The real question is what the energy policy should be. The USA, Europe and Asia are all highly addicted to oil. The production of oil is at or near its peak. Most of the easy low extract cost oil has been found. There is plenty more oil to be had, but it will be much more expensive to extract and can cause environmental degradation. Plus China and India are growing their use of oil and oil distillates at a rapid pace, which increases demand. Increased demand and no increase in supply lead to increased costs.
So what should be done. Some say to raise taxes on it. That will increase the cost and reduce demand to some degree. But with increasing demand, the supply will not be affected and the overall problem remains. The increased tax revenue can be designated to increase research and development into alternatives and subsidize their price. Currently alternatives are much more expensive than petroleum products so this might help some. Also tax incentives can be given to encourage research and development into these alternatives and encourage new production spending.
The big problem is lack of vision. We encouraged corn ethanol and it has reduced our demand for some oil, but at the cost of increased food prices. Plus the direction keeps changing. We need a comprehensive Energy Policy that everyone can understand. That way everyone can work together and in the same direction. It will take time and money to come up with viable alternatives. This will just be a start. What do you think?
