The Most Important Graph in the World

Monday, December 1, 2008

Against Turning the Road Gang Loose

A lot of people who always say that more pavement is the solution to any problem have latched onto the current economic meltdown, arguing that more pavement is really a jobs program. Tom Toles does a wonderful depiction of where this leads.

Infrastructure spending is an investment, and there are some jobs available building infrastructure. But the time when you're reeling drunk from the temporary price collapse of oil is not the time to make big, long-term capital investment decisions.

We need to make investment decisions as if oil was still $140 a barrel, because it will be there again soon enough. Then the money invested in infrastructure would truly be invested, because it would make us more capable of coping with that $140/bbl oil, and $200/bbl oil and so on.

Oil is down only because our economies can no longer function on "hallucinated" currency (h/t to James Kunstler for the perfect description of our credit binge). We'll be in a long recession or depression, and as long as daily pumping capacity even slightly exceeds world demand, prices will be low. But that's a big if, and an unpleasant one. In a world of 6.7 billion people and climbing, keeping oil demand below extraction capacity means that the per human usage has to keep going down just to stay still. And that means economic misery is baked in. As soon as "recovery" starts to gain steam, demand will increase. We're at such a tenuous balance around 87 million barrels per day (for all liquid fuels) that the instant demand exceeds supply, prices will leap up again.

President-elect Obama said something that made me feel a lot better about him right after his election: he said that falling oil prices made it even MORE vital that we deal with our energy addiction, because of our history of alternating between hysteria and coma when it comes to thinking about energy. That's an important insight, and for the guy in the White House to recognize that bodes well for us.

All the money that the road gang is lusting after would create just as many jobs if turned onto building a new electric grid and into electrifying heavy rail and building a close, fine-grain network of light rail systems that will enable America to get through its perpetual adolescence of auto addition once and for all. And then, when oil prices shoot up again, we'll be in the catbird seat, instead of on the torture rack.

UPDATE: Oregon Environmental Council adds this.