Federal and state governments need to implement smart

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Unformatted text preview: s off oil starts with a change in attitude about the way we get around. Such change is possible. When gas prices skyrocketed, we saw the market for SUVs dry up and the Toyota Prius become as much of a status symbol as a sports car. Automobile advertisers started touting fuel economy over horsepower, and the hype surrounding the Chevy Volt and the Nissan Leaf plug-in electric vehicles has been enormous. But an attitude shift alone won’t end our dependence on oil. Federal and state governments need to implement smart transportation policy. Solutions such as building solar recharging stations for electric cars, electrifying and increasing the reach of high speed rail, investing in public transportation, emphasizing smarter urban development, and strengthening fuel economy standards will save more oil than would be sucked from the ground under President Obama’s plan to expand offshore drilling. Solutions dovetail with each other. Smart growth links land development, transportation, and economic growth to people’s everyday needs. Instead of the sprawl of parking lots and big-box retail stores, smart growth communities are built around subway stops and bus routes and encourage walking and biking. Zoning is mixed so people can work, live, and shop in the same area. Solar recharging stations can be built in existing parking areas and augment local energy grids when they’re not being used. More investment in public transportation will expand the reach of these communities . Well-funded high speed rail corridors can facilitate quick, clean, and affordable travel between urban centers. 48 Oil DDW 2012 1 Perception 49 Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 Perceptions of shifts in oil demand can cause greatly influence prices OECD, 04 OECD, Organisation for Economic Co-operation and Development, 12-17-04, [“OIL PRICE DEVELOPMENTS: DRIVERS, ECONOMIC CONSEQUENCES AND POLICY RESPONSES,” OECD Economic Outlook No. 76, http://www.oecd.org/dataoecd/19/6/34080955.pdf] The first two scenarios suggest that oil price projections may be particularly sensitive to assumptions about the demand for oil. Moderate variations in global growth (½ per cent per annum stronger except in China, where the variation is 1 per cent) could push the oil price up by an additional $4.50 by 2030 (scenario group 1), while an increase of 0.2 in the income elasticity of oil demand could lead to an oil price some $13 higher (scenario group 2). In both cases, the magnitude of the shock imposed is plausible; any GDP growth projections over a 25-year horizon will have significant error bounds associated with them, and the range of estimates for long-run elasticities of demand with respect to income is sufficiently wide to suggest that a 0.2 percentage point change relative to the baseline assumption is possible. Although the scenarios presented in Table IV.2 are for positive shocks to growth and the income elasticity, negative shocks are equally plausible (with the impact approximated by reversing the signs in Table IV.2). As discussed in the annex, the model already assumes that the income elasticity of demand has declined since the 1970s, consistent with falling oil intensity and on-going technological change. But this process could continue over the next 25 years, resulting in even lower income elasticities. 50 Oil DDW 2012 1 US Demand Key to World Prices 51 Last printed 9/...
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