My friend Jeff directed me to an article about new advances in combustion engine technology. Reading about new technology has always been pleasurable for me. It’s almost like I can sense the future rushing past. It’s very refreshing. Maybe I should be a journalist who writes about new technology. Would be pretty nice — I could travel, meet interesting people. Alas, I have chosen to be an economist. But then I am pursuing something brighter on the horizon in that field, too; a world in which unimpeded commerce and trade ties us all together in peace and allows us to have as much of the things we value as possible.
The technology sounds incredibly exciting. Some of the claims regarding what it is capable seem hard to believe, like eliminating or drastically reducing NOx from gasoline engines and particulates from diesels. This is done by controlling the intake and exhaust valves, which direct air into and exhaust out the cylinders, independently from the action of the pistons (these valves are usually driven by the pistons). The key breakthrough was the development of a mathematical model that makes this independent control feasible.
Though I enjoyed the article, I do have a few complaints. The headline really got my goat. I bridle at the implication that reducing oil consumption is some kind of worthy goal unto itself (I feel another post coming on). I don’t buy that the diminishing supply of oil is cause for alarm, and I don’t buy that it hurts our national security that much of our oil comes from unfriendly regimes (shouldn’t we be glad that they depend on our demand for their exports?). The negative externalities imposed by drivers, power plant operators, and others should be internalized into the market, it’s true — but it’s not clear how much of a reduction in oil consumption doing so would produce, so this line of reasoning does not necessarily jive with a policy of cutting back drastically.
I am starting to dislike the labeling of some fuels as “alternative,” as the article does. Such labels are being used to imply that these fuels are inherently “better” (as if it were immoral to use oil). Internalize the costs and let the market decide, dammit! And it’s hard to be excited about how this new technology will aid in the use of ethanol, since ethanol is so popular only because it works well as a green cover for the government’s massive handout to corn producers.
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May 11, 2007 at 10:47 am
Jeff
“I don’t buy that the diminishing supply of oil is cause for alarm”
Excuse me for diverting in the geek analogy here, but I frequent a computer hardware forum, and on one of the posts someone was lamenting the switch from AGP to PCI-e, saying “well we’re just now getting to the point where PCI-e is necessary, why’d they have to change back then?”. The answer is of course that it’s better to be prepared for for the need that you know is coming before it arrives. If the hardware companies had waited until they NEEDED PCI-e before they switched then it would have been much harder on everyone involved from the engineers to the consumers. While the diminishing supply of oil isn’t necessarily a cause for alarm, it is something that should be taken into account, we will eventually run out of oil. When? No one knows, but it will happen. It’s much better to be prepared and have alternatives available before it happens and have some method of stretching the supply more so that the end comes more slowly (giving more time to react), then try to switch over as we run out.
“and I don’t buy that it hurts our national security that much of our oil comes from unfriendly regimes (shouldn’t we be glad that they depend on our demand for their exports?).”
Well if you consider that the people we are sending dump trucks full of money to are the same people who funded 9-11 you might wonder if they even pay attention to were the money comes from. Never forget that ideology trumps sense, if they subscribe to an ideology that says that we must be converted to their ideology or killed then they aren’t likely to stop just because we give them money.
“The negative externalities imposed by drivers, power plant operators, and others should be internalized into the market”
I’m still a bit hazy on the terms you use for the economics, but I think you are talking about the idea of pollution tax and the like right? Doesn’t it make sense that if you institute a tax on pollution that you should have less-polluting alternatives? It would be a little silly to say “we’re going to tax you if you drive this but we don’t have any other options for you to drive.”
“Internalize the costs and let the market decide, dammit!”
But once again, if there is no alternative in place then the market doesn’t have a choice. A push must be given for it to be worth the while of business to explore alternatives, giving the market the ability to decide on something different.
“And it’s hard to be excited about how this new technology will aid in the use of ethanol, since ethanol is so popular only because it works well as a green cover for the government’s massive handout to corn producers.”
Especially since corn actually has a net cost of energy to turn into ethanol while something like sugar doesn’t.
May 12, 2007 at 12:14 am
cdfox
“Especially since corn actually has a net cost of energy to turn into ethanol while something like sugar doesn’t.”
Yes! Glad to see we agree on this. I don’t get why we have huge tariffs on ethanol from Brazil, which is primarily made from sugarcane. Well, actually I do get it — the corn lobby is powerful. While you can perhaps make an argument for switching away from energy supplied by countries that have nasty governments, Brazil is hardly the enemy. I can’t remember exactly where, but I read a comment on a blog that pointed out the important distinction between energy security and energy independence.
On a side note, a google search for “ethanol tariff” returns this piece of trash.
“If the hardware companies had waited until they NEEDED PCI-e before they switched then it would have been much harder on everyone involved from the engineers to the consumers.”
What I’m suspicious of are calls for government action. The example you bring up, though I think you meant it as a counterexample, affirms what I am arguing — that the market takes care of these things.
“It’s much better to be prepared and have alternatives available before it happens and have some method of stretching the supply more so that the end comes more slowly”
If a car suspects that oil will soon get more expensive, would it not develop such alternatives in response to the anticipated future demand for non-oil powered cars?
“Doesn’t it make sense that if you institute a tax on pollution that you should have less-polluting alternatives?”
Yes. And businesses will develop those alternatives in response to the demand created by the tax, in the long run. In the short run, if all else fails, people do less of the polluting activities. Power plants produce less power, and drivers drive less (whether by getting where they’re going via a different route or by staying home).
“A push must be given for it to be worth the while of business to explore alternatives”
The tax would be the push, in that it would raise demand for less-polluting alternatives. You might think that this approach is basically equivalent to whatever you have in mind (subsidies for R&D, production of less-polluting goods? mandatory requirements for car producers and power plant operators?), but a pollution tax (or a system of tradable permits, in the case of power plants and factories) is better. I think both John and I have talked about externalities in past posts. Try this and this.
To justify the more direct intervention that I think you’re suggesting, you need to explain why, for example, car companies would fail to develop new technology in response to the demand for more efficient vehicles (created by a higher gas tax) or in anticipation of future demand for cars that don’t run on oil (since oil will become very expensive at some point). After all, by doing so they would be missing out on potential profits.
On a related point, the Seattle Electric Vehicle Association had some converted electric cars at UW a few days ago, in part to promote the film “Who Killed the Electric Car?” I spoke to someone there who referenced the EV-1 as proving the phoniness of car makers’ claims that electric vehicles are not feasible in the marketplace. However, I have a different interpretation. The whole EV-1 episode shows that alternatives to gas-powered cars can be pretty easily developed with existing technology. Indeed, electric cars were the first cars. Hence, the only thing that could be holding back such alternatives is that gas-powered cars are the best value for the consumer at the moment. Now, maybe electric vehicles would be a better value if consumers faced the true cost of using gasoline. In that case, we should use the best methods available to make consumers feel that true price (although getting voters to go along with it is another story).