New Fuel Tax Suggestion

Maintenance/Repairs
81

Experience has shown that people have to be virtually legislated into the cars they should drive. Other countries do this with horsepower taxes, weight taxes, engine displacement taxes, overall size & width (Japan), fuel consumption and tailpipe CO2 emissions. France has most of the above, except a size tax. Japan has a size and width tax. There is a whole range of minicars that are not sold here because they are so narrow that 2 large Americans would rub shoulders in them.

The US only needs a hefty gas guzzler tax (purchase and annual) and a fuel efficiency or tailpipe emission standard. That, with $5 gas will soon drive down car and engine size.

82

“The US only needs a hefty gas guzzler tax (purchase and annual) and a fuel efficiency or tailpipe emission standard. That, with $5 gas will soon drive down car and engine size.”

That might work, but it’s not going to happen anytime soon. Even if it was politically feasible, the tax would have to be a very significant tax to have much effect. People who are willing to pay $40-50K for a 20 mpg SUV (knowing fuel prices are going up) are simply not going to be deterred by a couple of $1000 in additional tax. I’m also not sure that $5 is the price point for fuel, I suspect it will be much higher before anything changes.

83

I was thinking of something more substantial. Canada has a $6000 gas guzzler purchase tax on large SUVs, and France in addition to a hefty purchase tax, charges an ANNUAL license fee of about $2000 for large displacement engines, such as V8s. Together with the current $7.50 gas it provides enough incentive to be frugal.

84

Those kind of numbers might work, but it would be politically impossible in the U.S. About the only thing the the U.S, auto makes can sell these days are trucks/SUVs and they are already in deep trouble (walking dead); something like this would finish them off completely. I honestly think reduced consumption going to be driven by fuel prices alone (when it eventual happens), I just don’t know if $7.50 is high enough.

85

I don’t think that the US makers would necessarily be “finished off” by such changes. They’ll certainly have to adjust their marketing, though.

Look at Ford. In the US, without those incentives towards small cars, their sales have been falling, and faster than the overally car market. In Europe, where they have all these laws and taxes pushing people towards small cars, they’re growing at a pretty good clip (+5.4% in February).

Now, small vehicles aren’t a profit center here, but if demand moved strongly towards smaller vehicles (we’re seeing VERY weak movement in that direction right now), those vehicles wouldn’t need to be heavily discounted anymore… and people might pay premiums for nice versions, like they do in Europe (ever seen the price of a Ford Focus over there?)

86

"Excess is easy to define. For example, let’s just say it’s set at 15% after taxes. Anything above that is excess. "

I still disagree. How can you justify any number as excessive? What about the years that they make next to nothing? And whether a company can make money refining oil depends on whether they buy the crude oil or extract it themselves. If they extract it, they can make money for such investments (refining) through vertical integration. If the refiner buys on the open market, it does have the problems you mention. And there is still the issue of how long it takes to bring new refining capacity on line. First they need to find a location, design it, then get local, state, and federal government approval, and then build it. I think it would take a decade to see a new plant open up if they started today.

87

“Problem is the oil companies are reaping in the largest profits EVER…for any US company EVER…and they are NOT building new refineries…they are NOT updating their refineries…they are just taking their 1-2 MILLION DOLLAR PROFIT PER DAY PER REFINERY and running with it. Then 5-10 years from now when their profits are low (only $500k per day per refinery)…they’ll be complaining that they don’t have enough money to update their refineries.”

Largest ever in constant dollars, or in today’s dollars?

Can you provide a reference or two for the balance of your message?

88

“Commercial vehicles and farmers get a tax rebate on their vehicles used for business only. That’s different. Business often needs gas guzzlers to get the job done.”

Actually I would recommend including them. Fuel is consumed by business just as it is consumed by individuals. Businesses make decisions about how they spend their money just as individuals do. We want businesses to make decisions that will reduce their cost and reduce their use of fuel.

89

“So, if by magic, next week the US consumed 30% less, oil prices would merely stop rising, not plummet. That 30% will be made up withinn a few years by India and China.”

The difference in total consumption of oil between the US and any other individual nation, is much greater than you infer. A sudden drop of 30% would have a huge effect on oil producing nations; enough to drive oil prices down dramatically.

My point has always been…move energy developement out of the hands of big corp. and into diverse small bussiness interest. More safety, flexability and competition.

90

"At present, Canada and Mexico are the top suppliers to the US. Nigeria and OPEC make up the rest. Mexico’s reserves are dropping, since they lack the money to aggressively develop new ones. 60% of PEMEX’s revenue is grabbed by the Mexican government for operating expenses. Canada has plenty of reserves, but they are mostly oil sands, and expensive to produce. About 1 million barrels per day is presently exported to the US. "

See what I mean about reducing the incentive to invest with an excess profits tax?

91

“I still disagree. How can you justify any number as excessive? What about the years that they make next to nothing?”

I certainly agree with that. However it must be kept in mind that most of the time we think of markets as competitive with many buyers and many sellers. In this case there are only a few sells, but many buyers. It is an oligopoly. The market may not be functioning in a way to set fair prices. However I don’t believe that my proposal can in any way change that separate issue.

