opentocomments

Wouldn't one solution to the "problem" of growing sticker prices at the pump be to raise the taxes on gasoline? Now this seems like a contradictory idea but shouldn't an increase on the taxes on gasoline give people that little push to start using alternatives and/or drive less. With the fall off in demand there would be an influx of supply and therefore the prices of gasoline with the newly imposed tax should fall somewhere right around where the price of gas was prior to the tax but by this time people will have already started using public transit, and bought more fuel efficent cars and thus lowered our dependency on middle eastern oil. If iraq, iran, and afganistan are all really our enemies then why do we send the funding every time we start up our cars? So my proposition is that we add an additional dollar a gallon to the price of gasoline and who is going to be willing to drive a hummer then? With any luck a self correcting market should find a way to get the price of gasoline at a rate that is consitant with with those who are demanding the good are willing to pay. If everyone in our nation is willing to pay the additional 2 dollars a gallon then the govenment has that much more money to spend. However i think the worst thing you can do for the market is to offer government subsidies on the price of gasoline how is the market going to correct itself if the consumers don't even feel the full brunt of the problem?

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JumpinJesus

While it sounds like an interesting proposal, the continued demand for gasoline will continue to drive the price up anyway, thus resulting in more people seeking alternatives on their own.

I say let the price go up on its own.

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Derwood

has raising taxes on cigarettes made people smoke less?

Tully Mars

No but dying certainly has.

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MauiMensch

The demand for certain items -such as life saving drugs and (I would argue) oil- is not ver responsive to price. If the price of either of the two aforementioned items goes up, people will still need to have it. High oil prices over a long time will push people to use more alternative fuels but this will -almost necessarily- be a very economically painful process. Hundreds of thousands will suffer huge economic losses as a result of high oil prices and will be driven in to the poor house. If the Government wants to act in the interest of The People, it behooves it to herald the age of Alternative Fuels in other non-market-based ways. The point of the Government is to do for the people what the Market can't do for it, IMHO.

TullyMars- YES. Raising taxes on cigarettes will have inevitably made more people smoke less if only for the reason that they can't afford it. Even the demand for life-saving drugs will be affected if the price goes above what people can afford to pay for it.

Would-be smokers are also less likely to begin a habit that is so costly. The rules of The Market (if understood correctly) are nearly infallible. The understanding of the HUMAN effect of Market forces is not something that most economists like to think about, however...

ratbastid

Yeah, matter of fact, it has.

Here's a fact sheet from the Campaign for Tobacco-Free Kids that says, among other things, that adult smoking in Washinton State declined from 22.6% to 19.7% in the year after a 60-cent tax increase was put into effect, reducing the number of smokers in the state by over 100,000, despite the over population increasing. That's just one example out of LOTS in this (very well-done) fact sheet. An internal RJ Reynolds study said that if cigarette prices were 10% higher, the number of 12-17 year-olds who start smoking would be down by 11.9%.

It's a good analogy: America has an addiction. Put our drug out of economic reach, and usage will drop.

Ustwo

I do not feel cheap energy fueling the economy is analogous to a nicotine addiction resulting in lung cancer.

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opentocomments

I'm kind of confused as to how this shifted to cigarettes, i was just trying to argue that if we want to fix the gasoline issue (namely move away from a dependency on oil) shouldn't we make it more expensive to use then cheaper to use?

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dksuddeth

the only thing raising taxes, on any product, will do is effect the lower income brackets. raising taxes is never a good idea.

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Ustwo

You do know how ironic this statement is with a Ron Paul avatar?

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Willravel

Step 1 should be for the government to stop giving money to the big oil corporations. That's something a socialist like me and a libertarian like dksuddeth can likely agree on.

