We Can Solve the Financial Crisis by Destroying OPEC
There's a way to force the oil cartel to compete with other energy sources.
November 11, 2008 - 12:00 am
The graph below shows a comparison of American oil expenditures with net investment in housing stock.
It can be seen that in 2003 we spent 25% as much on oil as we did on houses. In 2008, we spent over 140%. This is why our housing market has collapsed. It is also why new auto sales have collapsed as well. Indeed the $760 billion increase in our oil payments is fifteen times the $50 billion decline in what we spent on new cars in 2008.
So, as a result of this massive new tax on our economy — by far the largest in American history — the United States is being driven into a recession. But for poor countries, which can afford it even less, the effect of the brutal OPEC global taxation program is much worse.
If we want to avoid complete economic defeat, we need to destroy the oil cartel. This cannot be done through conservation, because — putting aside the difficulty of getting the whole world to agree on conservation — so long as they are the only game in town, the cartel can always counter any conservation program by cutting production to match. The only way to beat them is to break their vertical monopoly by creating fuel choice on a global scale. The U.S. Congress can make this happen with a stroke of the pen, by passing a law requiring that all new cars sold in the United States be flex-fuel vehicles that can run on any combination of gasoline, ethanol, or methanol. The technology is readily available and it only costs about $100 per vehicle.
By making America a flex-fuel vehicle market, we will effectively make flex-fuel the international standard, as all significant foreign car-makers would be impelled to convert their lines over as well. Around the world, gasoline would be forced to compete at the pump against alcohol fuels made from any number of sources. These include current commercial crops like corn and sugar; cellulosic ethanol made from crop residues and weeds; methanol, which can be made from any kind of biomass without exception; as well as coal, natural gas, and recycled urban trash. By creating such an open-source fuel market, we can enormously expand and diversify humanity’s fuel resource base, protecting all nations from continued blackmail, robbery, and indeed, in some cases, starvation, induced by the oil cartel.
If we fail to do so, we are going to be taxed into depression.