Our bank regulators, if energy regulators, they would subsidize oil, and tax methanol and ethanol

Sir, there are two comments that I want to make in reference to Robert McFarlane’s and George Olah’s “Let the market determine the best energy sources”, March 4.

The first is that since OPEC is cast as a runaway producer cartel that distorts the market, it is again timely to remind the authors that in Europe, by means of taxes on petrol-gasoline consumption, the European taxman gets more income per barrel of oil than the OPEC members who sacrifice this non-renewable resource.

Secondly, because they argue their case so well, I would like to ask for their support on the issue of bank regulations. Currently bank regulators, by allowing banks to hold much less capital when lending to “The Infallible” than when lending to “The Risky” are, in terms of energy, subsidizing oil and taxing methanol and ethanol, and that is of course pure lunacy.

What we need is not to cap the oil prices but to give them a decent floor

Sir the real oil crisis occurred in 1998 when the price of barrel fell under $10 per barrel and the Economist wrote in "The next shock?" March 1999, that "in today's condition the price would head down towards $5", and this is what primarily explains the current high prices of oil. Had the consumer countries acknowledged the growth in demand that for instance China would bring to the market (IEA did not say a word about it for years) and expressed their willingness to enter into those reasonable long term contracts that would have allowed producing countries to make the massive investments needed we would most probably have faced a completely different energy outlook.

From this perspective Ricardo Hausmann "Biofuels can match oil production" November 7, and that has 95 countries investing billions of billions in cultivating 700m of acres just in order to cap the price setting capacity of OPEC seems to say the least an astonishing proposition. The question to ask Hausmann is what he will do with those 700m acres when oil having been at last given such a real price floor really starts the pumps. Why don't you give OPEC a price floor without having to go into the environmental and economic nightmare of cultivating 700m of acres that will have to be subsidized in the future and that we pray will not include the Amazon?

Just do no harm

Sir, Jaques Diouf “Biofuels should benefit the poor, not the rich” August 15, prescribes such a complexity that our first and only reaction is… forget it! Much more reasonable seems to try to live up instead to that single three word rule that says “do no harm”,

Why do you not sit down and talk instead?

Sir, Mr Vito Stagliano argues that “Opec’s threats prove sense of promoting alternatives to oil” June 12. There might be a thousand reasons for developing alternatives to oil but the only thing that the Opec threats really prove, is the need to sit down with them and talk about the whole issue. For instance if in 1998, when the price of a barrel of oil was $11 and according to some pundits like the Economist heading for $5, someone would have offered to buy the barrel of oil in a long term take up contract centred around $30 with some flexibility on the up and downside, then perhaps we would not be going through the current circumstances. Someone must have a vested interest in the oil issues not being solved by talking.

Sir Samuel Brittan’s blackout

Sir, Sir Samuel Brittan in “Towards a true price for energy” June 8, speaks up for the UK climate change levy and ends by saying “And if Opec made disapproving noises we would know that we were really on to something”.

He must be suffering from memory loss. In late 1998 early 1999 when oil was around $11 per barrel and according to some pundits (The Economist) heading for $5, then the distribution at the pump was 85 per cent for the UK taxman, 5 per cent for distribution and only 10 per cent for the producer who gave up for ever the non renewable resource that we should remember oil is. And sure did Opec produce noise, among others oil at $70 and Chavez.

If only at that time, Sir Brittan would have suggested fair long term take up contracts at $30 dollars per barrel, I can almost swear we would not be living the current extreme market tightness, and so reading him now suggest that the “proper reply to threats from Opec against the development of biofuels is to tell them to take a running jump” is just sad.

By the way, on biofuels, for the sake of our children, please let us not take a running jump, just to run our cars a couple of miles more.

Forget the biofuels and go for a real oil price floor instead

Sir, what do you really mean with your editorial “Biofuels need not leave us hungry”, June 2. You start by mentioning that the US corn based is ethanol grown in Iowa is “eye-watering wasteful”, and there is no one to discuss you on that, but then, though you spell out the arguments of ethanol being only marginal less polluting than oil and that the marginal new production areas of sugar-cane based ethanol lies in the rainforests, you still conclude that EU should drop its tariffs on ethanol…with a dramatic “now before it is too late”

Days ago, May 23, you suggested (for the US) “A price floor for oil” but, since you proposed achieving that by imposing green taxes on gasoline, you were there actually suggesting a price floor for anything but oil. May I instead take you on the word and suggest you try a real price floor for oil, whereby Europe guarantees a take up of oil based on a minimum negotiated price? That would help to bring some real new oil production to the market and, if you then would want to impose some other green taxes on gasoline to finance the cost of that real price floor guarantee or just to further reduce its consumption, well be my guest.

Sir, why does Europe willingly to enter into long term take-up agreements for gas but not for oil?

The addict and his new sourcerer!

Sir, Paulo Sotero and Edward Alden wrote about the United States and Brazil “Building a Biofuels Alliance”, Washington Post, March 8 and which in these days of climate change sound as far as it can from being a holy alliance. What a shame, when the United States should be cutting down on its addiction to cars, it is only looking for a new supplier, and when Brazil should be putting forward proposals to the world of how to keep the Amazon, they are just thinking of cutting it down in order to be that sourcerer.

About the calm and silent Mr Wolf

Sir, walking in the smog of Mexico City, flying over the Amazon jungle and seeing it being deforested in order to grow soybeans for China, and soon perhaps even ethanol for the US, and seeing how the most powerful country in the world still structures its American way of life around the car, is more than enough to know that something is wrong and that something needs to be done. It is then utterly confusing to read Mr Wolf’s “Do we need to cry now that the climate wolf is at the door?”, July 12, that poses such questions as “is the warming itself a bad thing?” and “is there any chance that we will, in practice, find a workable way of dealing with it?” since with these type of doubts he could run the risk of justifying inaction, but perhaps Mr. Wolf suffers from a special phobia against “crying wolf”. Of course, we should be very careful with panicking, and with all those salesmen out there offering lousy escape doors and not really wolf-proof doors, but that does not mean that with respect to the world’s environment, it is not high time to scream out wolf!, at the top of our lungs.

global warming

Let the willing consumer in on the carbon trading principle!

Sir, James Macintosh in “The car industry needs carbon trading”, July 3, puts the full responsibility for carbon-trading on the car manufacturers and also mentions the problem that “automotive carbon trading might not provide politicians with the image boos they get from driving a hybrid car or filling up a car with ethanol from Iowa’s cornfields”. Well, he misses the most important part of the story. As the environmental conscientious consumers are the ones actually purchasing the hybrids and the ethanol, the most important thing to be done is to make them aware that there are more efficient ways for them to help out. Let them get their real image boost by placing a sticker on their window shield stating that though they drive normal cars, with normal fuel, they are contributing all of their cash savings from not using hybrids or ethanol, to smart and cost-efficient environmental projects, like for instance a reforestation of a couple of acres in Tanzania, and that they could perhaps even watch growing on the web.

Yes, that is an effective suicide method

Sir, Mr. Marcelo P. Lima is suggesting the US the “Solution - import ethanol from Brazil”, April 26. Yes, that should do it. Planting the whole Amazon with sugar cane, sounds like the mother of all effective suicidal methods that the world could come up with.