If we really think that there's a real sense in which we're consuming too much oil, then we should probably treat it as a market failure involving a negative externality (a geopolitical one, perhaps). If so, then why isn't Matt Yglesias right that we should just jack up taxes on gas, thereby getting the price closer to what it should be?
http://yglesias.tpmcafe.com/story/2006/2/1/0730/79297

We'd probably want to do it as part of a package that would shield the most vulnerable families from the cost, e.g., with a flat $200/family tax rebate below a certain level of income, paid for out of the new tax's revenues.

I'm not sure why government cannot "offer much meaningful help" since our energy policy, and our oil dependence, is the direct result of government initiatives in areas of infrastructure, planning, etc.

I really don't think it's "the market" when we have examples of other wealthy industrialized nations with extremely high standards of living, active markets, and far less dependence on petroleum than we have.

Japan has nearly 1/2 our population yet its petroleum consumption is 1/4th ours. Germany's per-capita oil consumption is 1/2 hours.

We could achieve the president's objective of being free of foreign oil (or nearly so) just by adopting the same governmental approach to energy use as is found in all of Western Europe, Japan, heck just about anywhere BUT here.

greg

Greg, isn't it fair to suppose that a lot of Japan and Germany's efficiency in this matter isn't their mastery of exotic power supplies, but rather their relative independence from the car? Japan Rail and Deutsche Bahn are, after all, incomparable to Amtrak and even the better-known American commuter rail systems. Anti-sprawl legislation, in other words, might be even more effective than high-tech. (And, of course, Europe and Japan tax gas much, much more than the U.S. does, proving phil's point inter alia.)

Paul, you're right about the primary reason in many countries for consuming less oil than we do being less dependency on the automobile. But regulating sprawl can't turn back the clock. The roads are already built as are the suburbs. In the relatively short term the best bet for the U.S. to reduce oil dependency is better materials science to lighten vehicles (Which could also reduce fuel consumption by aircraft.), hybrid vehicles and once we can beat the large numbers of obstacles to it, hydrogen power. There is no one thing that will solve our problem. It will require every possible method of generating power in the places where the various systems can work. Solar, wind and even tidal power systems can help. So can wider adoption of heat pump systems for heating buildings.

Never asserted that Japan and Germany's lower per-capita petroleum consumption was the result of "exotic" power supplies. It's the result of different lifestyles, themselves the result of different decisions about what's valuable and what's not valuable in life. And, yes, a lot of that is about the car.

In the United States, we've made a (semi) conscious decision to invest in suburbia, to zone land for function, and to de-localize economic activity. We decided that it makes more sense for a restaurant in Bloomington, Indiana to get its salad lettuce from California than from two counties away. We implemented that set of decisions through government directves and decisions about where and how to invest and where and how not to.

The salient characteristics of all those decisions is their singular reliance on liquid hydrocarbons, notably the availability of and the price of.

Other advanced nations have made other decisions -- or at least not gone down the same path as we have with the same speed and enthusiasm. Other nations still have discernable cities and towns, surrounded by an agricultural base that can supply those cities and towns in a much less energy-intensive manner than is required in the United States.

As the relentless decline in liquid (and gaseous) hydrocarbon production continues and accelerates we'll get to see, firsthand, just how smart the investment decisions we've made over the past three generations were.

Or weren't.

greg

Sorry--I didn't mean to imply that Greg thought Japan was more efficient because it had advanced ethanol refining capabilities* but rather to point out that the logical implication of Bush's apparent theory of energy efficiency was that they had. As Greg and I and others have mentioned, the truth is more prosaic.

(On the other hand, I don't agree with Greg that the fact that farmers in California--or Chile--provide food to consumers in Bloomington is prima facie evidence of a flawed economic system; it may in fact be the opposite. And similar examples could have been drawn in many markets starting from the late 1870s, with even more dramatic ranges--Aussie beef feeding England, Kansas wheat feeding Germany, etc. So the culprit isn't liquid hydrocarbons, but the advanced technology of the refrigerator railroad car and the steamship, coupled with the telegraph.)

*which incidentally wouldn't help the Japanese all that much, inasmuch as they import much of their biomass.

Greg wrote:

We implemented that set of decisions through government directves and decisions about where and how to invest and where and how not to.

Could you be more specific about which government directives and decisions you believe have shaped the US economy into what it is today?

It seems to me that our transportation-intensive economy has evolved naturally due to technological, economic and geographic realities. The only government decision that has affected that is the decision not to interfere. Likewise, the structure of European and developed Asian economies was not so much the result of foresight and wise planning, but mostly the result of hundreds of years of history. (To put it simply, most of America was developed with the availability of modern transportation, whereas Europe and Asia was developed with transportation by horse and boat.)

"Could you be more specific about which government directives and decisions you believe have shaped the US economy into what it is today?"

Aside from the decades of federal subsidies for interstate highways, the mid- 19th century enthusiasm for "internal improvements," and the massive federal giveaways of land to build railroad lines, the examples are few (excepting the use of military contracts to shape industries such as communications and aerospace, and of course basic research in both the social and physical sciences).

