Here in another corner of the world it is sometimes difficult to make sense of US policies on oil.
President Obama has seized on one aspect of the puzzle by pointing out that just as fuel is hitting the unpalatable $US 4 per gallon, Exxon is announcing record profits for its shareholders and yet the US government is continuing to pay a staggering $US 4 billion a year subsidies to the oil companies. If this was the only fact we might simply wonder at the curious double phenomenon of the diversion of hard won tax dollars to supplement the bulging wallets of the rich coupled with a system whereby powerful are permitted to lobby Congress and the Senate to a point where the government is powerless to do that which is in the best interests of the voters they are supposed to represent.
Then we have the inverse relationship between alternative fuel and food supply and pricing. Taking land and crops that might otherwise have boosted urgently needed food production for the world’s increasing population and using it to provide supplementary fuel production – eg corn and soy bean for ethanol and taking land in third world counties for palm oil production may well increase fuel production and in an ideal world even reduce fuel prices – yet if at the same time it drives up food prices it is hard to see how the wage earner wins. If the alternatives were made plain – ie I will help your fuel bill by making you pay more for your food, the voter might not be quite as accepting. Putting this pressure on third world countries is not a saving if those countries become more unstable as a consequence.
While there is good sense in the Obama administration wishing to encourage the use of more efficient car engines more care still needs to work out the implications of the electric alternative. In any economy where electric power production is already over-stretched, electricity needed for the charging of car batteries will be taken from the part of the extra National electricity production ie the burning of fossil fuels. While electric cars are a minority novelty there is no problem, since many cars would require much extra electricity from the National Grid – more fossil fuel is burned in the power stations than is saved in the cars. (cf. the calculations done on the electrification of cars in the UK). What a strange world we live in.