It's tempting, when faced with substantial challenges, to lump everything together; but Mr. Malin's letter regarding oil and record-breaking gas prices is such a quintessentially flawed response that I'd like to address several errors in fact.
First, there is plenty to blame Congress for; however, there is no possible means of solving our energy crisis this week - even if substantial legislation were passed.
Next, like most of our current challenges, the problem is complex, interwoven with a myriad of individuals and institutions acting both complicitly and unwittingly.
For example, let's take surging gas prices. For the most part, these are not due to less available supplies, nor even to the laws of supply and demand. That's right, this current crisis flows contradictory to previous price increases. Otherwise, the laws of supply and demand would dictate that decreased driving - which is occurring nationally, particularly in large urban areas - would result in lower prices at the fuel pump.
Unfortunately, what has happened is that most of the increase is due to speculation, and most of it is being done unwittingly. And, ironically, our Fed chairman, Mr. Bernanke, is at the heart of the problem. (And let me say, I consider him to be a wise leader.)
When the housing and escalating bank crises reached their apex (hopefully!), Mr. Bernanke truly had no good options open to him. Lower interest rates had already greatly devalued the dollar (much of this devaluation occurred during Mr. Greenspan's tenure, but that's another letter), and Mr. Bernanke was wise indeed to be concerned with inflation, even at that early date. But he tipped his hand to investors that further lowering of interest rates would be necessary to share up the banking system.
By lowering interest rates once again, Mr. Bernanke took a calculated risk in allowing the further decline of the dollar. What were investors to do?
Many were encouraged to opt out of traditional dollar-based investments and look at the future's market, and, boy, did they jump in! Compared with traditional investments, it looks like a sure bet, particularly with the emerging markets of China, India and other developing nations. But unlike the typical futures of investors who buy, sell, sell, buy, sell, this current group is holding on to their investments. Therefore, as they "hold" and additional investors are joining them (again, being driven away from traditional investments by the declining dollar), the price of oil is being driven rapidly upwards.
Market analysts estimate that the true value of a barrel of oil is somewhere around $90. (Remember, last summer we were flirting with $70 barrels of oil; the $20 increase can be attributed both to problems in oil-producing nations, e.g., Nigeria, and to increased demand in developing countries.) However, with futures currently selling at approximately $140, there's at least a $50 "bubble" in the price per barrel.
Since the term "speculator" carries such a pejorative connotation, it should be noted that many of the current investors/speculators are institutions - foundations, pension plans, universities, etc. - who use funds/fund managers to inform their investments. Moreover, most of the people behind these institutions don't realize the true risk to their current investment, and would be mortified to learn of their role in the current gas crisis.
Thus, the problem is not simply one of supply and demand where increased drilling will do anything to alleviate consumer pain. President Bush has actually called on those oil-producing countries more friendly to the U.S. to increase production (pumping), although it's not certain this will have any benefit to us with regard to pricing. Moreover, any new drilling will take years to come on line, so its impact on pricing has absolutely no effect in the near term, and it's doubtful there would be any positive impact on pricing in the long-term as well.
As to the inflationary role of investors in a market they don't entirely understand, this bubble, too, will burst. The when and where are not known, but the consequences most likely will be unsettling.
So, rather than responding with a knee-jerk reaction of, "Let's open up drilling here in the U.S.," we actually have an opportunity to do better. (There is a silver lining in this particular cloud.) Solar, wind, and renewable technologies that can "fuel" our cars exist; they are simply too expensive to bring to market under current conditions. Here's our opportunity: Invest in these technologies that bring a multitude of benefits, including national security, well-paying jobs, a healthier earth and environment, reinvigorating the "can-do" American spirit, and above all, demonstrating to the world by leadership, not followership - that America not only is up to the challenge, but that Americans have the fortitude to endure some pain now for huge gains in our future and for future generations.
In reading this paper over the years, I've learned that many on the Peninsula are well-traveled and intelligent adventurers. Our planet's oceans and ecosystems depend on all of us being good travelers - stewards - of our beautiful earth. If we fail to avail ourselves of this opportunity to move forward in a fundamentally new, and I would argue better, direction for our energy requirements, I fear we will become victims of our own short-sightedness. For I cannot foresee how we can possibly sustain ourselves or our planet on fossil fuels in the long run.
Mr. Malin was right to denograte Congress. But he was wrong in his characterization. Republicans and Democrats alike are responsible for failing to raise CAFE standards, the minimum miles-per-gallon fuel consumption of our vehicles that would actually help us. Detroit and our automakers ought to be ashamed, too, for waiting so long to confront a problem that has been in view for years. However, we Americans are also to blame.
By and large, we've purchased gas-guzzling vehicles, even during the last few years, despite repeated warnings regarding both oil production and climate change. Our actions allowed Detroit to look the other way and not fast-track new hybrid vehicles or invest in alternative-fueled (hydrogen, battery) vehicles. So, now we are paying the price.
Finally, with regard to Mr. Malin's "Global Cooling" silliness, which for goodness sake shouldn't require a response at this late date, I will simply say that ignorance and demagoguery are not personal virtues. Surely, the Observer's staff understands how these willfully uneducated comments reflect on our community. While readers of this good paper are entitled to their opinions, they are not entitled to make up their own facts. To persist in the circulation, and thus the perpetuation, of these myths without so much as a caveat when so much is at stake is a genuine disservice to the Observer's readership.
While we may disagree on how to get there, we need to lose the hyperbole, partisanship and prevarications. Science is not something to be disdained; rather, we should embrace it, understand it, and use it to our advantage.
Our actions have consequences of great import on a global scale, and I would welcome a leader of any political stripe who will encourage us to embark on an energy revolution to bring clean technologies to the forefront. This generation is capable of living up to our energy challenges, but only if we have the determination to look forward, not backward.