Is President Obama responsible for spiraling price of gasoline? Republicans say yes, but the facts say no.

Why have gasoline prices increased since the start of the year? The simplest explanation is that the price of crude oil has increased. Specifically, the spot price for Brent (North Sea) crude has increased $16 a barrel since January. Given that there are 42 gallons to a barrel, that works out to a 38 cent increase in the price of a gallon of oil. Spot prices for gasoline trade in New York have increased about 41 cents per gallon over the same time frame. So there you go.

Why is the price of North Sea oil relevant to the price of gasoline in the United States? Well, we import gasoline refined in Europe from North Sea crude. Even though these imports constitute less than 10 percent of U.S. gasoline consumption, they are necessary to satisfy domestic demand and their price sets the market price for all gasoline regardless of whether other cheaper crude sources are used to refine most of our gasoline.

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Without question, the problem can be traced back to a renegade Iran. For good and sufficient political reasons, the West has come to see that the Iranian nuclear threat is not just bluster. Indeed, it poses far greater risks to world peace and the political order than even a major disruption in oil supplies.

Hence an anxious West has now put into place a reasonably effective concerted effort to cut off Iran from the world’s banking system, and to block the use of Iranian oil internationally, which has been made easier by the Saudis’ willingness to expand their own shipments into the world markets. Nor have the Iranians sat back idly. They have cut off exports to the United Kingdom and France, a move that is largely symbolic. But the Iranian threat to close the Strait of Hormuz, through which about one-third the world’s oil supplies travel, is not symbolic. Nor is the movement of the U.S. aircraft carrier, the U.S.S. Abraham Lincoln, into the Strait of Hormuz, merely symbolic.

For both the short and the middle term, these developments have driven the base-line price of Brent crude from the North Sea up to around $119 per barrel. That translates into a potential price at the pump of about $4.25 per gallon, which undoubtedly will eat into the pocketbooks of many Americans.

He concludes that the worst possible thing, for gas prices, is for politicians to start looking for “something to do”. (And, yes, he criticizes both Democrats and Republicans on this issue.) Rather, we should sit back and let individuals and companies figure out the best way to react to the increased risk and the possibility of sudden shortages.

The question on the table is how best to respond to the disruptions in oil supplies, not to pretend that these disruptions do not exist. On this score, the great advantage of a market system is that it forces Mr. Coudle (and everyone else) to think hard about the relative value of the goods and services he consumes and to make cutbacks in a cheap and rational fashion. In both good times and bad, people are always having to decide which goods and services to spend their incomes on, and which to forego.

Price movements give them an accurate, instantaneous, and impersonal picture of how other people value various goods and services. When oil prices rise, its least valuable uses are the first to drop out of the system. The decisions are typically made on a continuous basis, so that if some people find that they have cut back purchases by too much (or too little), they can increase (or decrease) their purchases in the next pricing period. Spurred on by these price increases, people can also make changes in their spending patterns elsewhere to offset the inconvenience of the higher prices for oil products. Purchasing a hybrid, insulating your home, and moving closer to work are just some of the many ways to save money. Good luck to Mr. Coudle, who provides an object lesson in how that task should be done.

The great risk is that the government will undermine the market by resorting to centralized devices to cap the price increases or to dictate its collective vision of the just price. Now is the time to recall the lessons of Friedrich Hayek’s best writing, the scholarly essay “The Use of Knowledge in Society” (1945), which is about the superiority of a decentralized price mechanism in response to system-wide shocks. As he reminds us, “The knowledge of the circumstances of which we must make use never exists in concentrated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all separate individuals possess.”

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The United States’ rapidly declining crude oil supply has made a stunning about-face, shredding federal oil projections and putting energy independence in sight of some analyst forecasts.

After declining to levels not seen since the 1940s, U.S. crude production began rising again in 2009. Drilling rigs have rushed into the nation’s oil fields, suggesting a surge in domestic crude is on the horizon.

… By the EIA’s forecast, the United States will challenge Saudi Arabia as the world’s top oil producer when crude and other forms of liquid petroleum are included. But the U.S. is also the world’s top oil consumer, demanding nearly 20 million barrels a day. So even with an oil boom, the nation still falls far short of its energy demands.

I’d love to challenge Saudi Arabia as the world’s top oil producer. I’d love to weaken the power of those terrorist sponsoring, women abusing cowards.

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To be sure, part of the reason for this change is that demand for energy in the U.S. is down in the sluggish aftermath of the Great Recession, while demand for energy in other parts of the world is rising. For example, the U.S. is now a net exporter of oil to Brazil, Mexico, Argentina. While exports and imports will bounce around in the short-run, over the longer run it appears that the U.S. is on track to become an energy exporter of oil, coal, and even natural gas (as technology improves for shipping liquified natural gas).

I look forward to the day when the U.S. becomes a net exporter of oil to Venezuela. Given how badly Chavez is mismanaging things, that may not take as long as you’d think.

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It turns out that the great majority of this energy, 10.2% out of the 13.8% share, comes from biomass, mainly wood (often transformed into charcoal) and dung. Most of the rest is hydro; less than 0.5% of the world’s energy comes from wind, tide, wave, solar and geothermal put together. Wood and dung are indeed renewable, in the sense that they reappear as fast as you use them. Or do they? It depends on how fast you use them.

