The Fed can only manage monetary policy. If Congress wants to fix the petroleum energy crisis with policy, it has the tools to do so.

High gas prices are mostly a function of insufficient refining capacity, short of the government building more, I dont see a policy fix here. The market is responding to the probability of an electric future.

Mandate work from home capability for anyone who can work from home; prioritize oil consumption for non discretionary use cases where you have no choice but to move atoms vs bits. Agree with your thesis otherwise, no way to juice output in the short term, only shims until electrification ramps faster (which, I argue, should carry the same gravity and speed as a wartime effort, but alas I am not a politician).

Edit: Normally I’d suggest a carbon tax and rebate to low income folks, but that would directly work against Fed FFR increasing efforts and Congress is so pathetic as to not be able to get it done.

Mind you, I think the electric future s 15-30 years away, not 8-15 - but the lifetime of a refinery is 40-50 years. Thats the issue, it wont pay for itself on a conventional amortization schedule.

Disagree. We’re already past peak combustion vehicle sales per Bloomberg NEF, and the rate of EV sales will only increase based on operating costs versus combustion vehicles.

Lots of folks interested in EVs when fuel is $5-6/gallon, which will remain for some time. Gotta scale up faster, build the machine that builds the machine and whatnot.

https://e360.yale.edu/digest/new-analysis-suggests-we-have-p...

https://about.bnef.com/blog/electric-vehicle-sales-set-to-ri...

Disagree. Those combustion vehicles are sticking around longer. Getting 15+ years out of a combustion vehicle is a piece of cake. They also have to be replaced. There is not going to be any where enough production capacity to replace all of those for a while. The early EVs will have shorter lives for one reason or another so the used market for those will suck for at least a decade. There is also going to be grid issues which will either out right prevent electric vehicle adoption or slow it. Sure, you might get to the point where few new vehicles are combustion in say 10 years, but the used market will be quite a different story.

Don't get me wrong. I WANT an EV, but there isn't one out there I would buy. No way am I getting a 1st, 2nd, or 3rd year EV. I'm not going to be a beta tester. No way am I getting an EV with just touch screens. No way am I getting an EV which is a pain to maintain or repair.

I think you're underestimating the long tail, the average age of a vehicle is 12.2 years old, we're probably 15-20 years from where 50% of vehicles on the road are electric. I'm 39, and I do not see a point in my expected lifetime (around another 35 years) where gasoline and diesel fuel will not be common and available.

Unleaded gas was introduced in the 1970s in the US - and leaded gas was still made and sold until the 1990s. And it's still available if you know where to look in every city in the US as 100LL Avgas, or with additives.

I'm expecting retail gas stations to be common for the next 20-40 years, with some density reduction towards the middle of that period is what I'm saying more or less.

To say leaded fuel is still available is a little bit of a misnomer, in the states anyhow, its not legally available as a road fuel, nor is a TEL additive - there are lead substitutes, but they're potassium I think, largely to prevent valve seat wear.

As far as I know, low octane unleaded fuel has always been available, you could always get a 'regular' grade gas without TEL, and premium fuel was marketed as with TEL.

Yeah, was just showing that it takes time for things to change, even given that most cars sold in the 70s worked fine on unleaded, there were still leaded cars out there.

And cars didn't last nearly as long as they did before.

> I think the electric future s 15-30 years away, not 8-15

This definitely varies on the definition of "the electric future" is. Are we in the electric future when the number of total passenger miles driven increases or stays the same while the gallons of gas combusted for passenger car travel decreases? Is it when >50% of cars on the road are electric? 100% of passenger cars?

50% of the cars on the road, is the metric I use, I'm 39, and I do not see a point in my expected lifetime (around another 35 years) where gasoline and diesel fuel will not be common and available.

>Mandate work from home capability for anyone who can work from home;

Oh yeah that'll get past congress. I'm sure one of our parties won't have an aneurism over this idea :)

The federal government is one of the largest employers in the country, if the President signed an executive order moving most jobs that could be done remotely to remote, it would have a positive impact on oil demand.

That could happen tomorrow. It could be challenged in court, but the internal running of federal departments hasn't traditionally been successfully been upheld unless they have some novel legal theory as to why this is unconstitutional.

> I dont see a policy fix here.

Relax regulations which prevent companies from building new or expanding plants?

> The market is responding to the probability of an electric future.

The "electric future" is so far out there. The fuel would likely just be exported. Also, fuel is not the only thing produced at refineries.

Where is all this new demand for gasoline coming from? I know a lot of people are back to in-person work and school, but a substantial number of people are now full or part-time WFH where they weren't before 2020. On top of that we've "unexpectedly" lost over a million people in that same time frame. Shouldn't demand for gasoline be lower than it was before the pandemic?

The million lost weren't big gas users, I suspect.

And those of us left are apparently filling our swimming pools with it

It does, and it has:

- reduce speed limits, like in the 70s. Actually enforce with speed cameras everywhere (bonus, fewer people will die). - mpg mandates for new vehicles, like Obama, but now also include light trucks. (bonus, fewer people will die).

The fact that they are not even being discussed by policymakers in this context of high gas prices tells you that driving fast with large vehicles is fetishized.

It's true that economic policy is structured such that Congress has effective control over the non-monetary levers.

The problem is that Congress is functionally ineffective at responding to popular demand, intentionally. The Senate is structurally allowed to act anti-democratically against the will of the populace: two representatives for fifty arbitrarily defined land areas are allowed to override proportionally elected representatives, and the filibuster allows only a third of them to block any action.

We are at a political impasse. Things will get worse because it does not look good to the minority party for the majority party to enact real economic wins.

If only the majority party were willing to wrestle a tiny speck of that anti-democratic power away from the Senate by overriding extreme rules like the filibuster...

>If only the majority party were willing to wrestle a tiny speck of that anti-democratic power away from the Senate by overriding extreme rules like the filibuster...

Or reverting back (pre-1970s) to the "Talking Filibuster,"[0] where you could only stop a vote by continuing to "debate" on the floor of the Senate.

That won't solve the problem, but it would be a step in the right direction: Talk until you can't and in the meantime, try to negotiate with the majority.

[0] https://historynewsnetwork.org/article/149663

We need to abolish the Senate or at least make it as irrelevant as the House of Lords.

Bring back the requirement that a filibusting senator speak one the floor indefinitely to prevent a majority vote from happening.

A huge component of American and British inflation is endogenous (stimulus checks, loose monetary policy, etc…). Both the central bank and the government can and should do something about it.

Core inflation in the UK is 6.2%, in the US is 6%, more than half the inflation rate. This is not the same in countries more affected by the energy shock, such as the eurozone.