People are blessed and cursed in my humble view with intelligence. But intelligence seems to be a widely varied thing. Admittedly this field is completely out of my area of know how, and lots of people who are in the energy and fuel field exceed me by far and some are strikingly good at thinking and seeing problems in useful ways.

On the other hand some people because they have considerable skill in writing and some sense of research ability to chase up some “facts” seem to think their opinion has value. But using a skill to skew information and form conclusions can be just irrational and damaging.

Geoffrey Stiles who writes the blog Energy Outlook is one of the best minds on the Internet and a huge asset to anyone seeking to grasp what the problems and opportunities are along with a distinct expertise in the market and production assets needed to keep energy and fuels coming the consumer’s way. Last Friday, December 5th 2008 Geoff wrote a blog post “Cheap Gas.” In the space of a short paragraph Geoff neatly covers the raw basics in plotting the future costs of gasoline in particular and as such a large part of a barrel of oil. Thus a future price for oil could be plotted in a general way.

I’m pasting the whole paragraph here as super smart as Geoff is he still doesn’t have or at least make available an easy to use means to link to particular posts. (Super Smart in one way isn’t Super Smart in others . . . scroll down his page to find it)

An interesting analysis of gasoline prices from the American Petroleum Institute puts today’s prices in perspective. Despite the precipitous drop of the last several months, the average price for 2008 should still tie the previous annual, inflation-adjusted high of $3.277/gal. for 1981. That makes today’s $1.81/gal even more remarkable. While it looks typical or even high compared to most of the years from 1982-2002, it appears quite low in the longer historical context. The question facing consumers and policy-makers alike is whether future gas prices are more likely to resemble the first two-thirds of 2008 or the last third, once the economy recovers. Setting aside concerns about Peak Oil, which has receded from attention, lately, the period coinciding with the lower gas prices on API’s chart featured a weak OPEC and steady non-OPEC oil production growth of around 1% per year. That looks unsustainable, even without the likely impact of $40 per barrel oil on new deepwater drilling and oil sands projects.

Geoff points out that while $1.81 feels really good today, the failing in sustaining that has some consequences. While the paragraph is a massive contraction of the entire picture it serves to point out a hard fact – energy and fueling from oil products is a market based in production driven by buyers.

Later Geoff says, So if $1.80/gal. gasoline looks unsustainably cheap, what should we be planning for? Eyeballing the API’s 1918-2007 gasoline price chart suggests the long-term average is pretty close to 1949’s inflation-adjusted $2.43/gal. Coincidentally, that’s consistent with the level implied by OPEC’s notional “fair price” for oil of $75 per barrel.

The buyers are all of us, rich and poor alike, completely across the globe. Thanks Geoff, very good work useful to millions of us.

Opposed to this is the Washington Post editorial that serves as my example of Irrational Thinking. The WaPo is a fellow traveler with the likes of the NY Times and other major media and press groups that have the temerity to suggest that what they think is better than what anyone else thinks. Its human nature, lots of people believe they are the smartest person, so its forgivable, but this sort of thing has no rational place in the discourse of making decisions either personally or at the level of small business, charity and other small organizations on to big business, state government and national policy.

The WaPo’s (unsigned) opinion piece starts off with “There is a certain unreal quality” that applies to the piece much more so than the discussion of the salvaging of the U.S. automobile industry. The opening paragraph offers that it’s “striking” that increasing gas taxes is not in the discussion. The answer to why many of us are not “struck” is that introducing an artificial market manipulation, capital investment and jobs destructor at this moment would dumber than drinking hydrochloric acid for pleasure. Geesh, as if a tripling of gas taxes is going to save the Big Three? The concept is baiting for a vernacular comment like “That’s insane!”

Somehow though, that bewildering notion is in print at the largest newspaper in the national capital. The reality is that for most Americans the personal car is their second largest investment and is only done a few times in a lifetime. Whether the automobile national sales are 10 million or 16 million, after government, big business, fleets, car rental and other large purchasers are taken out the actual sales to people buying new cars is a mighty small part of the 300 million or so of us people. Most of us are buying used vehicles.

The WaPo offers that Europe has much higher fuel taxes than the U.S. A fact, but what is left out is that lots of Europeans have concluded that fuel taxes are a dead end in the context of the whole economy. A perverse incentive, which is what gasoline taxes are, form perverse results. A cursory look at what is going on in Europe is that many have realized that taxing energy is a mistake; policy that guides is far more beneficial. That now readily available know how isn’t in the research at the WaPo or in their paper.

The suggestion that raising gas taxes 36.8 cents per gallon should make Americans fightin’ mad. Even more insulting is the offer that “A higher gas tax would buy valuable public goods: national security; a cleaner environment; and safer, less congested streets.” Whereas the facts from the past prove the new gas tax would make almost everyone poorer, enrich the government and their designated beneficiaries, destroy one of our basic economic industries, compel an increasing useful life of poorer emission vehicles, and deny many more Americans the freedom to move about on the streets we paid for so making it safer and less congested for the elite – like those of the WaPo who are part of the “inside the beltway” crowd so ignorant of the reality on the outside of the Interstate highway that borders their little territory.

I’ll grudgingly admit that as a group energy and fuel consumers are rather “point in time of purchase” guided about making decisions and repetition is the most likely means of influencing the long-term conduct of individual affairs. Life in a modern economy is packed with incoming blasts of decisions and explicit expertise in every case for everyone is an unreasonable expectation. As a group we could look to government, our combined power to make national directional decisions. But government seems to have been hijacked into the easiest and most corrupt form of cooperative directional decisions. The only tool in the box seems to be TAX!

There are lots of other ways to discourage or encourage decisions. The target should be, if reason is allowed room, to affect us with the devices we need to use: to be painful if inefficient and pleasurable if very efficient. That’s not so hard is it? The replacement of the “fleets of devices” would keep the economy humming.

But most of all, leaving energy and fuels alone or cutting their end user expense will make capital for almost everyone available to make the transition to more efficiency.

Nothing could be more daft or cruel than to tax energy and fuel themselves when the goals are more, better and cheaper. Never will everyone be wealthy enough to tolerate huge increases in energy and fuel costs as we just learned this summer without devastating results. But a transition to big increases in efficiency would get us were we all hope to be – unless you live in the reality inside the Washington DC beltway.


7 Comments so far

  1. Contrasting Intelligence With Irrational Thinking | New Energy and … | Cost Fuel on December 12, 2008 8:26 AM

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  2. The Economy » Blog Archive » Contrasting Intelligence with Irrational Thinking | New Energy and … on December 12, 2008 9:16 PM

    […] Its human nature, lots of people believe they are the smartest person, so its forgivable, but this sort of thing has no rational place in the discourse of making decisions either personally or at the level of small business , …[Continue Reading] […]

  3. Mertie Norwell on May 27, 2011 9:13 AM

    Thanks for posting. Good to see that not everyone is using RSS feeds to build their blogs 😉

  4. Joaquin Pov on September 13, 2011 6:55 PM

    I would like to say “wow” what a inspiring post. This is really great. Keep doing what you’re doing!!

  5. Chang Welland on September 18, 2011 5:54 PM

    I was just having a conversation over this I am glad I came across this it cleared some of the questions I had.

  6. Ron Walchli on October 4, 2011 5:31 PM

    Thanks for posting. Good to see that not everyone is using RSS feeds to build their blogs 😉

  7. Chet Pistilli on October 7, 2011 6:03 PM

    Great read. Thanks for the info!

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