making the slightest rub against the ice far more damaging. That is all it can do, that is all it has ever done.


Look at the fuel itself for verification of that last statement. Ask yourself honestly, who is responsible for our dependence on foreign oil imports? Who is responsible for funding expensive largely inefficient and environmentally toxic biofuel production? Who is responsible for halting development of our own domestic oil production instead leaving those untapped resources for foreign competitors to utilize? Who is responsible for leaving our refining capacity stagnant for the past forty years? Who is responsible for a new requirement for ultra low sulfur emissions in response to the enduring MYTH of global warming? The monstrous jump in diesel fuel prices is a direct result. Lastly, who is responsible for preventing competition in the retail market from allowing one gas station owner to lower his prices to draw more business to his pumps?

In my home state,Minnesota we have a very twisted idea of how competition works and have even passed legislation to make it fair. According to our legislature, retailers are not allowed to reduce their prices below cost to keep the big bully oil companies from working the market to drive out the competition. The government and not the guy selling the fuel sets the minimum price. They utilize a convoluted formula based on wholesale prices, fees, and taxes effectively eliminating competition. What could be more fair? By the way, if you are caught, selling your gas for anything below that minimum our commerce department will ruin you not the competition of the marketplace.


Obviously, the one thing that government can and should do is get the hell out of the way and let the market correct itself. As an example of the heavy hand of government making a situation worse just look at our current foreclosure crisis if you need further confirmation. Historically low interest rates over too long a period put people into homes they just couldn’t afford. The construction of new housing at blistering rates feed into the frenetic rise in real-estate values. Those same cheap lending rates allowed speculators to buy houses cheaply, fix them up and flip them for a quick profit. Every one was happy for a while until the market couldn’t sustain that kind of activity.


All of this frantic borrowing and buying applied immense upward price pressure for new and existing homes. It also encouraged homeowners to borrow against the souring equity they saw in their homes. Equity that was artificially inflated by the speculation craze until the bottom suddenly dropped out from under all of them. The market overheated and those that made poor choices were being hurt by them. All of them Lenders that made risky loans, homeowners that borrowed foolishly, and speculators who couldn’t recoup what they had spent on homes that they couldn’t sell profitably. The result? Homes abandoned by owners that could no longer afford the loans they took against their falling value and foreclosures climbing at an astonishing rate. Enter the government riding the white horse of fairness. Just as they had done during the S & L crisis of the 1980’s at an estimated cost of $124.6 billion to the US taxpayer the government intervened. As though nothing was learned from that real estate, driven crisis the federal government decided to prop up lenders and borrowers alike this time. Of course, they immediately reached for the taxpayer’s wallet rather than letting the market deal with the situation reaching its own equilibrium.


As a result of that earlier crisis, there were a host of expensive regulatory requirements forced upon lending institutions. Freddie Mac and Fannie Mae were given more responsibility to prop up mortgages for lower-income families all at taxpayer’s expense. We’re still paying for that lack of wisdom as both government sponsored private corporations were caught up in this crisis and are now looking to the government with an open hand. In the last mortgage crisis, the bailout funded by the taxpayer’s induced a clear moral hazard that encouraged lenders and borrowers alike to continue taking greater risks. They did so safe in the knowledge that the government would always be willing to ride to the rescue and keep the forces of the marketplace from crushing them.

Now lets go back to the gas pump and getting the hell out of the way. There may be one other way that the government could be of limited use. It can support competitive innovation and then step out of the way allowing a normal introduction to the marketplace. If biofuels were forced to compete in this way, they would disappear tomorrow. Government subsidies keep them afloat and not the profitability of their inferior products. What I am referring to is here is real technological advancements not shifting the burden of cost from your fuel bill to you grocery bill. There are already several examples of tremendous technological leaps available in the marketplace but most haven’t quite caught fire yet. Hybrids are one, but they still depend heavily on the gas pump and most offer lackluster performance. One little company in southern California has managed to step over the hybrids through superior technology and produce a world-beater…almost.

Tesla motors has managed to create a pure electric sports car that compromises damn little on the performance side of the balance sheet. It combines impressive styling with acceleration of 0 to 60 in less than 4 seconds and a top speed 125 mph. Unfortunately it suffers from many of the same old bugaboos that every pure electric car always has. Limited range, (around 220 miles) specialized charging requirements, and severe serviceability issues. If I bought one today I would have to ship it to Chicago for any service it might need. It is in production right now. I suspect that they will sell quite a few of them for their novelty value alone even if the company does not succeed in the long run. I won’t even mention the cost of initial purchase even when compared to the $.02 per mile operating costs it’s as impressive as the spec. sheet for the car. This is a nice start and accomplished with no detectable government subsidies if you can imagine that.


There has to be more that can be done though, I guess I just have a hard time believing that this is the very best that Americacan do. It will undoubtedly take someone a whole lot smarter than I am to do it, but even I can think of untapped energies currently wasted by my 12 year-old Chevy. Two obvious sources of energy we utilize to produce electricity every day are heat and motion but, what can be done with them? How can I harness their potential? Why aren’t they part of the electric car/hybrid equation? The exhaust heat alone from the internal combustion part of the hybrid’s processes should be enough to do something productive. There already is excess electrical energy produced by the engines electrical system that is discharged to the chassis. Why isn’t that captured for later use? There is excess heat developed in the engine as well. It’s currently dissipated into the atmosphere by your radiator. There is heat generated by your brakes, tires, and wheel bearings while you are tooling down the road oblivious to the phenomenon. Heat is generated almost everywhere on your car and no one that I am aware of is looking at it as a potential energy source to extend the range of a pure electric car or to boost the efficiency of a hybrid.

What about all of those vast expanses of sun baked metal that heats my car’s innards to 125 degrees? Is there no one in the vast scientific community in this country that can produce a durable solar collector making use of that potential deployment? C’mon, boys and girls the market is ripe for this kind of innovation right now. Where are you? OK forget heat transfer, forget sunlight, what about the science of motion? Why haven’t you developed something as simple and effective as that little generator rubbing on my bicycle tire producing the electricity that powers the night light? Aircraft have something they call a (RAT) that is deployed during emergencies to produce electricity. Its called a ram air turbine and only needs air movement to work. Even if the energy produced in any of these methods can't be used immediately to aide the vehicle's primary role why couldn’t they be stored for later use elsewhere. Automobiles are a festival of physical forces most of which have been ignored and thus wasted.

Perhaps science and technology aren’t the answer just yet. They can't offer us a silver bullet not even a tarnished one. Biofuels certainly are not the answer we've been looking for.We may be stuck with oil for many years to come and where the prices are heading for no discernable reason, we can’t keep sitting on our hands. Your car is much more than just transportation, in many ways it represents your freedom. I for one do not think any of us need less of that. All right then, let’s drill some more and refine a little more too. The only direct influences that can apply downward price pressure are increased supply and lower consumption. While exercising some sensible conservation,we must tap our own resources and refine as much as possible here. Oops…we ah…can’t. Our government won’t let us. It seems that they would rather we suffered the wild gyrations of the world oil markets. Yet another crisis that is in part fueled by historically low interest rates over too long a period. Borrowing money for speculation in the oil futures market costs virtually nothing and the profit potential is immense, as long as the prices keep going up. When the market correction comes for this one and it has to, it will be brutal. Will our politicians mount up one more time in the name of fairness trotting to the rescue waving bags of tax dollars? Really now, how could they possibly resist.