Two summers ago, I made a step toward the dark side by trading in my bicycle for a shiny new SUV. I couldn’t have timed the switch more poorly. This was the first summer of record setting gas prices, when the pump price first climbed over $3.00 a gallon. Fair weather activists went to work that summer, sending out chain letters over email and myspace demanding a boycott of gasoline. Let’s boycott all gas stations for a day! Or better yet, let’s just boycott Exxon! That’ll show ’em!

After reading these, I (and anyone who had taken Econ 101) immediately were hit with terrible headaches. Why? These consumer gas schemes pandered more toward emotions than to any rational economics theory.

Now two years later, a similar situation is occurring. However, this headache isn’t being spread by zealous internet users. This fire is being fanned by two of our own presidential candidates. Their idea is not a boycott, but rather a “gas holiday” where the federal gas tax is erased for the summer driving months.

But wouldn’t lowering the gas price increase demand? And when demand increases, won’t the prices go back up? The short answer is Yes. Peter Schwartz of Global Business Network describes this as the true American energy policy: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Under such a scheme, consumers would see little change in gas prices this summer. Without taxes of course, our own Federal government’s revenue would shrink. And the real winners in the game would be….you guessed it….the big oil companies.

According to this article by Thomas Friedman of the NYT, “This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.”

Paul Krugman, another NYT columnist points out in a post that any attempt to quell gas prices for the summer driving season is too little, too late. The petro we’ll use this summer has already been extracted and refined. No matter what politicians will promise for the summer, there’s simply not much to be done.

Photo found at Huffington Post

My car gets 14 mpg on a good day and public transit isn’t an option for my commute. I’m sitting front and center in the cross hairs of high gas prices, and I would be ecstatic if there were a plan that could help me out. Unfortunately, there doesn’t seem to be much of a rationale consensus from our leaders. Of the three candidates, only Obama has voiced his disapproval of a gas holiday. Both McCain and Clinton have publicly favored this gas-tax holiday.

It’s time for our politicians to take a proactive and logical approach to our energy policy. All the research, rationale, and logic point to the same conclusion. It’s been close to 30 years since President Jimmy Carter proclaimed we would stop being dependent on foreign oil and that we would develop oil alternatives. Perhaps its time we began working toward this long-time goal.

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Dear Pennsylvania Governor Rendell,

I’m a 20-something year old who loves politics. Even more than usual, I can’t seem to escape the excitement of the current campaign season. It’s been a long, long time since so many people have become civically engaged with our political system. This is a time we should celebrate; which is why I was so surprised to hear some comments from you which belittled young voters. In a recent forum, you seemed to infer that young voters weren’t informed about the upcoming presidential candidates. That we “drink the Kool-Aid of [Obama’s] wonderful speeches” resonates the sentiment that 18-29 year olds are being suckered in by a slick campaign message and a charismatic orator. With this in mind, I have to share a story with you.

I spent four years at a state university, during which I was accosted daily by students, flyers, posters, and emails telling me to “be informed and get involved”. I sat in classes where students absorbed books and articles written by the world’s top experts. I watched as kids debated the intricacies of tax policy in lecture halls that sat 300 people- where so many young voters attended that it was “standing room only”. I’ve witnessed 20 year olds show up late for work or class because learning and being informed was more precious than a few hours of sleep. To be truthful, this describes me and most of my peers.

Governor Rendell, your opinion of my demographic is grossly incorrect. We may be young; but we are not ill-informed nor are we uneducated. In fact, I would argue that the majority of young voters have a much stronger grasp of campaign issues than most demographics. Take a glance at any college or university in the country, and chances are you’ll find less apathy than in any other demographic. Look at any of the political campaigns today, and you’ll see young volunteers pounding the pavement and knocking on doors, ready to speak to anyone and everyone about the issues. Find a political website, and you’re bound to see young voters go toe-to-toe in educated political debate with much older people. To be blunt, you have misjudged many of us.

