Thursday, July 3, 2008

Locking-in green behavior

Ten observations related to how people are adjusting to high fuel prices, and maybe we can have a discussion.

1. "Peak oil" is on the digital lips of many progressive bloggers. This event, assuming it has happened, signals the start of a fundamental restructuring. The economy will have to respond by replacing oil with another energy input.

2. Progressive opinion leaders are observing, however, that the problem is not supply, and speculation is responsible for higher pump prices. This is borne out by events and expert opinion:

John McCain's Connection to Big Oil

3. Are we familiar with the concept of elasticity of demand? It's from Econ 101 -- when something is purchased at a certain level even when the price rises, demand is said to be more inelastic.

At a certain price, buyers begin switching to substitutes. For gasoline that point is about $4, and some examples of substitutes are transit, biodiesel, fuel efficient cars, and carpooling.

4. Assuming an Obama Administration ends the market manipulation, penalizes the oil futures market and sends key offenders to jail, the likely result will be oil and gasoline prices that fall back to the $2 - $2.50 per gallon level. The crisis will be over, and presumably so too will be the switch to substitutes.

For discussion: How do we get switchers to not go back to their old behavior?

5. I think appealing to personal sacrifice for the good of the planet is effective with only a limited demographic. Most people are working hard to make ends meet, and they need to get those things done in a way that is a balance of convenient, cheap, and fast. Thus, while we should continue to devote effort to consumer education and sustainability outreach as the carrot approach, a stick is still needed.

6. The key is that the dominant oil-based paradigm has struck the convenient-cheap-fast balance for a long time, and only now has lost the cheapness advantage. Idea 1: encourage conservation behavior now, by increasing the federal gas tax by a modest amount. This should be of a size big enough so that people notice it and choose to conserve, while being fair to those at a percentage of national median income to be determined. I propose 50 cents per gallon; it could be called the Green Fee.

7. Idea 2: allocate Green Fee revenue to facilitate conservation behavior.

Set a national goal for transportation energy use. The DOE already tracks this in a number of ways, I suggest energy per passenger mile (the energy required to move one person one mile), measured in BTUs. Buses and trucks use roughly 4000 BTU/PM, while cars use around 3500, and rail transit around 3000. (Bicycles about 1500.) But one reason people have relied on cars is that alternatives are not always available. Therefore:

8. Use a portion of the Green Fee revenue for infrastructure, incentives and innovation.

A. Give funds to jurisdictions to achieving average reductions, e.g., increasing ridership of existing transit systems through more frequent service or expanding hours of operation. B. Fund order of magnitude reductions, e.g., by expanding reach of transit infrastructure, broadly institute tolling, offer tax credits to employers who equip their workforces for telecommuting.

9. What if we set a transportation energy goal at 1000 BTU/PM? How could we get there?

For example, how would we lower rail transit's 3000 BTU/PM by two-thirds? Answer: you would have to triple ridership while holding energy used (existing service) steady. Commuters are the biggest growth market for transit, but rush hours are already high ridership and can't be tripled unless you take service away from non-rush periods.

Thus, the inescapable conclusion is that the current transit system must be enhanced with newer low-energy transportation technologies and approaches. There should be R&D on use of lighter weight materials -- what if a train undercarriage could be made with less steel? What operational practices could result in less empty vehicle movement and higher occupancy, without affecting service frequency? What if the roof of every transit vehicle was covered in solar panels? Personal Rapid Transit (800-1000 BTU/PM) falls into this broad category as well.

10. Change the paradigm underlying the other paradigms.

Another basic from Econ 101, probably from the first chapter of standard texts, is that an economy's basic inputs are land, labor and capital.

Some definitions include a fourth input, "enterprise." This had me scratching my head, as this is actually an old old practice that went away because it can't be quantified. Then I saw other references call it "management" and even "entrepreneurship." It feels like confidence-building therapy for middlemen, so I will feel free to ignore this fourth input.

Instead, I am tempted to nominate energy -- considered a factor of production -- as a fourth input. What doesn't take energy? It is not just consumed in production processes, but in many non-productive aspects of our daily lives.

Idea 3. Here's a long-term, transformative goal: a public, shared investment in clean, renewable energy. The sources can be as many as are viable -- solar, wind, tidal, geothermal, fusion, whatever. The important result is that by virtue of resulting from public investment, the energy produced (the input) could be free except for the cost of operation, maintenance and delivery (imagine a publicly-owned local utility that didn't have to pay for electricity).

And what would we do with the savings? Make a list. National health insurance, free college, free daycare...

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