What to do about the Price of Oil?

So what to do about the price of oil? Over $140 some months ago, with gas at $4, and now $30-$40, and gas back to $2. Four dollar gas got our attention. While the growth of man-made carbon dioxide in the atmosphere will fall during the current recession (one good thing), the collapse of the price of oil removes the immediate incentive to save energy (more efficient houses, cars, electric motors, industrial piping designs). Our dependence on imported oil is an economic and national security issue, as well as a biological disaster. From many perspectives, $4 gasoline made sense, no matter how painful it was. With their dispersed settlements and relative lack of public transportation, Americans will need cars for a long long time.

What we need is an old idea: a general tax on carbon. While raising the price of gasoline by ten cents a gallon a year in order to make cars more efficient and reduce our dependence on foreign oil would have made sense in the 1970s, when the idea of global warming was first being dismissed by conservative scientists, and OPEC was raising the price of oil dramatically, now we need a more general solution to the cost of emitting carbon. Suppose we put a floor of $100 per barrel under the price of oil and raised that by $10-$20 per barrel per year for ten years. After 10 years oil would cost $200-$300 per barrel. This would correspond to some very expensive gasoline (and electricity and heating oil). Half to two thirds of the money collected would be returned to people making (say) less than $125,000 a year, in a progressive way (so poorer people get more). This would also lessen some of the income inequalities that have developed over the last 30 disastrous Republican years. Expenses for gasoline, electricity and heat are ongoing, so reimbursements should be returned with the paycheck, perhaps through a reduction in social security taxes. (Then we begin to replace taxes on labor with taxes on resources, another step to a better world.) The rest of the money (a third to a half) would support schemes that reduced the output of carbon, and coincidentally reduced energy bills, such as insulating houses; buying more efficient cars (100 miles per gallon and up) and appliances; building public transportation; installing wind, direct solar and geothermal electrical generating systems. There are many way to leverage tax monies to support rapid changes in the energy system. Infrastructure generally turns over at 2% a year, so it takes about 50 years for a changeover in energy (or transportation) systems, but there are ways to speed this process up.

Similarly, other fossil fuels (coal, natural gas) should have a price floor put under them, equivalent, in terms of the carbon their burning produces, to that of oil. With such fuels, the economic and natural security issues are not as great as with oil but their potential effects on climate are the same and their effects on the landscape are the same or worse. Such a price floor would immediately make coal uneconomic, compared with gas or oil, since the fuel contains so much more carbon. Since coal generates a considerable part of the electricity in the United States, a price floor would have to be phased in slowly, so as to let coal generation disappear as other sources of electricity (sun, wind, all those saved negawatts from insulating houses and installing more efficient equipment) take over. To survive, coal plants would have to become much more economically efficient, selling their waste heat (60% or so of the energy generated from the burned coal) to district heating systems or industrial installations; separating and selling the metals scrubbed from their stacks; selling their slag for aggregate for building blocks; their fly ash to make E-cement. Most of the schemes for sequestering their carbon dioxide seem to be dangerous or unworkable but the gas could be used to manufacture magnesium carbonate building blocks (more mining!), in which it would be chemically locked up. Of course this ignores the havoc the mining and transportation of coal involves; and that much of the energy in the mined coal will be used up in its mining, transportation, combustion, mine cleanup, the cleaning of the flue gases and the storage of the carbon dioxide. Estimates vary, running from something over 50% to 90% of the energy available in the coal. But such a plant would be as green as a coal burning plant could be.