One of the greatest threats to rain forests is the cutting of wood for fuel by impoverished people. Haiti meets about 60% of its energy needs with charcoal produced from forests. Even bakeries, laundries, sugar refineries and rum distilleries run on the stuff. Full marks to renewable Haiti, the harbinger of a sustainable future! Or maybe not: Haiti has felled 98% of its tree cover and counting; it’s an ecological disaster compared with its fossil-fuel burning neighbor, the Dominican Republic, whose forest cover is 41% and stable. Haitians are now burning tree roots to make charcoal.

You can likewise question the green and clean credentials of other renewables. The wind may never stop blowing, but the wind industry depends on steel, concrete and rare-earth metals (for the turbine magnets), none of which are renewable. Wind generates 0.2% of the world’s energy at present. Assuming that energy needs double in coming decades, we would have to build 100 times as many wind farms as we have today just to get to a paltry 10% from wind. We’d run out of non-renewable places to put them.

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Here’s part of the conclusion of a recent, data-rich paper by Indur Goklany; this paper is Chapter 6 in Climate Coup (Patrick J. Michaels, ed., 2011):

Despite claims that global warming will reduce human well-being in developing countries, there is no evidence that this is actually happening. Empirical trends show that by any objective climate-sensitive measure, human well-being has, in fact, improved remarkably over the last several decades. Specifically, agricultural productivity has increased; the proportion of population suffering from chronic hunger has declined; the rate of extreme poverty has been more than halved; rates of death and disease from malaria, other vector-borne diseases, and extreme weather events have declined; and, consequently, life-expectancy has more than doubled since 1900.

And while economic growth and technological development fueled mainly by fossil fuels are responsible for some portion of the warming experienced this century, they are largely responsible for the above-noted improvements in human well-being in developing countries (and elsewhere). The fact that these improvements occurred despite any global warming indicates that economic and technological development has been, overall, a benefit to developing countries [pp. 181-182].

This is why I don’t think we should be engaging in any crash programs to reduce carbon emissions or restrict fossil fuel usage.

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By increasing U.S. oil production (from off shore drilling, from natural gas fields, and from shale oil fields) we could cut our oil imports roughly in half.

By using U.S. resources, and creating U.S. jobs, we could end our dependence on oil imported from unstable, risky regimes. What’s not to like? Why is this such a hard thing to approve?

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Instead of storing it in Yucca Mountain, why don’t we use it to generate clean electricity instead?

One big road block: getting a national government somewhere to allow someone to actually build and operate such a reactor.

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On the claim that oil companies are extracting increasing amounts of water instead of oil:

But this is hardly a concern — the buildup is caused by the Saudis pumping seawater into the field to keep pressure up and make extraction easier. The global average for water in oil field yields is estimated to be as high as 75 percent.

On the claim that we’re only discovering one new barrel of oil for every 3 or 4 that we pump:

When a new field is found, it is given a size estimate that indicates how much is thought to be recoverable at that point in time. But as years pass, the estimate is almost always revised upward, either because more pockets of oil are found in the field or because new technology makes it possible to extract oil that was previously unreachable. Yet because petroleum geologists don’t report that additional recoverable oil as “newly discovered,” the peak oil advocates tend to ignore it. In truth, the combination of new discoveries and revisions to size estimates of older fields has been keeping pace with production for many years.

Actually, the consensus among geologists is that there are some 10 trillion barrels out there. A century ago, only 10 percent of it was considered recoverable, but improvements in technology should allow us to recover some 35 percent — another 2.5 trillion barrels — in an economically viable way.

In the first chapter, Jerry advocates a form of energy production known as the Ocean Thermal System (OTS).

It is an Earth-based solar power system, and the concept is simple enough. All over the Earth the sun shines onto the seas, warming them. In many places—particularly in the Tropics—the warm water lies above very cold depths. The temperature difference is in the order of 50° F, which corresponds to the rather respectable water-pressure of 90 feet. Most hydro-electric systems do not have a 90 foot pressure head.

The system works simply enough. A working fluid-such as ammonia—which boils at a low temperature is heated and boiled by the warm water on the surface. The vapor goes through a turbine; on the low side the working fluid is cooled by water drawn up from the bottom. The system is a conventional one; there are engineering problems with corrosion and the like, but no breakthroughs are needed, only some developmental work

The pollutants associated with the Ocean Thermal System (OTS) are interesting: the most significant is fish. The deep oceans are deserts, because all the nutrients fall to the bottom where there is no sunlight; while at the top there’s plenty of sun but no phosphorus and other vital elements. Thus most ocean life grows in shallow water or in areas of upwelling, where the cold nutrient-rich bottom water comes to the top.

More than half the fish caught in the world are caught in regions of natural upwelling, such as off the coasts of Ecuador and Peru.

The OTS system produces artificial upwelling; the result will be increased plankton blooms, more plant growth, and correspondingly large increases in fish available for man’s dinner table. The other major pollutant is fresh water, which is unlikely to harm anything and may be useful.

Well, that sounded impressive enough. This book was written in 1979. Why haven’t had I heard more about OTS? Then, this morning, I did hear more about OTS. The New York Times published an article about it. The Times’ article offers a brief overview of the technology while also talking about how expensive it could be to use.

Skeptics say that the technology is highly inefficient because it requires large amounts of energy to pump the cold water through the system.

Patricia Tummons, who edits the newsletter Environment Hawaii, said a major question about the technology was “just how economical it can be.”

Robert Varley, who is helping to lead Lockheed’s efforts, estimated that just 3.5 percent of the potential energy from the warm water pumped might actually be used. “In reality that doesn’t matter — the fuel is free,” he said.

This is something I’ll be keeping an eye on.