The American people are stupid

Submitted by Floater on Sat, 11/10/2007 - 1:19pm. Tags:

Economics and Business

The American people are stupid. A provocative statement that's sure to
provoke a strong response from some. I'm not a politician though so I
don't have any need to tell the American public how wonderful they are. One of the reasons the American people have been able to get away with being stupid for so long is because they have for the most part been insulated from the cost of their stupidity. There are exceptions here and there (e.g. people who thought that the real estate boom would go on forever) but when it comes to the grandest stupidity of them all the American public has not had to pay a price for being stupid. That's about to change. I am speaking of course about energy policy. Oil is approaching $100 barrel as I write this. Unlike previous price spikes which were caused by political issues (e.g. wars or boycotts) this one is because there is simply not enough oil available to meet demand. At this point economists would respond that the high prices will lead to increased production which will reduce prices. Unfortunately that's not happening. World production has been flat for 2 years now even as prices have skyrocketed. The fundamental problem with the economists view is that the world does not in fact produce oil. It's a finite resource that we extract. Big difference. When the resource is gone it doesn't matter how high the price goes you won't be able to extract any more.

But back to the stupidity of the American people. They are not happy with energy prices right now. They're about to get a lot unhappier though. China has started to experience fuel shortages. China has a lot of American dollars to spend. The price of oil is going to go much higher. None of this was particularly hard to foresee and in fact it's been predicted for nearly 40 years. (Google Peak Oil for references). US political leaders don't seem to have been paying much attention but of course that's because American voters have not been paying much attention. They've purchased ever larger cars and SUV's, built ever larger houses farther out in the suburbs and generally acted as if the party would go on forever. Part of their stupidity has been because they listened to analysts pundits and experts who kept reassuring them that there was nothing to worry about. One of the most prominent of the so called experts is Daniel Yergin of Cambridge Energy Research Associates. You can hardly open a newspaper these days without reading a quote from Mr. Yergin claiming that oil prices are going to go way down in the near future. It's odd that he keeps getting quoted. A review of his record over the last 7 years is pretty dismal. This graph outlines it nicely.

http://home.entouch.net/dmd/cera.h2.jpg

The full story associated with the graph can be read here.

http://home.entouch.net/dmd/cera.htm

Mr. Yergin is not alone. The OPEC countries, oil companies and their allies in politics and think tanks (mostly conservative leaning) have done a wonderful job of stopping the US from enacting a sensible energy policy for the last 30 years. The domestic automobile industry and organized labor also share part of the blame but the ultimate responsibility lies with the American public and their willingness to be duped. President Carter started the US down a sensible path but the problem was that he was not telling the American people what they wanted to hear. A president with better leadership skills might have
been able to overcome this but Carter did not have the necessary skills. Reagan had the skills but not the necessary sense and he preferred to tell the public what they wanted to hear. Since the oil shock at the time was due to political issues it eventually resolved and oil prices crashed. With no pressing impetus from high prices and with no strong leadership from the top the policies that Carter initiated were mostly discarded and the US is paying for that now (and will be paying a lot more in the very near future).

So here we are. We've got a rough ride coming up. Technology exists that can solve our problems. Unfortunately all of these technologies have a long implementation time. Vehicle mileage can be drastically improved and it will be improved but the average lifetime of a vehicle is more than a decade. Land use patterns can be changed but that takes even longer. Biofuels and alternative energy can replace oil but again there is a long lead time before they can make a significant contribution. Government policies could have been structured over the last 20 years so as to minimize the transition costs but that was not
done. It needs to start but unfortunately we are unlikely to see anything happen until the situation gets much worse. Some people are finally starting to take notice though. The International Energy Agency which up to now has put forth rosy energy forecasts finally
seems to have woken up and realized that the world is facing a serious problem in the very near future.

Demand destruction in the form of recessions/depressions may temporarily lower prices but everytime the economy starts to recover prices will skyrocket and the cycle will repeat. The severity and duration of the disruptions will depend to a great extent on how soon the US (and the world) starts to seriously address the issue. All sorts of political and economic changes are in the works. Interesting times indeed.

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Oil has risen in price... (#67453)

by locutas on Wed, 11/21/2007 - 3:02am

but the US dollar has dropped, more, in value. In most world currencies, oil has only gone up about 15% over the last couple of years.

John Spragge
Peacemaker, student, web-log author
...the truth about atrocities... is that they happen

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We're running out of oil (#66508)

by Joe on Wed, 11/14/2007 - 11:39pm

and yet our domestic supply is artificially restricted. Maybe we stupid Americans are just waiting for the price to really skyrocket before tapping into known reserves inside US territory.

