steveross

Only These Three Things Can Halt Oil's Advance

I know the following ideas might not be popular, but neither will $200 a barrel oil.

A SIMPLE SOLUTION FOR PEAK OIL CRISES

This is a 2 part solution to the runaway price of oil. It’s goal is to change driving habits, increase the mpg of cars, increase the use of alternative energy, and reduce the speculative pressures on the price of oil.

Part 1. $5 Consumption Adjustment

A $5 consumption adjustment will be added to the price of each gallon of gas sold. This money will be put in a pool and at the end of each month, divided by the number of drivers and rebated, preferably by direct deposit, to each driver. The average driver will say pay $500 extra for their gas and then will be rebated $500. The person who drives less than average will get rebated more than the extra cost and therefore will end up paying less than market for their gas. The person who uses above the average will pay more then the money rebated. For the average person, there would be no cost and they will save because of a lower market price for gas. For the person who is having trouble buying groceries and gas now can make ends meet by buying less gas therefore reducing the cost of gas both by using less and by ending up paying less than market for the gas they use. Of course, the person who uses more than the average will have to pay for this which is exactly how things should be.

Of course there will have to be some considerations made for people who use their cars for business. There will also be a cost to manage the system, though most of this will be done by computer, and in any event, the cost will be for less than say a war in Iraq.

While part 1 will lead to voluntary conservation, it also will make alternative fuels much more competitive with gas since they would not have a consumption adjustment. (85/15 blends would have 85% of the consumption adjustment).

Part 2. MPG Price Adjustments

Automakers will no longer have to comply with any mpg standards. Each year the average mpg of all the cars sold will be calculated. The next year, those that are sold with less than the average will have a $ 1,000 per mpg less than the average added to the cost of the car. Those cars sold with a higher mpg than the average will get a rebate of $1,000 per mpg above the average.


The results of these 2 plans taken together should 1. Have drivers doing everything possible to be below the average gas consumption. 2. Especially with Part 1 in place, auto sales will be extremely mpg driven giving automakers all the incentive they need to increase the mpg of their cars. 3. Increase the use of alternative fuels and 4. The moment these plans are announced with an implementation date, speculators should stop bidding up oil futures.