However, the average price of oil is predicted to be about 43/barrel this year. Thus, if true, we will be paying only 328 billion, saving 402 billion, which then, effectively, will enter the U.S. economy. How this multiplies into lower gasoline, airline tickets, food, fertilizer, and so on is beyond my analytical capability, but there must be a multiplier effect that increases the true windfall. Thus, in addition to the upcoming Obama stimulus package seemingly headed towards 1 trillion, just on lower oil prices alone, there will be another 402 billion sum provided to individuals, companies and governments. There should probably be a meaningful multiplier, maybe sufficient to bring this unexpected benevolence to a second trillion dollars, which will again be largely repeated in 2010 because the U.S. Department of Energy predicts that oil prices will then average 54.50/barrel.
Thus, the effective stimulus of more than 3 trillion (and up to 4 billion when you add on the Bush rescue package) over the next two years will probably boost the U.S. economy well beyond expectations. Similar advances will occur world-wide. The only ones to suffer will be those oil-exporting nations. It will be interesting to see what imaginative solutions OPEC will foist on the world to again embarrass the U.S. Department of Energy, which, granted, has been woeful in predicting the future price of petroleum.
Further, about two-thirds of the oil we use is imported. Thus, there is also the matter of 220 billion that we will not be paying to foreign oil suppliers in 2009. Somehow, there is then another nice multiplied sum you can add to the above each year until the anticipated next oil shock happens. Finally, any reduced Middle East war costs will further provide enhancement. Maybe we might even now be up to 5 trillion over the next couple of years to pump up the national economy.
Yet, as the Sun will rise again tomorrow, you can expect skyrocketing crude prices sometime within the next decade, and maybe even as early as next year. After all, our Energy Informational Agency has been regularly imperfect. In the meantime, as energetic as President Obama has been in his support for renewable energy--surprising because with oil below 50/barrel, you would think that his foci would be limited to the economy and the Middle East--with generally reinforcing comments from the Congress, I can only fear that the anticipated withdrawal of major industrial investments in sustainable resource projects will result in only admirable, but insufficient, action from our Congress.
To repeat, from my HuffPo on Do It Now, Congress needs to take advantage of the moment and immediately add a 1/gallon gasoline investment surcharge. We moaned at 4/gallon gasoline when Europeans were paying more than 10/gallon. The national price for premium today is less than 2/gallon. A whole dollar only kicks the price up to 3/gallon. This fund would accrue about 125 billion/year. Work out the rebates and subsidies, but spend most of the revenues on renewable energy research, demonstration and commercialization.
Secondly, on a global scale, the G8 nations need to agree at their 2009 Italian Summit on a 1 cent/pound carbon dioxide remediation duty linked to crude oil at 30/barrel, to proportionately increase such that the levy would be 5 cents/pound carbon dioxide at 150/bbl crude. The sum collected could amount to about 200 billion/year just in the U.S. Funds should be used by each country to install smart grids and accelerate renewable energy investments. At 2 cents/pound (when oil reaches 60/barrel), coal-fired electricity would almost double, making unnecessary any renewable energy tax credits, bringing into competitiveness wind power and utility scale solar thermal power.
What are the prospects of a 1/gallon gasoline investment surcharge and a one cent/pound carbon dioxide remediation duty (both, incidentally, also known as taxes) becoming real over the next year? One or more of you reading this posting could well be that galvanizing spirit to make this happen. Just read my Epilogue in SIMPLE SOLUTIONS for Humanity and be inspired.-The Dow Jones Industrials jumped 201 to 8375. Except for Hong Kong, world markets were all up. Oil stayed largely unchanged at 42.24/barrel. Gold fell 14/toz to 887.
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