We aren’t professional politicians, so it should come as no surprise that some young people can’t rattle off which legislation a candidate has sponsored. But don’t be fooled – when we come home from a campaign event, chances are you’ll find us scanning the paper and the internet for information on the candidate. We do the homework because we know what’s at stake. We’re the ones fighting in Iraq and Afghanistan. We’re the one’s who can’t find jobs because of our current economic state. We’re the ones fighting to afford health care, and we’re the ones who will be dealing with climate change long after you’re gone.

Of course, I would never expect anyone to accept my thoughts without first doing their own homework. Student organizations, universities, and communities are always looking for speakers to participate in meetings and town halls. Please consider an appearance at any of these so you can see for yourself just how engaged students can be. Attending just one student debate may completely change your opinion of this promising demographic.

Today, young people are standing up and participating in our democratic political process. Help celebrate this by engaging our young demographic!

See the video that started it all here

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Credit: Timothy Fessier & the Santa Barbara Independent

Like many political science and international studies students, I was first introduced to Nobel Prize winning economist Joseph Stiglitz while discussing globalization. His 2002 book “Globalisation and its Discontents” was the tastiest of textbooks for the aspiring politico and undeclared academic. The critical assessment of globalization Stiglitz put forth cost him a job at the World Bank, but helped stimulate the minds of many who grew up in the midst of the internet and NAFTA.

Now, Stiglitz has struck again. His new book, “The Three Trillion Dollar War”, is an in-depth look at the dollar cost of the Iraq war, and the subsequent consequences (dollar or otherwise) of all the money spent. In an interview given to the Guardian, Stiglitz reveals some shocking conclusions his research uncovered:

money.jpgIn 2005, the Congressional Budget Office estimated the cost of the Iraq war at $500bn. Stiglitz and the book’s co-author, Linda Bilmes, found this number to be surprisingly low. Discrepancies began to unveil themselves. For instance, the listed cost of the 2007 troop surge only accounted for combat troops. No funds were budgeted for the additional support troops needed as well. After years of data mining and number crunching, they’ve found the cost to be between 2 and 3 trillion dollars.

What’s more surprising than an unannounced 3 trillion dollar bill? Stiglitz links the cost of the war to US credit woes, economic recession, dependency on foreign nations, and even the failure of foreign aid in Africa. The war cost has been paid for not by raising taxes, but primarily through borrowed money. This has hidden the true cost of the war from Americans – most of whom have been spending their savings as if they were lottery winnings. We were, as NYT columnist Paul Krugman calls it, “partying like it was 1929”.

Once the lights came back on and the party ended, an economic recession hit. Banks called for a bailout. Problem was, the US didn’t have the money to bail out everyone. Many bailouts are being financed not by the US, but by countries in the Middle East and Asia. Other nations rescued Citibank and Meryl Lynch when they called for help. These companies now depend – as does our economy – on forces other than our own.

Outside of the actual cost, even the war itself has had economic effects. The instability in the Iraq region has sent oil prices souring to new heights. At the start of the war, oil was $25 a barrel. Now it’s over $100. Developing nations are feeling these price hikes like never before. African nations have been amongst the more dire strugglers. Stiglitz estimates that years of foreign aid have been virtually erased simply due to high oil prices.

This is just the tip of the iceberg.

The amount spent on the war so far could have paid for 8 million housing units, 15 million public school teachers, health care for 530 million children for a year, or collage scholarships for 43 million students. Three trillion could have fixed America’s social security problem for half a century. America, says Stiglitz, is currently spending $5bn a year in Africa, and worrying about being outflanked by China there: “Five billion is roughly 10 days’ fighting, so you get a new metric of thinking about everything.”

It appears it is our economy – and not the terrorists – that now sit in the cross hairs.

