I’ve long believed that political solutions to the climate crisis will be limited in their impact primarily because of the very short attention span of most politicians, i.e. until their next election and due to the influence peddlars in DC, most of whom are ex-politicos. If we’re going to solve this huge global problem then the markets will have to be the drivers of change.

One big factor in this is our own pocketbooks- we know from the oil crisis in the seventies that it took average Americans screaming bloody murder over gas prices and shortages to see any big change in energy policies. So what will it take now? Let’s look at where gas prices might need to go to drive change.

Gas at the pump prices are about $.30/gallon higher on average than six months ago. assuming an average MPH of 23 this means it costs us about $.013 more per mile to drive. If you drive an average of 1200 miles per month, this increase cost you $15.60 more per month than you would have paid six months ago. Probably not enough to really anger a lot of people in the US.

If we’re at $3.30/gallon now, at what price point do we start getting concerned and/or angry? $4/gallon gas would take another $36.40 out of our monthly budgets (on top of that 15.60). Is this a price tipping point? How about $5/gallon- another $52./month? That might do it.

Admittedly, this is a simplistic calculation. Let’s look a little further. There are approximately 200 million licensed drivers in the US, driving 240 million registered passenger vehicles. If these 200 million drivers are each shelling out an extra $1200/year for fuel (based on $5/gallon pricing), that’s $240 billion that is not entering the ecomomy- it’s being sucked up by the oil industry. Is a quarter of a trillion dollars in lost purchasing power, annually, enough to wake this country up? I sure hope so because it’s coming. They’re already there in Europe.

Finally some other related stories: The recent riots in Myanmar (aka Burma) were triggered by the government removing subsidies on gas prices. They went from pennies a gallon to dollars a gallon overnight and the country exploded. In Venezuela, nut case dictator Hugo Chavez (I’m a liberal but I don’t buy into this guy for a second- nothing but a petty tyrant), subsidizes gas so the populace only pays $.07/gallon. This is the classic ‘bread and circuses’ tactic used to keep the populace blissfully unaware of reality.

Oil is never, ever going to cost less, no matter what new fields are found. We have to change our entire society to end our dependence, quitting cold turkey so to speak.

The Wall Street Journal, which has had some of the best reporting on climate change issues weirdly offset by their insanely unscientific (ignorant) editorial stance, has a story today on the Peak Oil theory. Unfortunately it’s locked behind their paid sub firewall (another quandary- I support Rupert Murdoch in his plans to open up the WSJ online).

Peak Oil theory says that there is a point where we have taken 50% of the available oil out of the earth and consumed it. At this point the supply diminishes until none remains. The oil industry has consistently claimed they can pull 120 million barrels/day through 2050 even though others were sceptical. This has changed. The WSJ article quotes OPEC officials and oil executives who now say we may hit Peak Oil as soon as 2010-2015. The reality is that our current demand exceeds 180 million barrels per day so we’re already overstrained for capacity. This is a major call to action by those who have had a vested interest in keeping the oil economy in place.

The problem is the inherent problems with the way oil consumption and mining works. In the first 50% we’ve been skimming the low hanging fruit, taking out the most profitable and easily accessed half of the supply. The remaining 50% will get increasingly more difficult and costly to acquire. This means can’t blithely assume we have say another 50 years to fix the problem. What we can assume is an economy crippled by major increases in fuel costs in just a few years. In other words this is it- we have to stop pretending that conservation is a choice rather than a necessity. The oil people have done the math and realized that they better start preparing us for dire circumstances…

BTW, that theory of usage is way out of whack- with India, China and other countries becoming huge consumers of oil our total global needs are skyrocketing far beyond our ability to refine. This is another acceleration factor. $8/gallon anyone?

“Water rationing has hit the capital. Car washing and lawn watering are prohibited within city limits. Harvests in the region have dropped by 15-30%. By the end of summer, local reservoirs and dams were holding 5% of their capacity.

Oops, that’s not Atlanta, or even the southeastern U.S. That’s Ankara, Turkey, hit by a fierce drought and high temperatures that also have had southern and southwestern Europe in their grip.”

“Based on the record of the last seven years, we can take it for granted that the Bush administration hasn’t the slightest desire to glance down; that no one in FEMA who matters has given the situation the thought it deserves; and that, on this subject, as on so many others, top administration officials are just hoping to make it to January 2009 without too many more scar marks. But, if not the federal government, shouldn’t somebody be asking? Shouldn’t somebody check out what’s actually down there?”

“To find even tentative answers to such questions you have to leave the mainstream. Amy Goodman of Democracy Now!, for example, interviewed paleontologist and author of The Weather Makers: The History and Future Impact of Climate Change, Tim Flannery recently on the topic of a “world on fire.” Flannery offered the following observation:

“It’s not just the Southeast of the United States. Europe has had its great droughts and water shortages. Australia is in the grip of a drought that’s almost unbelievable in its ferocity. Again, this is a global picture. We’re just getting much less usable water than we did a decade or two or three decades ago. It’s a sort of thing again that the climate models are predicting. In terms of the floods, again we see the same thing. You know, a warmer atmosphere is just a more energetic atmosphere. So if you ask me about a single flood event or a single fire event, it’s really hard to make the connection, but take the bigger picture and you can see very clearly what’s happening.”

Great comprehensive post from Tom Engelhardt on the reality of water issues. These are just a few of the many quotable facts in his post.

And I’m wondering what price will initiate real change. The recent protests in Burma against the military oppressive government weren’t triggered by human rights abuses, they were the result of the government removing their artificially low gas prices (under 10 cents a gallon). Overnight it became virtually impossible to afford to drive. This triggered an entire country to rise and confront their government on a wide range of issues.

Recent earnings reports from the big oil companies had their results down sharply from the year before (when they recorded the highest profits in history for any kind of company). Ask yourself why? My answer?

They have been intentionally keeping gas prices at the pump from rising as oil prices have risen because they know the social implications of a sharp rise. One economist estimates that a $10 rise in oil should increase retail gas prices by 2.2 cents a gallon. Oil has risen almost $50/gallon without a related rise in gas prices over the past year. However, on the heels of these earnings reports and the extremely unstable political situation in the Middle East (Kurds and Turks fighting, Musharraf showing his true thug nature, Israel and Hamas fighting, sword-rattling between us and Iran…) we’re finally seeing prices rise. High test today was $3.47! Now these are New York state prices that include high taxes but…

So oil is nearing $100/barrel which puts the true cost, adjusted for inflation, higher than at our worst point during the Arab oil crisis of the seventies. I’m old enough to remember gas lines, rationing and an uptake in public transportation. I imagine that these things won’t happen until we hit $5 because we’re slightly more efficient mileage-wise than we were then. But only slightly, thanks to the insane lobbying to keep gas-guzzling behemoths legal by the US auto industry.

We could easily be driving 100 MPG vehicles today. If we were, we wouldn’t be at war in the Middle East, we’d be in a position to tell the Saudis to stop this fundamentalist craziness, we’d be an example in fighting climate change for the rest of the world and we’d be creating a better world for our grandchildren.

So bring on the $5/gallon gas if that’s what it takes to wake us up.

BTW, GM posted a $39 billion dollar loss today. This would never have happened if they had any real strategic long-term planning instead of the afore-mentioned lobbying and reliance on old technology instead of innovation.