The global economy is built on subsidized prices for fossil fuels, which assures them a dominant role globally. Oil subsidies are integral to the dominance of auto and truck transportation, which contribute to urban sprawl and growing globalization and to industrial farming operations in the United States.
Oil and its derivatives are the fuels of choice for modern military power. Access to oil has been a key military objective for world powers since the early 1900s.
As global oil supplies dwindle and the global economy expands, competition for oil will intensify, particularly among the United States, Europe and China. Continued armed conflict, guerrilla insurgency and terrorist actions seem assured. With 80 percent of known oil reserves in the Persian Gulf region, the area is of prime importance. Some analysts believe if the fear factors regarding potential disruptions were eliminated, oil would be selling for $30 per barrel. If the Chinese economy collapses, prices might fall to $9 per barrel. If such a price collapse occurs, it is unlikely to last long.
Peak oil and natural gas advocates believe we are entering a period of continual decline in fossil fuels accompanied by dramatic price increases. In their view, we need to make a rapid transition to efficiency and renewables now to avoid a major global economic and ecological collapse.
In light of this, Charles Komanoff, keynote speaker at the Renewable Energy Fair, called for an increase in taxes on all petroleum products to reflect their true cost to our society. Over the next decade, annual tax increases averaging $0.20 per gallon would double the price consumers pay for all petroleum products. To ease the burden placed on consumers, the taxes would be rebated. Komanoff, a prominent energy economist, sees a gradual, predictable tax increase as the only tool powerful enough to cut deeply into our oil dependence and cause a major redesign of the role of energy in our society.
With our current political atmosphere, a call for increased taxes on oil will not get very far. The point, however, is well taken that cheap oil and cheap energy are problems that must be dealt with to provide a sustainable energy future. The use of efficiency and renewable energy would increase dramatically if fossil fuels were not subsidized to the extent they are now. A gradual and predictable end of fossil fuel subsidies would achieve the same goal.
An energy market freed from fossil fuel subsidies but adjusted to account for factors ignored in the marketplace would set in motion powerful forces to address the problems of peak oil and natural gas, global climate change, the loss of biodiversity and the increasingly dismal prospect of war without end. We need to use our existing energy reserves to build the technologies essential to a renewable, sustainable energy future. The longer we prolong our excessive energy consumption and ignore its true costs, the more difficult it will be to make the needed changes to meet the global energy challenge.
Komanoff claims its time to decide: Its time to choose between love of oil and love of country.