It is also simply erroneous to state that today's developed Asian economies grew because of laissez-faire policies. True, they did use market mechanisms--but Japanese ministries like MITI were also heavily involved in shaping development paths. (And pre-modern Asian technology was, at least in China, rather more sophisticated than I think you may be giving them credit for.) On the larger point of whether European economic development emerged naturally from history, how then to explain the disparities between Ireland and England (until the present generation) or between north and south Italy today?

None of this is to discount the importance of market mechanisms in the growth of the rich economies, particularly in the United States, which has been less heavy-handed to most; but for good or ill much investment in all the wealthy countries, even in the nineteenth century, was the result of state decisions.

"It seems to me that our transportation-intensive economy has evolved naturally due to technological, economic and geographic realities. The only government decision that has affected that is the decision not to interfere."

Let me give two specific examples of what I mean. The first, treated well by de Soto in his "the Mystery of Capital," is the development of land codes for the settlement of the West. (F.J. Turner also talked about this a lot, even in those periods in which "the West" meant "Virginia more than 20 miles from the ocean.) Clearly, after a point, the government did much more than let Hayekian institutions do their own thing, which is why we have a national mortgage market. The second, which began about a decade or so earlier, was the development of the rivers and canal systems (and later of roads and railroads) for internal commerce; until rather a long time after independence, and not long before the Civil War, most of America's trade was trans-atlantic, not domestic, which is one reason why New York, Boston, and New Orleans were more or less the three major cities of the day. The navigability of rivers and the development of railroads were simply not the product of free-market forces (especially the former, and the latter especially during and after the Civil War).

Paul,

I see your point about national infrastructure improvements facilitating intra-continental trade. However, it doesn't seem like that in itself would have necessarily brought about the sort of sprawling, transportation-intensive economy that causes us to have roughly twice the per-capita oil consumption that Japan has.

Greg's comment conveyed the sense that at some point, the United States collectively decided to pursue sprawl and abandon self-sufficient communities, whereas Europe and Asia decided not to do so. My assertion is that those European and Asian communities were established long before technology made America's more spread-out communities possible.

(Not that I don't wish things had turned out differently here in the US. I'd love to be able to rely on public transit or walking for most of my transportation needs, but I don't care for many of the other aspects of life in Manhattan or other US cities large enough to have transit systems that are even close to effective.)

Eric--OK, I see your point, and it's a fair one. And it's interesting to note that those cities in the U.S. which are best adapted to a car-less lifestyle are mostly in the older parts of the U.S. (the Northeast, plus Chicago). But I also think that a second-order set of policies, plus a first-order set of circumstances, did indeed encourage sprawl. The policies were those which frowned upon encouraging high-density urban living by starving local mass-transit lines and subsidizing new home construction via agencies like Fannie Mae. The circumstances were that Americans were, and are, terribly rich, and that America had, and has, a vast amount of land that the Japanese and Europeans did not, and do not, have. (The same with the Chinese.) The policies encouraged what the circumstances would have permitted. (It is also worth remembering that, first, suburbia seems to be a universal desire--God knows the Irish and the Chinese look forward to owning their own places "in the countryside", what little is left of it in both places; and, second, that Europe has its own sprawl problems too.)

Greg's comment conveyed the sense that at some point, the United States collectively decided to pursue sprawl and abandon self-sufficient communities, whereas Europe and Asia decided not to do so. My assertion is that those European and Asian communities were established long before technology made America's more spread-out communities possible.

It pretty much did. America had plenty of non-sprawl "traditional" communities prior to the post WW II automotive explosion and you can still see their relics in towns and cities across the country. My hometown, Bloomington, Indiana, boasts a central business district and residential area largely unchanged since it was platted out in the 19th century.

In America what changed was an suburban explosion during the post WW II years fueled largely by two factors, neither one of which would have been possible without the heavy hand of the state:

1. Massive infusions of public dollars into one form of transportation (automotive)

2. Strict land-use regulation which zoned land for function and segregated land for residential use from land for industrial use from land for employment use from land for retail use.

The former was, as far as I can tell, the result of some kind of collective techno-hallucination fostered by the visions of individuals like Le Courbusier and Norman Bel Geddes and enthusiastically bankrolled by entities like General Motors.

The latter was the result of powerful land interests that understood that government could be used as a blunt cudgel to drive intensification towards certain parcels and away from others. The key was only to own those parcels to be intensified and to make sure one's enemies owned the others.

It's really not about "mass transit" at all. As I said, the organic form of our oldest and most functional towns and cities took place long before any significant form of government or corporate input took hold in the form of streetcars, etc. They were defined by the distance a man could reasonably walk or ride a horse in a day.

And Paul is completely correct to note that some of this predates WW II, when preferential land grants to the railroads, etc. shaped development. My only addition to this is that it didn't really take off until after WW II.

Finally, I'd like to note that there's really very little of "the market" in all of this. Again, as Paul notes, the development of our country was shaped by government, not market, initiatives from the get-go. Everything from the establishment of national roads through the canal system, to railroad land grants, and on to land use zoning and the national system of roads and highways has the stamp of government all over it.

greg

Is there a statue of Le Corbusier somewhere? I'd like to deface it.

Paul,

Let's plan that trip together.

greg