Ray’s quite the wit, proposing a new consumer gasoline tax.
I must be a halfwit because I half agree with him. I think there should be a new tax on gasoline, but not on the gasoline consumer. The new tax should be an earnings tax split up among oil refining operations, auto manufacturers that do not improve their gas mileage by at least 5 percent each model year, and petroleum/petroleum products futures trading firms.
HalfWit
This is a very interesting post; get rid of stopsigns. It could work here in the US but there might be a dangerous learning period of time when those with little sense of self-preservation would get themselves and other killed or injured. Still, a measured introduction to this concept is worth trying. There is plenty of slow speed running of stopsigns here already happening; has been for as long as I can remember.
That really bugs me to hear a bureaucrat or a bureaucrat’s sycophant tell me that driving is a privilege and not a right. If there was public transportation available when and to where I want to go, then my attitude would be different. Meanwhile, my life needs my driver license and a car or else will be impaired.
it isn’t just folks in rural areas that would suffer. I live in a decent sized suburb of Detroit. This being Detroit, we are especially poor in the public transport area. Where I live there is no public transport, so I’d be walking a couple of miles to work each day. My husband works a 25 - 30 minute drive away in the opposite direction from my job. Perhaps driving is a privilege. Personally I don’t see it that way, however. I see it as a necessity so that husband and I can go to work and pay our bills. I’ll stop driving to work when the bills stop coming! And in terms of inspiring alternative fuel choices, putting the squeeze on the consumer will contribute towards that in a very minute way, because we are still held captive by whatever is available to us. I’d love to be driving an ethanol fueled vehicle, but tell me where I’m going to find the ethanol?
Lastly I despise the comparison of fuel to other non-similar products - for instance coffee. I can’t remember the last time I bought coffee at a coffee house personally, and we do not depend on that $5 coffee to get us to work so we can put food on the table for our children. the already high price of gasoline is putting a crunch on many american families because in our society driving is a necessity. This idea of a gas tax is not a solution. It worsens the problem without any solution.
J
The gas is already $3 per gallon. And people still commute alone in cars that make <15mpg.
Big part of the $3 /gallon we pay goes to middle East. I do not mind paying extra $2-$3 per gallon in taxes provided that most of this extra money is spent on (new technologies) research and new roads.
Many posters are against having government involved in anything (Big Brother issues, etc). It’s all right, but who owns/maintains roads/bridges in US? Who can afford supporting research like DARPA does (I am not talking about efficient spending)???
just my $0.02
I know this is a pretty un-American thing to suggest, but how bout investing in a bike if you really can’t afford gas? If your commute is only 5 miles, that’s a real short ride.
Also, while I can sort of sympathize with you, I’m not sure the logic you present, that destroying the enviroment is best for economy and society overall, really holds. It’s that kind of myopia that have gotten industrialized nations into this mess.
The Us imports 13% of its gasoline, because of a refining constraint. US refineries are old, and many cannot handle the heavy crudes now coming on the market. So, yes they are not operating at full capacity because the can’t. There is also a seasonality factor. Summer driving takes the most gas, so refineries run full out in the sring and summer.
Minimum wage controls cause job shortages.
Wha wha what? That has not been the case here in Florida. All of the conservatives said that when Florida raised its minimum wage and it hasn’t been the case. Our economy continues to grow.
Minimum wage controls prevent low wage workers from being exploited. Would you please explain how minimum wage laws violate human rights? I enthusiastically await your cogent response.
The current US oil import bill is about $330,000,000,000 ($330 billion) per year, out of a total trade deficit(import minus exports) of $805,000,000,000 ($805 billion) per year.
In a different previous post on Tom & Ray’s MPG, we stated that a 50% reduction in oil use could just about wipe out that part of the trade deficit. It does not so much matter which country gets the oil money, it is leaving the US and affecting the value of the dollar. The rest of the trade deficit is mostly due to manufactured imports, such as computers, electronics,toys, clothes and all the other things China, Korea, Japan, and othe Asian countries make. These imports are hard to back out! US oil production can be increased somewhat (Alaska, offshore lower 48), but cannot begin to close the import gap.
The next administation has to make some hard decisions, whether to regain control over the value of the currency by gradually backing out oil imports through conservation, ramping up biodiesel production, liquifying coal (of which the US has plenty)into gasoline, etc.
If we do nothing, gas will definitely go to $5-%6/gallon or more, and the BIG Three may die a natural death, as the Japanese, European, Korean and Chinese companies flood the market with economy cars.
