There have been some interesting discussions in the Lutheran blogosphere about oil and national security. CPA insists that we burn the resources of other countries before we drill ANWR, a position I respect in principle, but I’m curious as to whether he’d use government force to secure a commodity. Jeremy Abel reacts to a statement from Senator Lugar (R-Indiana), concluding that we are addicted to oil and we as a nation must do something. Most recently the highly esteemed Dr. Uwe Siemon-Netto gives his thoughts in reaction to a Tom Friedman book and a London Times article that borrows material from a book by Matthew Stein.

Friedman, by the way, believes it’s a good thing for oil to go to $100/bbl so people will change their behavior and it can drop back to $20/bbl. If one will change his/her behavior as a result of $100 oil, won’t he/she revert to the previous behavior when oil is cheap again? Newsbusters exposes his economics further; I’d take anything he writes cum grano salis.

I admire Dr. Siemon-Netto’s suggestion:

Inspired by Appleby’s (sic) article, I have developed a doctoral-level seminar, which I am currently teaching at Concordia Seminary in St. Louis. This seminar has developed into a think tank of sorts whose members are currently trying to develop pastoral care methodologies for a post-petroleum era when neither produce nor people will make it to supermarkets; when the faithful can’t reach their mega-churches; when civil authority falters to the point of chaos that might evolve in God knows what tyranny; when community turns against community, generation against generation, when the young ask their parents and grandparents: Why did you squander our natural resources?

…if for one reason: it would be a non-governmental system that reacts quickly as needs change. There is no way a majority of Congressmen with their staffs as well as the Cabinet offices of the Executive Branch can react as quickly as a Venezuelan dictator with his finger on his country’s valves. Those who relied on their own wits to get out of New Orleans before Katrina fared far better than those who depended on FEMA.

Beyond removing government subsidies to oil companies, cutting gasoline taxes, and reducing the 20+ special gasoline blends as demanded by major metropolitan areas, there isn’t that much our government can or should do that would result in a positive manner. Mr. Stein’s analysis needs some broadening:

Optimists believe that the market — the law of supply and demand — will solve the problem. As oil becomes more expensive, we’ll shift to some other energy source. But do high prices really cut demand? Since early 1999, oil prices have risen by about 350%. Meanwhile, demand growth in 2004 was the highest in 25 years. That’s bad news, because the market won’t push energy companies into pursuing alternative sources of energy until oil reaches considerably higher prices. And then it will be too late to make the switch.

Chevron (earlier in the article) may be fresh out of ideas, but BP (formerly British Petroleum) is branching into other areas, such as liquified petroleum gas and liquified natural gas, solar, coal, and others. The market impetus to survive or die is causing companies to find the next marketable resource. Honda is finding out (link dead) that their hybrids aren’t that profitable yet. They’ve got work to do. The market does respond — and what is this “too late to make the switch” business? Not everybody needs oil at the same price. Those that have cheaper alternatives (clothing, containers, etc.) will switch earlier. Brazil is turning to sugar cane for its energy needs. That ought to make sugar beet growers in Michigan and sugar cane growers in Louisiana happy.

If the federal government (or rather, since the federal government) is subsidizing particular alternative fuels, it is guaranteed to be a waste. President Bush is betting our money on a hydrogen economy, but unless that is the most profitable venture going forth, there will need to be continued government assistance for the long run as the government solution competes with whatever solution the private sector works out. We don’t mine hydrogen; we get it out of water. Energy is consumed from splitting water into hydrogen in oxygen. That initial energy has to come from somewhere. Maybe we have nuclear plants doing the electrolysis—fine. I’m still curious as to how our cars become little Hindenburgs or Challengers when they collide into something. :)

The oil futures market, or any market, is not an on/off situation. Even if Chavez locked down Venezuela from the U.S. tomorrow, as long as prices aren’t arbitrarily fixed, there will be supply. Suppliers have their price point where they bring wells on line that weren’t profitable at $10, $20, $60/bbl. We consumers also have our individual price points where we consider doing something else, and we don’t make our decisions at the same time. That is where behavior is changed, when it hits us in the wallet.

“I knew I should have put more than 5 bucks in!” — Barfolomew, Spaceballs