Sunday, July 20, 2008

Economic Stimulus That Also Reduces Energy Consumption

The legislators really missed the boat on the economic stimulus. Of course the executive branch never had a boat to begin with. We all understand that the economic stimulus money went to pay off existing debts or straight overseas in exchange for cheap Chinese goods. It didn’t work. But could a policy be enacted with more merit? Yes.

Instead of just giving $1500 away to the average family, a policy could have encouraged a solution to something else also pressing the U.S. economy. They could have encouraged energy conservation. Instead of just giving the money away, they should have made people turn in receipts for up to $1500 for improvements to their car or home that reduced their energy use. For an automobile tax incentives could have been given to anybody who got a tune-up, fuel efficient car, or approved system enhancements. Houses could use the incentive to install tankless hot water heater, solar or wind generators, or more fuel efficient windows. $700 per person could have been given to those who bought prepaid public transportation vouchers. This would help the economy in a few different obvious ways.

First it would direct more of the money to sources that would return to the local and national economy. Auto mechanics, bus drivers, and plumbers labor can not easily be bought from China. Many of the parts they use are made by American companies too. The money won’t be deposited straight back into savings either. The only way you get it is if you spend it.

Secondly, it would help to drive down the cost of oil by reducing demand. (Sorry all of you ignorant, greedy, self serving conservatives, there is two sides to the “supply/ demand” equations.) We can’t easily force the increase of supply; however we can reduce the demand pretty readily. Many of us might not like it, but we can do it. I can’t find a quotable source but I had heard once that increasing the national fuel economy average just 1 MPG would be equivalent to opening up an oil source that produces 650,000 barrels of oil a day. Considering how many cars are out there, it seems believable. Encouraging better upkeep is going to be way easier then inspiring the Saudis to produce more.

Speaking of which, a 3rd advantage would be the reduction of foreign oil dependence. It turns out that many of the people in the countries we have to get that oil from don’t like us. Don’t take it too personally they don’t like each other as well. The more we take the lead on this issue the better our chances are to remain standing as the worlds superpower.

Forth, the promoting of these activities might make them a more common and acceptable substitute for the norm. More people may take public transit, tune their car up, or install energy efficient house hold goods.

Last, the savings on the energy cost would supply an economic boost that could last longer then the cash supplied without conditions. The money saved in the reduced energy cost would also be available to buy cheap crap from China. But that is another story.

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