The Chapter 18 Project

Without a Price Signal...

While Washington was bailing out Detroit, President-elect Obama made two crucial appointments: he named Steve Chu as his secretary of Energy and Carol Browner as an energy coordinator or "czarina." It seems to me that the two posts neatly frame the two aspects of the effort to create a Clean Energy System—what we might call the clean energy predicament. Chu is a Nobel laureate in physics who has led a green-tech, clean-fuel effort that brings together scientists, the government, and BP; Browner's experience is with the Environmental Protection Agency, which she led during the Clinton Administration. Producing new energy, or protecting the environment—in the Energy-Climate era, which is more important? Is it possible to do both?

How we are going to do either without a price signal—i.e. gasoline or carbon tax—beats me. Consider this headline from CNNMoney.com on Dec. 22: "After nearly a year of flagging sales, low gas prices and fat incentives are reigniting America's taste for big vehicles. Trucks and SUVs will outsell cars in December, according to researchers at the automotive Website Edmunds.com, something that hasn't happened since February. Meanwhile the forecast finds that sales of hybrid vehicles are expected to be way down."

Have a nice day.


Recent Ideas from Chapter 18:

Anil Jain wrote, "How can the auto companies be bailed out? There is lot of debate on whether the big 3 GM, Chrysler and Ford should be..." in Without a Price Signal... Tuesday, 04:38 pm
Alek wrote, "Hi. Good site...." in Without a Price Signal... Tuesday, 12:16 pm
Bailey Fiedler wrote, "Dear Dr. Friedman; As someone who has just returned to the US from Europe (where up to 80% of the cost of gasoline is..." in Where's the Price Signal? Monday, 08:48 pm
David Cottingham wrote, "Hi Thomas, Great idea to solicit contributions via a blog! Just thought I'd mention David MacKay's book "Sustainable..." in Making Clean Energy Work Monday, 02:44 pm
Alek wrote, "Hi. Good site...." in Without a Price Signal... Sunday, 08:37 pm

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Win, Win, Win, Win, Win ...

How many times do we have to see this play before we admit that it always ends the same way?

Which play? The one where gasoline prices go up, pressure rises for more fuel-efficient cars, then gasoline prices fall and the pressure for low-mileage vehicles vanishes, consumers stop buying those cars, the oil producers celebrate, we remain addicted to oil and prices gradually go up again, petro-dictators get rich, we lose. I’ve already seen this play three times in my life. Trust me: It always ends the same way — badly.

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Time to Reboot America

I had a bad day last Friday, but it was an all-too-typical day for America.

It actually started well, on Kau Sai Chau, an island off Hong Kong, where I stood on a rocky hilltop overlooking the South China Sea and talked to my wife back in Maryland, static-free, using a friend’s Chinese cellphone. A few hours later, I took off from Hong Kong’s ultramodern airport after riding out there from downtown on a sleek high-speed train — with wireless connectivity that was so good I was able to surf the Web the whole way on my laptop.

Landing at Kennedy Airport from Hong Kong was, as I’ve argued before, like going from the Jetsons to the Flintstones. The ugly, low-ceilinged arrival hall was cramped, and using a luggage cart cost $3. (Couldn’t we at least supply foreign visitors with a free luggage cart, like other major airports in the world?) As I looked around at this dingy room, it reminded of somewhere I had been before. Then I remembered: It was the luggage hall in the old Hong Kong Kai Tak Airport. It closed in 1998.

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China to the Rescue? Not!

I had no idea that many of those oil paintings that hang in hotel rooms and starter homes across America are actually produced by just one Chinese village, Dafen, north of Hong Kong. And I had no idea that Dafen’s artist colony — the world’s leading center for mass-produced artwork and knockoffs of masterpieces — had been devastated by the bursting of the U.S. housing bubble. I should have, though.

“American property owners and hotels were usually the biggest consumers of Dafen’s works,” Zhou Xiaohong, deputy head of the Art Industry Association of Dafen, told Hong Kong’s Sunday Morning Post. “The more houses built in the United States, the more walls that needed our paintings. Now our business has frozen following the crash of the Western property market.”

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