Derwood

thanks for the info. it wasn't a snotty question at all....I honestly didn't know if the tax did or didn't work.

ratbastid

It's all about how you frame it, I guess. I'd say that cheap oil fueling wars that kill thousands and thousands of Americans is quite a lot like cheap cigarettes causing lung cancer deaths. I'd like to make war AND cancer a whole lot more expensive.

opentocomments

[quote: ustwo] You do know how ironic this statement is with a Ron Paul avatar? [/quote]

I personally think gas prices will drive themselves up with out any help but why is it that the state is currently discussing legislation about gasoline subsidies? Personally I am a libertarian and support ron paul thats why i think we should tax things we don't like rather then things we do. I don't like gasoline, cigarettes, booze, imported goods, ect... therefore i think those kind of goods should be taxed more then other goods. Libertarians and ron paul himself are most adamately opposed to federal income tax and the IRS so if you want to nit pick and dance around the actually point like a good politition then good for you get into politics but i'd rather hear some valid imput.

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lotsofmagnets

i suspect any real alternative to oil is still a long way off the mass market and society has become too dependant on oil for many of our needs (transport seems to be no.1 though.) i heard many people say that if the price of oil went past to $50 mark they would start to seriously reconsider their transportation but with oil at $112 the same people are still paying for oil and nothing else has changed. oil can still go up quite a long way before people are really going to start feeling the pinch (a figure i´ll hazard is over $200.) the problem is everybody leaves it open ended. "i´ll reconsider my transport options" translates to realising there are no really viable alternatives other than to scale down on the size of the car. this doesn´t replace the dependence on oil, just consumes a bit less so the problem remains, and as far as i can see will remain for a number of years yet.

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allaboutmusic

Sure, and sooner or later they will have to.

Seriously, you don't know how good you have it with gas prices in the US. Gas prices here in England are around US$2.30 a litre at the moment, and I gather that in a couple countries it's even higher (was it one of the countries in Scandinavia?). I wince when I hear Americans brag about getting 25mpg and some cars getting 15mpg. WTF?! My brother's car averages 65mpg (and it does close to 200bhp too), and one of my friends has a car that does over 70mpg.

Tully Mars

Yet in Venezuela it's like .25 a gallon. In most Arab nations it's like .50.

I think I see a pattern here.

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loquitur

I think we need to triple the gas tax immediately. Gasoline costing $6/gallon or more would be very good for the country in many many ways.

Ustwo

I don't think you grasp the whole 'Libertarian' philosophy as it relates to public behavior.

Its not about taxing things you don't like as a way to get rid of them or change behavior. Thats pretty much as anti-libertarian as you can get.

But I am against attempting to engineer the populations behavior by artificially raising prices in order to change behavior on anything, especially energy.

There are valid reasons to not be dependent on forigen oil, but this sort of thing will hurt us more than them. Its not like the market will dry up around the world because we use a little less gasoline. On the other hand it will directly hurt our citizens, in both prices for goods and their ability to work.

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Seaver

This hasn't helped the Europeans develop alternative fuels. Taxes are what make their gas cost more.

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Willravel

It sure has helped the Europeans develop more efficient cars, Seaver.

Tully Mars

Yep, were shooting for 35mpg by 2020 and they're headed to nearly 50mpg by 2012. Even now as a previous poster noted it's not uncommon to see 45-65mpg.


http://en.wikipedia.org/wiki/Fuel_ec...in_automobiles

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allaboutmusic

I'm willing to bet that's because petrol is sold way below cost in those countries. Because the demand in those countries is relatively low, and their output is so high, oil companies are more than happy to subsidise local oil prices in order to get contracts to sell to the much much bigger market outside those countries (at higher prices).

Seaver

It hasn't "helped" them. It's forced them. If I charge you $100 per meal, you'll start eating a lot less. That does not justify me in saying it's to curb obesity.

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Willravel

The market forces people to do things all the time.

Yes, it has forced them. As a result, Europe's oil consumption looks nothing like the US. It's forced them to be responsible. It's forced them to have higher air quality, be less reliant on foreign resources, and burn less of a resource that's finite. Kinda like anemia forces someone to eat more B12.

Ustwo

Just to be clear, saying 'the market' is misleading.

What you are really saying is...

The government forces people to do things all the time.

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connyosis

Helper, forced, whatever. It has made people turn to alternative fuels such as ethanol or biodiesel (And no, I don't consider these fuels to be perfect, it's a step on the way though) and as mentioned produced fuel efficient cars, which is a good thing.

Does it hurt paying ~$2 per liter when filling up my car? Yes, yes it does. Do I think it's worth it in the long run? Abso-fucking-lutely.

