Bill Paul's book takes a stab at predicting what the energy sector of the future will look like. It's refreshing to see a journalist taking the future of energy seriously. I really like some of his analysis. For example, he calculates that if all the hidden subsidies were included, the cost of a gallon of gasoline would be at least $11 a gallon. These subsidies include such things as military expenditures, lost economic opportunities due to transfer of funds to oil-producing countries, and the like. Paul is certainly correct here. In my opinion, $11 a gallon is actually a lowball figure. For example, he says nothing about one of the most destructive forms of government subsidy, local regulation requiring the provision of certain numbers of parking spaces around businesses and residences. Most American localities have such regulations, which are known as parking requirements. The idea behind parking requirements is to make sure that free parking is always available. Unfortunately, the effect is to favor automobile travel over other forms of transportation, like walking, that don't require all that vehicle storage space. It's a form of enforced inefficiency. U.S. building codes also favor the automobile in other ways, such as by requiring very wide streets. Parking requirements are one of the main reasons why housing is so expensive in the U.S. The cost of parking requirements in the United States is in the hundreds of billions of dollars per year, which would shove up that per gallon price a few more dollars. For more on this, see Donald Shoup's book "The High Cost of Free Parking."
Paul assumes economic growth is a good thing. Economic growth is generally measured by GDP, which as a measure of well-being is so inaccurate as to be almost laughable. GDP is measured by counting up what is spent on various items. This works more or less OK if you're counting food bought by hungry people, but very poorly indeed if you're counting money spent on bombs or automatic rifles, or on parking garages for rich people's cars. GDP is not corrected for increasing population, pollution, exhaustion of natural resources, or declining quality of life. More accurate measures of economic growth, such as the Index of Sustainable Economic Welfare or Genuine Progress Indicator, tend to show that there has been far less genuine economic growth than the official statistics suggest. For more on this, see McKibben's book "Deep Economy," Daly's "Beyond Growth," or Brian Czech's "Shoveling Fuel for a Runaway Train."
I think Paul is too optimistic on how easy it's going to be to make the switch to new technologies and keep our current American lifestyle going. Driving 90 minutes alone each day just to get back and forth to work in my opinion is not a viable option for the long-term future, no matter how efficient the car. The U.S. population is still climbing. None of Paul's proposals will work if this continues. Even if we managed to find a way to fuel all the existing cars with alternative fuels, it's very unlikely we could find enough to fuel cars for all the newcomers, not to mention housing, heat, lighting, etc. No matter how you look at it, a stable population is the first requirement for a sustainable economy. In the U.S. that means we have to take reducing immigration seriously. If we want to keep any semblance at all of the current U.S. lifestyle, we can't invite an unlimited number of people to this party.
Paul is excited by the possibility of converting garbage and other wastes to energy. I tend to disagree with him here. A great deal of the wastes we deal with today are themselves products of the age of cheap oil. An example is meat by-products, such as turkey offal. Cheap turkey is itself a product of cheap grains, which are produced using natural gas-based fertilizers and shipped long distances using diesel fuel. These products are not likely to be available for energy production in the future. For more on this see Kunstler's book "The Long Emergency."
Paul devotes a chapter to "Every Drop of Oil We Can Get is Important," discussing how to get more oil out of of the ground to meet demand. Paul has this completely backward. The more we push to get the last drop out of U.S. oil fields now, the sooner the earth's oil endowment will run out. Fossil fuels are the product of millions of years' worth of sunlight falling on ancient swamps. When they're gone, they're gone. We'd do better keeping them in the ground for a while longer. That oil will be worth a lot more in 50 or 100 years than it is today. What we need to be aiming for is the softest possible landing when making the transition away from fossil fuels. The sooner we start, the longer we'll have at least some of those fuels around to ease the transition.
Paul thinks raising gas taxes is a loser because of how Americans feel about their cars and trucks. He prefers a scheme known as Tradable Gasoline Rights, or TGR. I simply don't see the advantage of this over conventional gas taxes. I think a rise in gas taxes would work fine if it were carefully handled. The most important point is that it needs to be a tax shift, not a tax increase. Raise gas taxes while reducing income taxes, with the shift in tax types being dollar-for-dollar as closely as possible. Why would people object to this? After all, if they really wanted to, they could simply take their income tax savings and spend them on gas. We need to tax less things we want--like income and employment--and more of things we don't want--like fossil fuel use.
Paul also doesn't like gas taxes because they can hurt the poor. Wake up! Anyone who can afford a car these days probably isn't among the poor.
I really enjoyed Paul's analysis of the risk of large shocks in oil prices. This is a serious problem that doesn't get enough attention.