The Power of the Boiling Frog

There is an old story that if you drop a frog into boiling water it will hop out quickly and survive, while if you put one in cold water, then slowly raise the temperature, it will boil without noticing anything.

Much the same thing has been happening this year regarding energy prices.

I took this picture a year ago, at a local gas station. Gas prices had spiked due to Hurricane Katrina, and you may notice -- at the right-hand corner of the picture -- that traffic had nearly halted as a result.

Today the price of gas is within a few dimes of that price, yet Atlanta traffic is as bad as ever. People have gotten used to prices as they have risen, and now shrug them off.

There is a lot of money under that price. Enough to keep our enemies well-armed. Enough to keep oil company profits at record levels. In the medium-term, however, these prices are unsustainable. They are a market aberration.

My point is this moment needs to be seized. We need to make today's prices a floor, not a ceiling. There is enough money there to provide ample incentives for production of solar energy, of wind energy, and of geothermal energy, not to mention technologies that save existing energy stores. But if we allow that money to disappear back into consumer pockets, the new supplies can't be guaranteed a market and the money to create them today won't be invested.

High prices create supply. We should use them for our own purposes, to replace the stranglehold oil now has over us. All we need to do in order for that to happen is get used to them, and tax away lower prices.

The United States uses 40% of the world's oil. If we can cut our consumption by just 10%, through simple incentives, this will have a profound impact on world prices. Such a cut would also result in re-sellable technology. But if we then capture those lower prices and buy new SUVs, we'll be right back where we are today in just a few years. (That image, by the way, is from an Iranian blog.)

That's what happened after the 1979 oil shock. Prices were allowed to fall, and the falling prices were not re-invested in creating new sources of energy supply. Thousands of our bravest men and women have now died as a result of that mistake.

Let's not make it again.