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Willravel

I mean exactly what I said. The government isn't upping the price of gas in the states on bit, in fact the government is giving massive tax breaks and handouts to big oil. The prices are still at an all time high. You can't possibly blame the government for the price of gas in the US.

Ustwo

Oh, then I was mistaken in thinking you understood why European gas prices are so high.

Its the government. Norway has the third highest gas prices in the world, and yet is an oil exporter..... Sorry not the market.

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dc_dux

Its absolutely the market.

The federal gas tax in the US is a flat 18.4 cents; state gas taxes are a percentage of total, but none have been raised since 2006.

The price of crude in '06 was $56/barrel....today, its $120/barrel.

Supply (Saudi's turning down the spigot) and Demand (particularly surging demand in China and India).

Seems pretty simple to me.

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Rekna

I think cities should add a few cents in gas tax and invest them in free public transportation. I would also support the government raising the gas tax a few cents and pouring it all into researching things like better fuel economy and alternative fuels. Also the government could use some of that offset to give larger tax breaks for purchasing hybrid cars. I wish the government would raise fuel economy standards gradually over the next 10-20 years and get it up to the 50 mpg rate.

shakran

Gas prices have gone up by more than 300% in about 4 years. and people are still driving everywhere. How is increasing the gas tax going to help? All that will do is make those of us who have to buy gas no matter what, have to pay more for it. The oil companies won't be motivated to find new energy sources based on that.

Willravel

You must have this thread confused with another one. I was talking about the US situation. I only mentioned Europe because it provided evidence that increased gas prices do spark innovation.

The oil industry (say it with me now: corporatocracy) is responsible for the higher gas prices in the US. That's a result of unchecked free market power.

loquitur

no, will. Higher gas prices in the US now are the result of higher petroleum prices in the spot market. And the US prices are still much lower than in other countries.

"Unchecked free market power" is a non sequitur, and evinces a degree of confusion about what a free market is.

Willravel

Yes, petrol prices are up globally, but not by the percentage increased here in the US. If the raise in our prices were directly related to the rise in the oil industry's prices, they wouldn't be enjoying such high profits.
I worded it that way on purpose. The "free" market isn't ever free. Either it's corporate controlled, government controlled, or some combination. In oil's case, it's far too corporate controlled. There needs to be some balance, which usually either means the customers revolt or the government intervenes. The customers in the US are too lazy to revolt, and the government is way too friendly to big oil, so it's up to people to invent their way out of the problem.

My thinking is that we should take the lazy way out and simply copy Europe's cars, like bringing over cars like the Smart ForTwo (which is now available in the US). 50 mpg gas and 69 mpg diesel is way better than anything the US has.

kutulu

I stopped smoking because I eventually couldn't afford it any more.

Psycho Dad

I think any solution to America's gasoline addiction is going to be unpopular. At least to someone as most solutions are.

The best solution IMHO is simply to reduce consumption. This would require very little if nothing in terms of technology. However it would seem easier to make Hummers run off AAA batteries than change American attitudes toward the way we view automobiles. And I'm as bad as anyone in that respect.

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ASU2003

I think we should fund the war in Iraq with a tax at the pump. We need to have a balanced budget, and it would get people to sacrifice in war time and stop funding OPEC (yeah, China & India would just buy cheap gas, but they wouldn't have the money if we didn't send tons of jobs there in the 90s)

ottopilot

What effect on the world oil market would follow an announcement that the U.S. has started oil production in ANWR (Alaska)? Could this be used as the "nuclear option" if OPEC, international oil producers, and speculators continue to artificially drive up crude prices? I believe this kind of measure would quickly get their attention.

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host

ottopilot, it's difficult for me to understand your questions.... ANWR is an insignificant project of, at best, long way off insignificant impact, given what it will add to the daily total world oil production "some day", and given chronic US consumption of 25 percent of all world daily production. Why would the current crude price be influenced by the "some day" event of ANWR adding...what.... a wildly optimistic 2 million bbls per day to an 85 million bbls per day total world output? Where do you think the rest of US domestic oil production numbers will be, along with the output numbers of the UK, considering it's recent dramatic decline, and likewise, Mexico's, and the recent fifth largest crude oil exporter, Norway be at, if and when ANWR delivers at it's highest potential? How much will US and rest of the world demand have grown when ANWR demonstrates it's first million bbls per day?