Will crush dissent for food

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Domestic petroleum reserves are inadequate (#66522)

by Bill White on Thu, 11/15/2007 - 12:28am

Canadian shale oil, on the other hand, is viable provided oil stays at ~$100 a barrel.

By the way "peak oil" does not predict we run out of oil, it merely predicts we run out of cheap oil.

= = =

Glenn Reynolds offers a link to Bob (Case for Mars) Zubrin and his touting of flex fuel vehicles based on methanol, which unlike ethanol can be readily produced from just about any organic product, including our farm waste streams.

The world economy currently runs on oil, a resource controlled by our enemies. This threatens to leave us prostrate. It must change—and it can change, quickly.

Saudi Arabia is the primary global financier of the Islamist terror cult. Until the Saudis started racking up billions in inflated oil revenues in the 1970s, the Wahhabi movement was regarded by Muslims the world over as little more than primitive insanity. Without rivers of treasure to feed its roots, this horrific movement could neither grow nor thrive. It is the Saudis’ unlimited funds—over $200 billion in foreign exchange earnings in 2006—that have allowed them to buy up the faculties of the Islamic world’s leading intellectual centers; to build or take over thousands of mosques; to establish thousands of radical madrassas, pay their instructors, and provide the free daily meals necessary to entice legions of poor village boys to attend. Those boys are indoctrinated with the idea that the way to get into paradise is to murder Christians, Jews, Buddhists, Taoists, and Hindus (not to mention moderate Muslims). Graduates of these academies are today killing American soldiers in Iraq. Meanwhile, Arab oil revenues have underwritten news outlets that propagandize hatefully against the United States and the West, supported training centers for terrorists, paid bounties to the families of suicide bombers, and funded the purchase of weapons and explosives. We have been subsidizing a war against ourselves.

And we have not yet reached the culmination of the process. Iran is now using its petroleum lucre to fund its nuclear program and to insulate itself from economic sanctions imposed on it. Once produced, Iranian nuclear weapons could be used by the Iranian regime itself or be made available to terrorists to attack U.S., European, Russian, or Israeli targets. This is one of the gravest threats to international peace and stability—and, again, we are paying for it ourselves with oil revenue.

Our responses to these provocations have been muted and hapless because any forceful action on our part against nations like Saudi Arabia and Iran could result in the disruption of oil supplies that the world economy is utterly dependent upon. We cannot stand up to our enemies because we rely upon them for the fuel that is our economic lifeblood. We pay them for their oil and they make war on us.

In light of these realities, U.S. energy policy for the last three decades has been a scandal. The time has come for change. To liberate ourselves from the threat of foreign economic domination, to destroy the economic power of the terrorists’ financiers, and to give ourselves the free hand necessary to deal forcefully with them, we must devalue their resources and increase the value of our own. We can do this by taking the world off the petroleum standard and putting it on an alcohol standard.

His solution? Flex fuel vehicles that can use gasoline or methanol or ethanol:

Fortunately, however, there are simpler techniques to make usable alcohol fuel out of biomass, and much else. This brings us to methanol, the simplest liquid fuel molecule known to chemistry. Commonly called “wood alcohol” because it can be readily produced from wood, it can also be manufactured out of virtually any kind of organic material, including every kind of biomass (whether edible or not), as well as coal, natural gas, human and animal metabolic wastes, and municipal trash. Since its potential sources are so vast, varied, and cheap, methanol promises to be an inexpensive fuel. In fact, it already is: during the summer of 2007, the wholesale price of methanol, manufactured and sold without a subsidy, was $0.93 per gallon. Methanol has about 54 percent the energy density of gasoline, so this price is the equivalent of gasoline selling for $1.70 per gallon (before taxes).

Depending upon the source material, there are a number of different ways to make methanol, but they all come down to the same few chemical reactions. Converting coal or natural gas to methanol can be done with tried and true nineteenth-century chemical engineering. The same goes for biomass—which means that any plant material, without exception, from weeds and fallen leaves to swamp cattails and the vast floating growths that clog innumerable rivers in Latin America and Africa, can be used as feedstock for the process. And trash, too, can be converted to methanol: it doesn’t matter whether the feedstocks are packaging materials, old rags, used candy wrappers, plastic forks, or Styrofoam coffee cups; the stuff is all just compounds of carbon, hydrogen, and oxygen, with a few impurities thrown in here and there, and all of it can be converted to methanol.

The chemistry needed to dethrone oil is well understood. We can readily convert our available fuels into an alcohol supply bountiful enough displace a large portion of the oil we import. The only problem is, we need to have cars and trucks that can use it.

Fence post turtles -- They don't get up there by themselves, some moron had to put 'em there.

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The American people are stupid

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