In figures:

  • $16bn
    The amount the US spends on the monthly running costs of the wars in Iraq and Afghanistan – on top of regular defense spending
  • $138
    The amount paid by every US household every month towards the current operating costs of the war
  • $19.3bn
    The amount Halliburton has received in single-source contracts for work in Iraq
  • $25bn
    The annual cost to the US of the rising price of oil, itself a consequence of the war
  • $3 trillion
    A conservative estimate of the true cost – to America alone – of Bush’s Iraq adventure. The rest of the world, including Britain, will shoulder about the same amount again
  • $5bn
    Cost of 10 days’ fighting in Iraq
  • $1 trillion
    The interest America will have paid by 2017 on the money borrowed to finance the war
  • 3%
    The average drop in income of 13 African countries – a direct result of the rise in oil prices. This drop has more than offset the recent increase in foreign aid to Africa

(Figures and other quotes heisted from the Guardian; read the full article here)

Last week, I unwittingly got into a discussion with the folks from carbontax.org about BC’s new carbon tax. Most of the comments showed strong support for a carbon tax, but I was surprised that there was little support for encouraging fuel efficiencies. The collective mind seemed to think that a carbon tax was the only tool needed to curb carbon emissions. Now I doubt that specific mindset is a good representation of what most people believe, but it got me thinking. I agree a carbon tax is a great strategy, but is it the only one? Where does a carbon-tax fall short? Does encouraging fuel efficiency pick up the loose ends?

Pitfalls of a Carbon Tax

  • A carbon tax’s goal is to lower the miles people drive. But what about those who can’t reduce? Commercial truck drivers are one group of carbon-emitters that won’t be changing their habits because of a carbon tax. For transport companies, driving less means less business. Transport services may become a bit more expensive, and truck drivers may not see a pay raise for a while, but carbon emissions won’t drop substantially.
  • For any substantial change to happen, consumers need to notice consequences. However, most carbon taxes are modeled the same: taxes start off very small, and are slowly increased over time. By slowly, I mean about 10 cents a gallon slowly. Politicians are wary of pegging the tax too high, but adding an extra 10 cents a gallon tax is almost unnoticeable at today’s volatile gas pumps. For many, paying a bit extra at the pump is more convenient than changing their habits to be more environmentally friendly. It’ll take years before the tax is expensive enough to force a change in the average consumer. Even then, there will always be people rich enough and willing to pay to pollute. A carbon tax is a great long-term strategy, but doesn’t offer any short-term solutions.
  • Marijuana UseA carbon tax is one sided, as there are two basic ways to change someone’s habits. One way is through negative consequences, the other through positive incentives. Training animals (stern voice vs tasty treat) is one basic example. When it comes to carbon emissions, a carbon tax is a negative consequence. But negative consequences aren’t always enough to cause change. Take a look at marijuana use. Marijuana has been illegal in the US for decades…but the drug’s use hasn’t slowed. A balance of negative consequences and positive incentives is the most effective means of changing habits.

The Benefits of Fuel Efficiency

If a carbon tax is peanut butter, fuel efficiency is the jelly. The two strategies combined provide a balanced plan toward decreasing carbon emissions from fossil fuels.

  • Promoting fuel efficiency is the perfect short-term plan because it’s available now! The technology needed to reduce carbon outputs is already sitting on car lots. Burning carbon fuels more efficiently has the same effect as driving less. Right now, the big obstacle is getting fuel efficient vehicles into the hands of drivers. Once that problem is tackled, fuel efficiency could reduce carbon emissions in a very little amount of time.
  • mazda.jpgDollar for dollar, fuel efficiency has a bigger effect on consumers. BC’s carbon tax will cost a family about $50 a year. Driving a fuel efficient car could save that in a month or less. My personal situation: If I were to drive the hybrid version of my current auto, I’d save $50 in two weeks. That’s $2600 annually! When it comes to carbon, promoting fuel efficiency is more powerful simply because of the dollar amount attached. Additionally, fuel efficiency provides a positive incentive for emitters to change their habits. Wouldn’t you drive a hybrid if it meant saving hundreds every year?
  • Fuel efficiency can reach people that a carbon tax can’t. Truck drivers and commuters who can’t bike or bus can still lower their carbon emissions with better fuel efficient cars. The same can be said for people who travel in distances more than what is covered by a carbon-tax. Fuel efficiency works no matter where the fuel is bought and burned.

The bottom line is that both a carbon-tax and fuel efficiency incentives are working toward the same goal. The planet doesn’t care how carbon emissions are lowered, so long as it’s done quickly. Why limit our options? The best strategy is one that uses everything in our toolbox; be it a carbon-tax or promoting fuel efficiency.