Will this hoped for "influence" of ANWR, not be checked by "stuff" like:
Does our government launch an incessant propaganda campaign intent on demonizing the Saudi king and his country as a prelude to bombing the shit out of them and invading them to provoke "regime change", while we cling to fantasies about "ANWR" as a solution to maintaining "our way of life", or do we examine our own close minded wastefulness and inefficiency in our energy use, along with the manipulation achieved through "free markets" advocacy:
http://www.tfproject.org/tfp/showpos...23&postcount=2 ?

and:

Your "speculators" reference is...what???...when it is compared to the doubling of the value of the Euro vs. the US dollar in just the last 6 years. Do you really believe that "speculators" are raising the price of crude oil and indefinitely keeping it at high levels? How come the price of crude is lower, in terms of purchases of it with gold or with Euros, compared to a few years ago? Wouldn't it make more sense to accuse "speculators" of driving the valuation of the dollar down, than driving and holding crude prices higher, since the Euro and gold have been exempted from effects of these speculators manipulation?


When the current fiscal year ends on this coming Sept. 30, the increase in the national debt will be at least $700 billion since last October 1st. There were 136 million federal income tax returns filed for the tax year ending in 2006. Add 14 million additional tax payers who did not file or were not required to file, and you have a figure of 150 million tax filings. $700 billion is an average $4666 per filing.

If each tax filing represents an average, because of driving aged dependents and jointly filed tax returns....of say.... 900 US gallons of annual aggregate gasoline purchases (900 gals. X 20 MPG = 18,000 miles, instead of the average individual vehicle total miles driven of 12,000 miles....) at most, the impact of increased gasoline prices per tax filing would be $2.00 per gallon multiplied by 900 gallons purchased.... $1800. Gasoline will not average as much as a $2.00 per gallon increase for all of 2008 vs. in 2007, and average fuel economy is probably greater than 20 MPG for the US privately owned passenger vehicle fleet.

Oil is still mostly priced in and sold for dollars on world markets and the Euro buys twice as many dollars as it did in 2002. If oil sells for twice as many dollars as it sold for in 2002, oil has not increased in price at all, in terms of the Euro, and it actually requires less gold in exchange for any measure of oil as was required to exchange the same amount of oil for gold in 2002.

Why has the dollar fallen to just half the valuation it was bid up to in 2002, vs. the Euro?

Dramatically higher US federal deficits viewed in the rest of the world as unsustainable, mitigated by huge increases in military and intelligence gathering/analysis expenses.

Dramatically higher US trade deficits aggravated by the increased costs of importing 14 million bbls of petroleum and petroleum equivalents, on average, each and every day....growing debt viewed as unsustainable in the rest of the world.

Dramatically lowered interest rates vs. the rate policy of the European central bank....the Federal reserve lowered a key short term interest rate from 5-1/4 to just 2 percent in just the past 8 months, a rate drop of more than 60 percent. Just as oil is priced, world currencies are priced via auction bid futures contracts. Selling dollars and buying Euros results in earning much higher rates of return on low risk bank deposits of Euros in European banks than can be achieved by dollar deposits in US banks.

US government military, foreign, and financial policy has done no better than a cat chasing it's own tail for the last few years. The next presidential administration is already set up to fail because of this seemingly insurmountable and increasingly deteriorating dollar valuation decline.

The US must change perceptions by rapidly and dramatically decreasing it's government spending deficits and trade deficits, raise interest rates, import much less, export much more, and appear to be less burdened by war operational and military expenses.

A great way to begin the task without crippling tourism would be with innovative but seemingly extreme emergency regulations. I propose a ban on all automobile travel of less than 50 miles distance from home, exempted only when passenger vehicles contain two adults who are not relatives or residents in the same household. You are required to take an effing neighbor or some guy who lives four houses down from you for the past ten years who you've, up until now, only waved to when you've driven by as he mowed his front lawn. The restriction would help to make childless folks who live alone feel that they were receiving equal consideration.

