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So Which Is Best, Increase The Supply Of Oil Or Cut The Demand? Well, What About Both

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So Which Is Best, Increase The Supply Of Oil Or Cut Demand? Well, What About Both

As we all know, the world oil supply/demand ratio is close to "one," and any one of our foreign oil suppliers could cut production, spike oil prices and whack our economy -- and then there are the terrorists. A major cut could bring us to our knees.

No doubt we need to increase our own supply and cut our demand and do that at full speed in all ways possible. Big oil and the companies developing alternate sources are busy on the supply side, but for them to work at cutting demand would be insane. That leaves the government to deal with much of the demand side. It has been reported that cutting demand could have a major impact. It relates to increasing the efficiency of whatever consumes energy as well as conserving energy. The government has been funding programs to increase efficiencies. A tip of the hat for that.

Obviously, cutting back on our dependence on foreign oil should have been going on full blast for years. We know that part of the gas money we fork over to the gas station attendant funds terrorist and nuclear wantabe countries; we know all that outgoing oil money is a drag on our trade deficit and we know that our quarter share of all the world oil demand is an upward force on world oil prices dampening the whole world economy including our own.

With reference to increasing our own supply, we have kept falling back with just the drilling. Solar cells and wind mills are great and have been expanding here for years, but still only provide a few percentage points of our total supply and projections have them still down there. Biofuels have a lot of potential, but the farmers have to grow that stuff and feed us too. All that will probably provide just a dint as the population keeps growing and we keep buying more stuff that uses energy -- including more cars on the highway. After all, we're importing the major part of our oil. So, things are happening on the supply side that will help, but what about the demand side? For one thing, we haven't heard much about improving vehicle mpg -- a no, no for big oil.

Actually, developing new technologies to improve energy efficiencies of machinery and devices would add high end jobs, profits for the tech companies and create great exports in addition to cutting back on our demand. Other countries would be champing to buy the stuff to help with their own oil problems. The benefits could go on and on -- every one would be a winner, except perhaps those oil exporters that aren't always that friendly.

But then, the president, like the oil companies, has a distain for reducing demand. He demonstrates that in a couple of ways. He's cutting back funding for programs that have charters to develop the necessary technology and he has done nothing, zero, about encouraging folks to conserve energy.

The bully pulpit should be totally worn out from overuse as he preaches about ways to conserve and how we should be doing everything possible to do that as responsible citizens -- slow down on the highway, adjust the thermostat, turn out the lights, etc. He could be explaining that we should be doing something while our young soldiers are dying in Iraq and Afghanistan. Rather, he has done the opposite. He has explained that we should go shopping and carry on as usual. He must be thinking that an electorate that doesn't have to sacrifice will have a song in their heart for him as they step into the voting booth.

To expand on the above, highlights of a recent Business Week article follows that brings to light how the president is cutting back on programs that are chartered to reduce the demand for energy.

In the president's last State of the Union speech, he addressed the problem. He called for investment in technology to break our addiction to oil. But, just before a follow-up visit to the National Renewable Energy Laboratory, he found that the lab had just laid off 32 workers because of federal cuts. They had to scurry around and restore $5 million before the trip.

Federal funding across the board for efficiency is taking a major hit. Efficiency funding is being cut 17% from 2006 in the proposed 2007 budget and 25% from the 2002 levels. Research to help industry reduce energy is slated to be decreased and some programs are being shut down completely.

One example is about Charles Bates. After years of research, Charles is close to perfecting a more energy efficient method for casting engine blocks that uses 30% less energy. Charles is close to his goal. But, Federal funds are about to be slashed that are needed to complete his work perplexing the foundry industry. Then, a $6 million/year funded university program to help smallish companies is stated to have saved $40 million/year and trains new efficiency experts. That program is about to be cut in half.

Some states are trying to fill the void. California has been investing in efficiency. Now California uses the same amount of electricity, with its increased population, as it did in 1976. In contrast, per capita use in the U.S. overall has jumped 50%.

Efficiency advocates lobbied congress to limit damage to their cherished programs. They argue that a 1% drop in demand causes prices to drop 20%. The California Energy Commission states that setting efficiency standards for refrigerators alone is saving $20 billion in California, but then, the administration has failed to update those standards--a proven way to save oil and money.

End of Article

The president comes on very forceful when describing his intentions to do whatever happens to be his issue at the time. He demonstrates his toughness and perseverance. He's in charge and obviously going to get the job done. He came on strong as usual last year. He was going to invest in the technology to break our addiction to oil. We can remember that determined tone in his voice. At that time, as Business Week described, he was backing off from investing in the technology. We have to wonder about his thinking. We might ask the question, " how are big oil, the Republican party and our country prioritized by the president?" I think we know the answer to that one.

The president's thinking came into further question when we just heard about a Bill Maher interview. Bill interviewed the president during the first day of the Iraq war when Bill discovered that the president had just learned right then that there were different factions in Iraq -- the Shiites, the Sunnis and the Kurds. Bill said that after he expressed his surprise to that, the president responded asking, "Well, did you know?" Bill said he replied, "No, but I'm not president and I'm not starting a war."

 

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