Thursday, September 13, 2007

Shana Tovah, $80 oil, and fuel economy.

To all those who are aware that it is a new year: "Shana Tovah!" For all of the rest of you, Shana Tovah is not the name of a the deputy administrator of NASA, a presenter on World Poker Tour, daughter of Van Morrison, or a female reporter on 60 minutes. (You can do your own research if you are really interested and that clueless.)

As for $80/barrel oil: well, it's happened (briefly). Of course, this is (if inflation is accounted for) less than what the cost of oil was in 1980 (est. $100/barrel), but it does mark a certain level of concern for transportation, heating, and electricity generation. It hopefully will not mean that heating fuel costs will increase drastically this winter (partly because I have to pay for heating oil, but mostly because many people live in the northern latitudes of the world that will be unable to pay drastically increased prices for heating). I do not look forward to seeing news stories of people dying in their homes from hypothermia or increased transportation costs being passed on to goods, but these might well happen.

If social problems (e.g., increased incidence of hypothermia, increased cost of goods) emerge from these rises in the cost of oil, this may provide yet another nail in the coffin of business-as-usual methods of organizing our (in the industrialized North) fossil fuel use patterns as they are currently. I'm NOT saying that $80/barrel oil is the answer to solving the environmental/global warming problems, but may well lend itself to that path.

A side note on $100/barrel in 1980. While I understand that the current cost of $80/barrel is less than the equivalent price of oil in 1980, I don't personally believe that the comparison is one that can be made as directly as some might like. The geopolitical situation of the world is completely different today than 27 years ago. China, India, and Southeast Asia consume significantly greater amounts of oil. Oil production is not as controlled by OPEC countries. The United States imports more oil today than 27 years ago, and the trajectory is upward, while the production trajectory is downward, while per capita oil use has leveled off.

In somewhat related news (since the majority of vehicles on roads require some sort of petroleum), a federal judge in Vermont decided that, yes, auto makers can produce higher fuel economy vehicles without compromising safety, breaking any laws. This (hopefully) allows California and 14 allied states to move forward with plans of instituting state laws for higher fuel economy standards. And since these 15 states constitute over half of car sales in the country, this finding could become the basis of a nation-wide rise in fuel economy standards.

From the Detroit Free Press article:

"Detroit's automakers warned the judge during a 16-day trial in April of steep job cuts and financial pain if the rules stood. General Motors Corp. said it would have to abandon some states or risk missing the targets even if it spent $25 billion upgrading its vehicles.

But Vermont U.S. District Judge William K. Sessions said the industry failed to prove that the standards were too tough, would endanger drivers, or that Congress had forbidden states from setting their own fuel economy rules."

One interesting point is that the article mentions only "Detroit's automakers" warning judge (and the Congress) of negative consequences. I feel that Judge Sessions would have been more likely to find on the side of the automakers if "Detroit's, Japan's, and Europe's automakers" had warned the judge of negative consequences. However, the fact that alternate technologies are shown to be viable, the arguments of even two years ago ring hollow today, and the judge realized this.

So how does all this relate back to "Shana Tovah"? It doesn't. Honest. I just didn't want to have two separate postings.

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