Moving beyond oil [TRANSCRIPT]
MB: Lisa, you’ve talked about how the price of oil is sort of a shell game. That it’s kept artificially low, and as a result we’ve created a non-responsive consumer market, which makes it difficult to develop the political willpower necessary to make change. If that’s the case, then how can this transition from oil happen?
LM: We really need the political will to make the change. We already have this preponderance of information about greenhouse gas emissions and climate change. And we had this very weird, disastrous summer — this enormous oil spill at one of just 50,000 wells that are in the Gulf of Mexico, which is just one of many, many regions of the world that supplies oil to the United States. We’re going to need to think out the implications of where we’re going, and really make the decision that we’re going to change policy. Waiting for the oil to run out, or for some sort of signal to arrive, saying “the oil is running out” is a) not going to happen, and b) not going to give us the time to change in the way that we need to.
The E.U. does have some interesting greenhouse gas policies in place. I believe that by 2030 many of their vehicles are going to need to have zero emissions. That, combined with the high gas prices there, is ultimately creating pressure to supply vehicles that can meet those needs. In the U.S. we don’t have similar pressures. A sort of high-efficiency vehicle here is basically a vanity project — a Tesla for the high rollers, and a Prius for the medium-rollers. So we’re actually going to have to decide that we have to do this. The idea of waiting for another huge disaster [to motivate change] is rather scary given that we got almost nothing done policy-wise out of the massive [Gulf oil] disaster this summer.
MB: So we have to make major political decisions in the absence of normal market pressures, such as soaring oil prices?
MB: You’ve all talked about how any transition from oil — whenever it begins — will be long and gradual. If you had the power to make that transition happen, what would you do? And what would your solution mean to the average American consumer?
GS: I tend to shy away from grand plans, but if you made me king for a day, I would set goals but not be prescriptive. I think we focus far too much on pathways, and not nearly as much as we should on outcome. We need to reward people for achieving what we want to achieve, not for achieving it the way we want them to achieve it.
We need to recognize where current technology is good enough — and there’s a number of areas where that’s already happening — and where we just need to wait for a big improvement. I want to see fewer handout grants to unproven companies and technologies. It’s very much up in the air whether electric vehicles are at the point where they’re good enough. We’re going to find out shortly whether people will be satisfied with a vehicle that can only go 100 miles before you have to recharge it for many minutes, or more likely, many hours. The market is going to have to render judgment on that, rather than experts and lawmakers. I would focus on the goals, on the outcomes, and worry much less about telling people how to get there.
MB: How about you, Severin? How would you make the transition happen?
SB: It has to be based on government policy. You need to recognize the real cost of using oil in the price, which would mean a much higher price for oil and gasoline. Politically I don’t think it’s feasible, but I would increase gas taxes by 50 cents every year until they’re about $3 or $4 higher than they are right now — at least. And looking at Europe, even that isn’t really going to make the change we need.
At the same time, we need to invest in the basic science. Not the roll-out of one technology over another, but the basic scientific research we need to bring biofuels to market, to bring batteries to market, to bring all of these alternatives to market. We haven’t been doing that for the last decade. We’re starting to now, but of course, that’s basic science so it’s a long process.
Putting those together would move us naturally off of oil over the course of decades. Would it be electric cars? Would it be biofuels? I don’t know. It would be important to do careful analyses of their impact on geopolitics, on the environment, and on macroeconomics. For instance, we may run into a lithium constraint if we start relying on lithium-ion batteries. So thinking carefully about those is going to be very important. But we’ve got to get started. We are starting to see greater investment in R&D. The public seems willing to tolerate that up to a certain point. But we certainly aren’t seeing accurate pricing of conventional energy. And I’m not sure how to make that start.
MB: Lisa? Thoughts on how to speed the transition from oil?
LM: We need to raise the gas tax. At the same time, we can’t do it too quickly, because it’s really going to clobber the lower-middle class people who are commuting to three jobs in an old car. So there’s a couple of things we need to do. One would be to raise that gas tax very slowly and incrementally every year. Also, do some sort of advertisement on the pump or on the receipt that talks about the external costs of gas and why we need to cut back. So you’re raising consciousness at the same time you’re raising the price.
At the same time, we have a lot of perverse policies in place. We have air traffic control policies that waste hundreds of millions of gallons of fuel a year. We have a one-size-fits-all insurance policy so that a person who drives 15,000 miles a year pays the same as someone who drives 2,000 miles a year. We have, as they say in the mortgage business, “drive until you qualify,” meaning that you drive farther and farther out into the suburbs until you find a house where you can qualify for the mortgage. All of these policies incentivize the extra burning of gasoline. And the National Academy of Sciences estimates that every gallon of gas you burn in a passenger car creates 28 cents in pollution and medical care costs.
We also need new ways of getting people to work. Whether that means giving large tax breaks to employers for vanpools and carpools and incentives for working from home, I don’t know. But all of that needs to be incentivized and encouraged because it’s not about just changing the vehicles and changing the technologies, it’s about changing the modes we use.