92

“The difference in total consumption of oil between the US and any other individual nation, is much greater than you infer. A sudden drop of 30% would have a huge effect on oil producing nations; enough to drive oil prices down dramatically.”

I believe the U.S. consumption is about 20% of the world, so we are talking about 30% of 20%, that’s about 6% of the current production. This 30% reduction would not be “sudden,” it would take several decades. In the mean time, the increases in china and india would more than off-set the U.S. reduction. At best this 30% reduction would slow the increase in worldwide consumption and price. In reality, the oil producers (especially OPEC) will reduce production to control the price anyway, they can live with reduced revenue longer than the U.S. can live with reduced oil supplies and they know it.

I agree that alternative energy development needs much more attention, by both large and small business. Small business is more innovative, but the only ones who can fund new energy sources are the big energy businesses.

93

Friendly reminder that three of our top five oil imports come from OPEC nations.
And a primary reason that illegal immigration reform is tied to energy importation as well…Mexico. Reasons to decrease dependence.

CANADA 1,784 1,919 1,864 1,830 1,802
SAUDI ARABIA 1,675 1,530 1,453 1,471 1,423
VENEZUELA 1,246 1,227 1,150 1,045 1,142
MEXICO 1,234 1,484 1,410 1,245 1,577
NIGERIA 1,210 1,245 1,082 1,010 1,037

The Organization of the Petroleum Exporting Countries (OPEC) is a large group of countries[1][2] made up of Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, Venezuela, and Ecuado

94

“I don’t think that the US makers would necessarily be “finished off” by such changes. They’ll certainly have to adjust their marketing, though.”

Personally, I think they are toast anyway and any mandates would make it worse. Some version of these companies may move elsewhere or be bought up by others, but I think the days of the “big 2.5” are numbered anyway.

My point was that it’s not going to happen, the political reality is that the U.s. government is not going to force anyone to drive more efficient cars and they are not going to intentionally drive up the price of fuel. At most, they will stand buy and let the oil market and the weak dollar cause a slow increase in fuel prices; assuming they don’t have too much pressure to intervene.

95

“Friendly reminder that three of our top five oil imports come from OPEC nations.
And a primary reason that illegal immigration reform is tied to energy importation as well…Mexico. Reasons to decrease dependence.”

I think (almost) everyone agrees the decreasing energy dependence is a good thing, the question is finding the least painful way to accomplish that goal.

96

A HUGE change can be made in short order with one govt. mandate…it was instrumental in the 70’s. It would cut consumption significanly. Most learned to live with it but few would be willing to return. A nation wide mandatory 55 mph speed limit.

Every time I reset my accum. ave speed indicator and recheck over a weeks time, it seldom seems to vary from 30 to 35 mph and I live in a rural state. I don’t feel it would have the negative impact we all perceive in travel.

It just ain’t going to happen…it does get my vote.

97

“My point was that it’s not going to happen, the political reality is that the U.s. government is not going to force anyone to drive more efficient cars and they are not going to intentionally drive up the price of fuel. At most, they will stand buy and let the oil market and the weak dollar cause a slow increase in fuel prices; assuming they don’t have too much pressure to intervene”

The senate did vote by veto resistant margin to raise CAFE standards on ALL vehicles to 35 mpg by 2020 (I think ?)…I believe that is forcing us to drive more efficient vehicles, and I believe a more prudent move than raising taxes.

98

“The senate did vote by veto resistant margin to raise CAFE standards on ALL vehicles to 35 mpg by 2020 (I think ?)…I believe that is forcing us to drive more efficient vehicles, and I believe a more prudent move than raising taxes.”

True, but I’m not sure that is going to make a very big dent. I was referring to the 30% reduction type of goals that were being discussed. These types of measures are more likely to just slow the increase in consumption. BTW, I believe those are “fleet average” requirements, not limits on individual vehicles, but I don’t remember the details.

99

Raising the CAFE standars certainly helps, and California with the Pavly amendment wants even better fuel economy sooner. An additional 13 states have adopted the Pavly rule, so the US car manufacturers will have to adapt or die. Since they lose money on each small car manufactured in the US, there will be heavy emphasis on offshore sourcing, such as GM is doing by importing Daewoo-built cars from Korea. Chrysler has already made an agreement with Geely? of China to manufacture small cars there. Ford will source cars from Mexico, Spain and Eastern Europe.

As this unfolds, we are going to witness the weird situation where the American Big 2.5 will become major importers of cars while the “Import” companies (Korean & Japanese) will build all their small and most of their large cars in North America!! UAW, eat your heart out.

100

Craig; they are Fleet Averages per manufacturer. You will still be able to buy gas guzzlers, but they will likely have either a steep tax on them OR, the manufacturer will only build a certain number of large vehicles to stay within the CAFE limits. GM did this with Corvettes for years since the plant could only produce 40,000 plastic bodies per year.

Mercedes will push their Smart Cars to off-set the consumption of their regular car line; also, the B series will be introduced in North America, since it is also a small engined vehicle.