Two problems with this tax:
This is just a stupid idea, it is a regressive tax and will hit the poorest the hardest and will do very little to nothing to reduce consumption. Why does Ray think it is high time to start conserving oil? If that were a good, economic, or logical idea, people would already be doing it. Since they aren’t they obviously disagree with Ray’s stupid idea. So convince us why it is a good idea and maybe you don’t need a huge tax to hurt the poorest citizen’s the worst. Also, just where would these billions of $$ in taxes go? To a government that is incapable of spending them wisely and a bunch of politicians who could care less about the citizens welfare and are in it for themselves? Right, that’s where I would want all my gas tax money going.
DoctorMike, you have no doubt heard of a revenue-neutral tax. Countries that tax gasoline heavily return that money in some other form, such as yearend tax credits on a sliding scale, depending on the net income of the tax filer. In other words, rich people would get no gas tax credit, while poor people would get it all back. The net effect is no additional revenue to the government.
I do feel, however, that we also need, in additon, a horsepower/weight tax, similar to, but higher than a gas guzzler tax, applied at the time of purchase. This would quickly reduce the sales of high horsepower, heavy vehicles, except to those whose business demands them. They would be able to write off all those extra taxes. Again, this tax would be revenue-neutral. We had a poster who had a large family, and feared he would have to buy 2 cars. Fear not, you would be able to buy a minibus such as the Toyota HiAce, which looks similar the the VW camper bus, seats 8 and has a 4 cyl diesel engine. He currently drives a F350 Ford van with a large V8 engine.
In addition to these 2 taxes, many countries have a sliding scale annual license fee, which favors smaller vehicles. A 1.5 liter compact would have a $65 fee, for instance and a 5.7 liter V8 SUV would have a $2000 per year fee, such as in France. There is a difficulty with this, however since states, not the feds set and collect this fee. Also, it would penalize lower income Americans who bought gas guzzlers in good faith based on the current cost structure.
Most developed countries have all three of these taxes and fees in place. You often find Europeans taking a $10,000 trip to North America, and when you talk to them, find out they drive cars with 1.6 liter engines, and stick shifts. In other words, frugal driving habits will generate extra cash and lower taxes to allow you to do these wonderful things.
Yes, I know about these things as I lived in Norway for 5 years. There gas costs about $7/gal. and a modest Saab costs over $60,000, all due to taxes. These taxes feed a welfare state of cradle to grave assistance in a small country that is rich with oil and gas revenues. However, the statistics show that the high taxes on gas has not done anything to consumption demand for gasoline, and the huge taxes on all options of a car (airbags, ABS, etc. are taxed as highly as HP and weight BTW) has likewise done nothing to reduce demand for these cars. So what really has happened is that the government gets more and more money for wealth redistribution (ala socialistic principles) but nothing else much changes. So in my mind, the same would happen in the US. But again, I see no compelling reason to conserve energy and unless the market sees it too, it will not happen no matter how much tax money you give the government to poop away on useless spending. In economics school we called it inelastic demand, just look at demand worldwide for gasoline as the price has doubled and tripled over the last decade, it has grown.
I think if you look at the cost of gasoline (and energy in general) in the U.S., you will find that the price has increased consistently with the rest of the economy. We have never experienced a real increase in the cost of energy (just a couple of little blips, like the one in the 70s and the current one). I do believe there is a price point at which you will see a significant decrease in demand, but I don’t think we have gotten anyplace near it yet. I would guess that a 100 to 200% price increase wound be required to make any real difference. We just have to decide if increasing gasoline costs to $6-9/gallon is feasible (or desirable). In other words, are we serious enough about reducing consumption to make it happen and is it worth the social/economic impact?
I agree. If people really saw a need and also had an economic signal, demand would go down, but yes probably above $10/gal before we see much. In general people will shift money from other needs to transportation as prices rise, as they value the utility of transportation more than the other uses, simple economics and most people are able to make those trade-offs without harming their personal life style. I do wish some politicians would propose something draconian for a gas tax, like $10-$12 per gal. Those politicians would be retired very quickly, we are not Europe or Japan and people will not tolerate it, but I know of some running for Prez right now I would encourage to try the big tax, go ahead make my day.
That is exactly why it won’t happen anytime soon, a lack of “political will” (to put it politely). We will continue to do what we are doing (basically nothing) until the reality of world economics overtakes us. At some point in the next couple of decades, the developing world’s (primarily china and india) per capita demand will approach western levels and energy prices will increase anyway. Good news if you happen to be in the international energy business, not so good for the rest of us. The price will be determined by supply and demand, and those countries whose demand exceeds their supply will have very little control of the situation. Those countries (i.e., europe) that currently have high energy taxes may be in a better position to “absorb” some of the impact, but they will also be affected. At that point, the lifestyles of the folks living in the “developed” world will be affected.
You were lucky to have spent some time in the Saudi Arabia of Europe. Believe it or not DoctorMike, I am a free trade advocate where possible. Norway has a huge balance of payments surplus which caused them not to join the European Union with all its restrictions. So even in a rich, thinly populated country with a huge trade surplus, the average car is much smaller than in the US, and CONSUMES LESS GAS.
