1. Close the Enron loop-hole. This should have the most impact short term on the speculations that have driven prices up.
2. Provide a tax rebate as proposed by Barack to reduce the spiraling effect energy costs would have on the economy.
3. Immediately shore up local conservation efforts

a)      provide rebates for energy saving activities including home energy conservation initiatives. If more homes can spend about $1000 on energy efficient fenestration and entrances, this can be matched by local rebates to offset this cost (driven by states) or by limited federal tax rebates.

b)      Limited tax rebates for those who wish to install domestic solar panels (the costs are normally recouped in about 20 years). This allows incentives to the relatively wealthier in our midst to chip in via this provision.

c)      Reconsider the limited rebates that come with purchase of fuel efficient cars although the long term savings has already made this viable to even middle class families.

The result of (3) would be admittedly increased spending on these initiatives offset by less demand for oil and less of our revenue going to the middle east.

Short term target price for oil: $3.20 - $3.60/gallon in 12 months.

This projection is based on the following:

(1)   Based on demand and supply economic calculations, projections of oil prices over the past five years sans the speculation indicates a price of $3.30/gallon using a very elastic and conservative economic demand/supply model and factoring in the decreased value of the dollar.

Consumption of Crude Oil: Source: BP DataBrowser

This is in some agreement with Michael Greenberger, the former director of Trading & Markets for the Commodities Future Trading Commission (CFTC), the government board that oversees commodities markets who gave an upper estimate of $3.06 once the Enron loop-hole is closed. Now our calculation is more conservative because we used a conservative model and are factoring in the weakening of the dollar, as well as an assumption that energy scale back based on measure (1) through (3) will be more than matched by growth in consumption in China and Asia even more than suggested by the trend in the chart above.

Said Greenberger in a testimony to the Senate Committee early in June 2008:

“Yes, overnight [closing the Enron Loophole] will bring down the price of crude oil to get at least a 25 percent drop in the cost of oil and a corresponding drop in the cost of gasoline. Some people estimate 50 percent.”
http://www.pensitoreview.com/2008/06/22/closing-enron-loophole-would-drop-oil-prices/

Our estimate is also conservative given proposed measures to shore up the dollar via other economic progress incentives, bringing an end to prolific spending in Iraq ($2billion/week) as well as the removal of local subsidies in China (will most definitely slow down the growth of consumption there). This means that there is room for a pleasant surprise in the above estimate.

Some important figures and charts used in the current projections:

USD to EUR 5 year chart

A new “Manhattan” project:

1. Scientific innovation team to fashion out how our renewable sources can be farmed to levels that provide up to 40% of our needs. Brazil has done this and it took them about 15 years. The focus of this effort
1. should look at other ethanol sources - cellulosic and cane
2. should consider corn ethanol (even at 2-1 energy recovery ratio it is still renewable and better than crude oil in the medium term)
3. should look at recent H₂O fuel options for cars – a technology that has been around for a few years and is being pursued in Japan and the US

2. Scientific innovation and research into the areas of wind and solar technologies.
1. efforts to drive up the efficiency and reduce the cost of axial and centrifugal based wind turbines and research into improvements in general
2. efforts to bring down the cost of solar panels and increase efficiency.

A desired goal would be to ramp up the contributions from these sources to about 20% in the next 8 years.

3. Scientific innovation and research into nuclear energy.
1. ways to improve safety of disposing waste
2. more assurances on operation and environmental safety
3. convene panel to analyze current European deployment - current problems and successes

We should consider increasing the balance of contribution of nuclear energy when current concerns have been better resolved.

4. Scientific research. Consider more local sources such as coal in the short and medium term. Apart from using coal directly for energy generation coal can also be converted for use as a replacement to foreign oil. There are several methods of converting coal to oil - the Fischer-Tropsch and the Karrick process. Part of the scientific research in the medium term would be to focus on ramping up the ratio of our energy that comes from local coal production. Both those methods still suffer from the emission of greenhouse gases in the process. The aim would be to the able to reduce this emission while increasing the recovery efficiency of the process and reduce how much of our money goes to the middle east. But we must also understand that just like oil coal is not regenerable and this is a medium term position.
   http://en.wikipedia.org/wiki/Fischer-Tropsch_process
   http://en.wikipedia.org/wiki/Karrick_process

5. Scientific innovation team to fashion out how to more effectively sequester variable release energy sources including wind, solar, and yes, even hydrocarbons. Wind for use in farms and houses, solar domestically, and hybrid cars would become more viable once the methods to harness their energy release at peak for re-release is improved beyond current levels.
1. this must be driven by more efficient and lighter batteries and energy banking methods
2. fuel cell technology would be explored with the aims of making the cells lighter, more efficient, and more cost effective.

Research has started in these areas (one of which I am actively involved in as a Ph.D graduate of Stony Brook since 2003)

“Manhattan” Project Organization, Administration, and Oversight

All scientific innovation and research initiatives will consist of three components:

§         Convening of an awards and proposal analysis group comprised of technology and policy experts in the relevant fields.

§         Designation of several grant types – by size and focus:

1.      Academic grants (NSF, Other)

2.      Grants to industry

3.      Small business innovative research (SBIR) grants

4.      Grand challenge approach for specific cornerstone and tough sub-problems.

§         Awards and analysis groups will examine proposals for research for funding.

§         Monitor the research and funding and assess benchmarks for progress towards overall project goals and targets.

§         Convening of annual conferences of progress in the relevant fields including presentations and invitations from researchers and experts in the US and internationally. Proceedings will be published and summary and briefings may be made to congressional and/or presidential committee responsible for overseeing progress towards the targets.