Going to the grocery store or out for a restaurant meal....commuting to work...? Not in your car, you aren't....unless you share the trip and half of the gasoline formerly consumed in close to home car trips, which means most trips.

Require that deliveries of consumer goods by wholesale to retail of non-perishable items (Budweiser....Coca-cola...), or longer duration perishable's (Thomas's English muffins.... Frito-Lays chips...) be cut in half... twice per week instead of daily. Retailers can either find ways to accept and store larger but fewer deliveries, or experience out of stock periods, on occasion.

Our currency is sinking, and it is the key to sustaining our recent increased militarism and internal social order. Significantly cut petroleum consumption lowers world demand and US imports, lowering the US trade deficit and prices paid at the pump, increasing perception that a reversal of dollar decline pressures is possible, strengthening the dollar more than the actual influence of a declining trade deficit number.

A law requiring you to travel everywhere you go locally with a non-related person of at least driving age, of your own chosing, is kind of a small price to pay to instill both an awareness of a crisis and a feeling that there is some way to personally have a favorable impact on the problem. More so if half the time you are the non-paying passenger on the local trip!

I'm ending two weeks spent on the west coast, today. On my first trip out here in 1972, it seemed that every other vehicle was a VW sedan or a VW micro bus. The remnants of that now nearly 40 years old fleet is still visible; I've seen more old beetles and buses than I've seen anywhere else in a long time. I saw a '59 VW running down the Coast highway north of Santa Monica yesterday. I knew it was a '59 because my father bought a new '60 model in October of '59. The improvements were a larger rear window in the '60 model and a lowered back bumper that was not mounted high enought to obscure the tail lights. I hadn't seen a VW with that small rear window and high mounted rear bumper in a long time.....

My point is that the 30 MPG VW, so popular on the west coast and in the rest of the country in the 60's and 70's has a successor now, if you know to look for it. Every tenth car I've seen out here is a Toyota Prius gasoline/electirc Hybrid. I rented one myself since last friday, and I've averaged nearly 50 MPG. This car gets better fuel mileage in city driving than on the open road because it is propelled by the energy generated from braking the vehicle, converted to electricity stored in it's battery, when moving in stop and go traffic. The Prius is allowed to travel in California HOV lanes without multiple occupants because of it's low polluting and fuel consuming performance.

The problem is that, while my father's October 1959 purchase of a new 1960 VW beetle cost $1600, out the door, the 2008 Toyota Prius costs a minimum of $23,000 with tax and licensing fees. There will be no money saved by purchasing the Prius, because aside from it's hybrid design, it is not constructed or outfitted with the features of the average conventional sedan costing that amount. A Prius owner who travels 12,000 miles per year would have purchased 400 gallons of gasoline if he drove a new $17,000 sedan achieving 30 MPG, with the same non-hybrid features offered in the Prius. At $4.00 per gallon, the $17,000 sedan consumes $1,600 worth of fuel to travel 12,000 miles. The Prius, averaging 50 MPG, consumes 160 gallons less gasoline to travel 12,000 miles. The savings is 160 gallons X $4.00.... $640...but the Prius cost $6,000 extra to purchase, compared to the similarly equipped 30 MPG sedan.

I'm hoping that presenting "the math" in this post will help reach a few readers . I don't think technology will be cheap enough, quick enough, to justify a change that results in every tenth car, nationwide, being a Toyota Prius. I also have the experience of dropping off a couple of Mexican friends at their homes on a regular basis after work. The lots at their apartment complexes are jammed full with the gas guzzling, recent model SUV's and pickups traded in by the new Prius owners. I saw the same phenomena in lower income neighborhoods in the late 70's and early 80's. Streets filled with parked late model Buick, Chevy, and Cadillac cars. People of limited means always choose reliability and perceived value above fuel economy when the market is flooded with the gas guzzling cast offs of the well to do....

We in the US are living in a crisis period, but it isn't a fuel crisis, it is a currency valuation fundamentals crisis, aggravated by a huge dose of denial. The denial is featured in some of the posts in this thread, and is the reason why so many think it is "normal" for a post industrial economy country with just 6 percent of the world's population, to consume 25 percent of all petroleum sold each and every day across the world. It isn't "normal".