The proposed regulations are not meant to get rid of cars, but to minimize their environmental and econonmic impact. The US traffic sytem is based on cars on roads rather than a mix of trains, busses and cars. As such, the population density will have to reach that of greater New York before public transit will significantly impact car use.
You may have travelled to other European countries and noted the small average size of cars and engines in them, the result of a complex set of regulations to: 1) conserve space on the streets, 2) minimize oil imports, 3)minimize environmental impact. To achieve this in a free market environment would mean that all the streets would be completely clogged with cars before consumers started to come to their senses and used bicycles or public transit. China’s cities are currently going through this.
In a previous posted we stated that if the US had all the oil it needed, had a large balance of payment SURPLUS, and there were no environmental consequences to the use of oil, we could stick our collective heads in the sand and let laissez faire economics take its course. Saudi Arabia is one of the few countries than can actually afford to do so.
However, with an annual oil import bill of $330 billion and an overall trade deficit of $820 billion this “economic freedom” of consumers you advocate has to be questioned. Especially, since 2 traditional suppliers to the US, Mexico and Venezuela, are depleting their reserves, so additional imports would have to come from elsewhere. Most of those “elsewhere” countries and unfriendly, unstable and unprecdictable.
If you were the next person in the White House you could choose beween regulation to ease the future pain or let things take care of themselves, which would result in: the same $7-8/gallon or more gas, but with a mad scramble at the pumps, like in 1974. Ultimately you would have to step in, WW II style, and impose RATIONONG until things could be brought under control. Either way, an equilibrium would eventually be established with exactly the same frugal cars, expensive gas, new technology, and a raft of regulations to make sure everyone had access to that expensive gas.
Much of what you say is true Docnick. The Europeans and Japanese typically live a frugal, crowded, and small car life. Many times driving is drudgery and a chore for them, and that is sad. They also crowd into tiny flats and houses and wait for hours for public transit and health care. I have to admit I do pity them for their lifestyles, but that is their choice and it’s fine for them as they are used to it, just not my free choice. I do hope the government doesn’t try to force it upon us.
We have been an oil importing nation for many decades and it is of course getting worse since there are so many restrictions to finding and developing (or even refining) any oil here. Thus part of the balance of payments deficit is self inflicted by environmental lobbyists and their paid political allies in Congress. Another large part of the trade deficit is of course the loss of manufacturing as firms have outsourced to cheaper wage and less environmentally regulated countries. I think that factor is much larger than oil, but a different topic. However, the oil shock of the 1970s led to gas lines and quasi-rationing due to the stubborn government officals who refused to allow prices to rise (they established price controls and regional blends) and thus sought to repeal the laws of supply and demand. That would not have happened had gas prices risen to where they should have been to suppress demand and bring it back into balance with supply. Governments are not very good at timing or understanding free markets when they are manipulating same for political agendas. But they haven’t learned that and so I suspect the new raft of politicians waiting to populate DC will once again try to manipulate free markets soon. I also expect the same disastrous results as before, since politicians haven’t changed.
I would have to agree with you that is what will likely happen, whether I like it or not. Part of the cause of the original oil crisis was Richard Nixon freezing the price of natural gas at only $0.40/million BTUs (it is $7.50 now!!) This caused energy companies to stop exploration, and putting pressure on heating oil and coal. After gas prices were allowed to rise, considerable new discoveries were made, and gas became plentiful again, until the last 5 years.
Unfortunately, worldwide exploration for oil has not resulted in finding enough to replace the rising consumption. In other words, “you ain’t seen nothing yet”, and $150/barrel oil will be with us within 5 years, since we cannot even slow down the consumption rise in China, India and other rapidly developing countries. US oil companies are flush with cash and are buying back their own shares, for lack of places WORLDWIDE to drill and explore. At least 75% of the world’s oil reserves are now in the hands of foreign state oil companies, and generally off limits to US firms. That is the REAL problem, since these state oil companies are less than brilliant in developing new reserves.
Gas, on the other hand is in much better shape. There are plenty of huge reserves worldwide, as well as on the Alaska North Slope and Northern Canada. All it takes is $40 billion in new pipelines to bring it out.
If we accept the fact that neither the Secretary of State nor the Marine Corps can get us more oil, we are faced with a decreasing supply in the nest 20 years. So it’s up to Americans to find a way to best accommodate this new reality.
Totally agreed DocNick. So let’s hope some sanity prevails as we need to quickly develop alternate fuels and transportation technology for the right reasons with the right metrics. Not the phony, Hollywood hyped reasons with goals that are incorrect and unworkable that divert our attention and resources from solving the real problems.