Other details will be worked out once bi-partisan committee to set up this project and agree on funding levels is in place.

Other Policies:

6. Increase mileage requirements for cars. This is more of a medium term approach as companies already know how to do some of this and just need leadership. Japan is currently beating American car companies in this regard because they moved early in this direction. We need to aggressively push the catching up phase in Detroit by:
1. imposing aggressive higher mileage requirements that scales and is cognizant of what is achievable by such technology internationally.
2. convening a panel with Detroit automakers on how the government can work with them to speed up the catch up process.

Detroit should want to work with the government and the next president in this regard as it would put them in good stead 4 to 8 years from now. Barring that their problem will be that they might jeopardize their very livelihood relative to foreign competition.

7. Implement cap and trade measures. I will not go into the cap and trade process here as it has been well covered in other sources but readers are employed to do some reading up.

8. Invest in mass transit infrastructure. This initiative will also include efforts at federal, state, and local levels to encourage increased use of mass transit alternatives. Currently, the percentage of transportation by mass transit means is a total of about 12% in the US compared to as large as 40% in some European countries. As noted by ARPA, mass transit utilization rose 3.3% alone in the first quarter of 2008 mostly due to the high gas costs. Our target is to increase the proportion of mass transit to about 35% in the next five years through investment in infrastructure. This desirable trend is favorable considering that mass transit transportation results in less greenhouse emissions per passenger and also enjoys superior safety record (air and rail has an order of magnitude safety record than personal automobile transportation, and even buses do have a higher safety record of about 79 times that of personal automobiles).

http://www.apta.com/media/releases/080602_ridership_report.cfm

-                                                                   Target an increase of the portion of transportation that is mass transit for long distance (greater than 50 miles) to 50% by investing in light and heavy rail and shoring up our air transport systems.

-                                                                   Increase the usage of currently available operational research and optimization procedures to fashion best plans for connectivity and deployment of ideal mass transit initiatives in strategic high to medium population centers as a medium (5 year) term intiative.
(The next two subitems are not included in the presented proposals and represent a personal preference)

-                                                                   Increase acquisition of personal transporters at the government, state and local levels (technology such as the Segway are a completely efficient boon to our environmental efforts and should be a major component of short distance (less than 10 miles) transportation. Although a testament to the history of our technology development, the automobile has a large volume and weight to passenger ratio that is inherently wasteful and more so as the distances decrease (motor bike owners know this).

-                                                                   Encourage public sector research into personal transporters for lighter and more portable systems than is even now available and in successful use. Public sector opportunities such as rent a segway businesses are expected to become available at subway and rail stations. Other improvements to enhance practicality include more comfortable, faster, and lighter versions, options with children wagon, etc.What we must do when PTs become more practical:

                                                                                                                                       i.      enhance our road and transit infrastructure to support and accommodate them (transporter platforms and passageways)

                                                                                                                                     ii.      Intall securable parking at major commerce and transportation centers (malls, bus stops, trainstations) similar to the provision of parking at those centers.

9. Online Communication and Commerce.Commit to a free Internet worldwide and foster initiatives that would encourage online commerce and communication to reduce some pressure on transportation requirements and spur growth in general. A not frequently highlighted result of the high transportation cost is the growth of online commerce and Internet conferencing. There is a Polish family in Long Island about 50 miles from New York who told me they used to commute to the city about once a week to purchase European food supplies not readily available locally. When the cost of the trip became about $20 both ways, they found it more profitable to buy the same supplies online at slightly high cost even when the shipping costs were added. They later opened an online store themselves. This is a trend that is healthy economically and environmentally and will continue. We have to do our part to ensure that we protect and encourage those technologies and build incentives to encourage small and home businesses to exploit and develop them. (It is worth mentioning that some of the initiatives that encouraged the growth of the Internet were put in place during the Clinton-Gore years).

The goal of the "Manhattan" project outlined and above and the other short, medium, and long term relief efforts would be the following:

(Noting that currently imported oil accounts for 58% of our consumption, and about 40% of the nation's energy came from petroleum, 23% from coal, and 23% from natural gas. The remaining 14% was supplied by nuclear power, hydroelectric dams, and miscellaneous renewable energy sources.

http://en.wikipedia.org/wiki/Energy_use_in_the_United_States)

The following projections in the table below are attainable targets of the proposed medium and long term policies as well as sustaining some of the short-term measures

Renewable other includes ethanol – corn, cane, cellulosic, etc.

This is a chart America needs to see that based on instituting the above policies and aggressively working in an aggressive bipartisan way for reform of our energy consumption practices; by 2033 we will not be dependent on a single barrel of imported crude oil.

Justification for Projections

Some of the reductions for oil consumption will come from efficiency and conservation means such as the higher mileage requirements, cap and trade etc., as well as being offset by renewable sources.

Note that the above figures contains room for pleasant surprises as scientific innovation will likely uncover more alternative sources (based on past experience on innovative research) and even some of the newer directions such as water fueled concept car recently unveiled in Japan were not factored in.

http://www.reuters.com/news/video?videoId=84561&amp

On the other hand, in a worst case scenario, we know already (from the Brazilian experience in which renewable cane ethanol provides nearly 40% of their consumption) that the projections for renewable are well within conservative reach. There is also room to move technology around for instance if solar and wind can not be ramped up as a result of innovation and aggressive prioritization and incentives (which is doubtful given that there is room for more solar panels on more houses and even the most conservative pundit today will not state that we are any close to having exploited much of our available wind and solar sources) then we will only need to deliver more on nuclear – again a proven alternative given that countries like France extract almost 50% of their requirements from this source today.

For those who wish to see more figures and spreadsheets regarding how those numbers were obtained please contact the author.