As Crude As It Gets

Well, lately I have been obsessed with all things oil-related. People have also asked me whether my rants against taxes in general and gas taxes in particular imply that I have some other solution to the energy problem up my sleeve. Or perhaps it is just that the constant rain on Oahu is making my brain go soft. Well...the rain is a problem...but let's see what I can come up with.

First of all, every problem doesn't necessarily have a solution regardless of what homely wisdom says. Sometimes the choice is between things that make the problem worse and things that delay the inevitable.

The simple truth is that given the world's population and level of industrialization, there is no solution to the energy question that can preserve both. In the long run, that is. Oil has to run out some day, and there is no known source of energy which is so abundant and delivers quite the same punch. We will have to go back to a less-mechanized era one day and the world's population will have to fall accordingly. So...do we let it fall due to famine and disease or by gradually declining birth rates? How does one soften the blow?

I cannot think of anything other than more fuel efficiency really - but not via higher taxes. My route would be regulation norms on fuel efficiency, that increase yearly upto some sort of limit close-ish to the Carnot cycle (100% is theoretically impossible by the second law of thermodynamics). Coupled with naturally increasing oil prices due to free market trading, this should be enough to delay the inevitable by several decades.

There is a small problem with all this though: the US auto industry as represented by GM and Ford is in no shape to comply with fuel efficiency norms. Both corporations presently enjoy junk bond status on the fixed income markets, which basically means that you should be even more wary about lending them money than to the government of Guatemala. These guys just do not have the technical or managerial capacity to make such a big turnaround in their standards. However, together they employ about 300,000 people in the US alone, plus several hundred thousand contract employees (hourly wage etc). No politician in this country is going to do anything that might put these guys out of business.

How did these companies get into this mess? The short answer is "MBAs". They ignored their technical workers, engineers, designers et al and brought in freshly minted line management with no understanding of how a car is made. Then they proceeded to insulate top management from the rank and file of the company. And now they are worth so much crap...

So, what happens next? Well, the rest of the world should go ahead with better fuel efficiency standards. This will allow the Toyotas and Volkswagens to really shoot for across the board mileage improvements (not just the Hybrid - all of them) and the rising price of oil will naturally cause US consumers to shift to those cars. Instead of a timeline to death, GM and Ford will just wither away gradually.

What if none of this works? Then maybe there is no solution after all. I already have my plan - gonna be a glow-worm farmer when the lights go out...heh...