Gas tax and Smart Growth
Posted by Yankee on September 18, 2005 - 5:29pm
Environmental Economics is kind enough to reprint a subscription-only story from the Wall Street Journal. The story is called "Using Taxes to Keep Gasoline Prices High Makes Sense to Some", and it discusses how some economists think that demand for gasoline would be reduced if gas prices stayed above $3/gallon.
Congressional Budget Office Director Douglas Holtz-Eakin calculates that a $1 increase in gasoline taxes would cut consumption 20% within 14 years. Other economists believe the savings may be inflated, because owners of SUVs and other large vehicles tend to be wealthier and more able to afford higher gasoline prices. Former Bush administration economist Phillip Swagel warns that a heavy tax could batter consumers, especially post-Hurricane Katrina. "It could muck things up," he says.(Very eloquent, Mr. Swagel.)
I wonder whether a permanent high gas tax would prompt a huge spate of rebuilding, or at least rezoning in the US. New Urbanism and Smart Growth are two related movements that advocate mixed use development in order to prevent suburban and exurban sprawl. The benefit of mixed use, of course, is that people would have amenities close enough to walk to, and the landscape would be designed to make biking and walking not just a feasible option, but actually the simpler one. From a PO perspective, this is just what we need to cut down on the massive use of oil in the transportation section.
I like to hope that the time for Smarth Growth has finally come, and maybe a gas tax is the way to make the US population see it.
There are 10 basic principles to Smart Growth:
- Mix land uses
- Take advantage of compact building design
- Create housing opportunities and choices for a range of household types, family size and incomes
- Create walkable neighborhoods
- Foster distinctive, attractive communities with a strong sense of place
- Preserve open space, farmland, natural beauty, and critical environmental areas
- Reinvest in and strengthen existing communities & achieve more balanced regional development
- Provide a variety of transportation choices
- Make development decisions predictable, fair and cost-effective
- Encourage citizen and stakeholder participation in development decisions
I like to hope that the time for Smarth Growth has finally come, and maybe a gas tax is the way to make the US population see it.
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About 71-73% of our gasoline price is tax.
The main trend here is that people are moving into cities or rather city areas with more then about 200k in population. These city areas are then expaning outward along the train routs with lots of train commuting to smaller old towns that starts to expand instead of contracting.
There is a simmilar reach for car commuting but it do not reach as manny km as fast train commuting.
There is a "counter current" of people moving out of the central towns to rural areas around them. Most of these are people looking for a place to have a few horses, more scenic surroundings or less neighbours around them. If I look at a detailed map of the area around Linköping where I live I find that there are single houses or small clusters of houses almost everywhere with a distance between them of about 500-1500m.
The more "rural" areas do of course depend 100% on cars, there are public busses but mostly as a bonus as there anyway is a need for buses for schoolchildren. Public transportation in towns and between towns are in general good or exelent. It is thus not common to have more then one car in a family if you live in a town. The public transportation is about 50-75% tax financed wich unfortunately gives a lot of the problems associated with centrally planning. The gas price hurts and is now almost even with the capital cost for a second hand car, but I do not get a feeling that it menas that much for the car purchases.
Most towns and all cities have district heating systems. The main fuels are garbage, forest biomass and oil for peak loads and soon fossil gas. This is cheaper then having a chimny in each house. Manny of the larger units and all large new built ones are combined electricity and heating plants. The main heating methods are otherwise, wood, wood pellets, direct electricity and electricity used for heat pumping. Oil heating is fairly quickly going extinct, this has a lot to do with the taxes. Electrical heating is popular since we have had very low electricity prices due to overinvestment in nuclear power. These prices are now risind due to electricity export, more demand and green party i****s closing 2 out of 12 reactors. But the 10 left are being uprated to give as much power as we had a few years ago. (The production is about 45-50% nuclear, 45-50% hydro and 5% misc. )
Another intresting trend is district cooling systems. Exess heat from garbage incineration plants is used during the summer to produce chilled water that then is distributed in city centers replacing small cooling systems in the buildings. No CFC, it do cost a lot in investment but is then cheaper to run and more electricity to export and the pipe network has a life lenght of manny decades.
Bicycling is slowly becomming more popular, among students it is mandatory since 90+ % of the students cant afford a car. In my town we have a network of bicycling roads and roads with little car traffic that if it were a grid would have sides of about 400m. All roads in built up areas exept the most tiny ones servicing a few houses do of course have sidewalks. An odd system fault is that you are not allowed to bring bicycles on trains.
The use of E85 ethanol/gasoline blend is growing very fast, more then 200 petrol stations have an E85 pump but most of the ethanol is Brasilian. There is a potential to locally produce biomasses based fuel for about half of the current car and truck fleet, we do have a lot of forests and a fairly small population. In Linköping, population 130 000 we have a methane plant using waste biomass from food production and manure that produces about 5% of all the fuel sold, it is at least enough for all of the local busses.
Another energy related major investments is in the railway network wich gets about half of the government transportation infrastructure budget. All major railway lines are electrified.
There has been and there are some municipials that make it very hard to build "dispersed" housing, trying to concentrate the new buildings in dense areas for easy public transportation, etc. My impression of that is that it mostly leads to a slower economical development for that town. People do anyway cluster a lot where they can share infrastructure as long as they get the benefit of the savings.
My guess is that Sweden will handle peak oil gracefully. On average we will become poorer in absolute terms but richer when compared to most other countries. I do not think there will be any drastic lifestyle changes here, only gradual ones.
I find that I've (from a different starting point)
suggested a more specific agenda towards advancing them.
http://www.livejournal.com/users/dasht_brk/1248.html
-t
- Remember, some years ago, a little itsy bitsy seven cent gas tax helped sweep Newt Gingrigh into power in the Senate? Folks are worried about the price of gas. They're not looking for it to be raised further; they're not looking for social transformation. They just want the price down. Which is why they want price controls, which will create the mischief econbrowser.com suggests.
- Rezone for mixed use? Fuhgeddaboudit. Folks have been taught for years that absolutely uniform isolated single-use pods are essential keys to the Eternal Free Ride From Ever-Escalating Property Values. I dare you to try to get rezoning for use of any exterior paint that's not the exact shade of Homeowner-Association-Approved shade of Theme Park Earth Tone Beige. Put a store anywhere near me? Are you nuts?
- New developments or towns? Maybe. Some of that has been tried in my area, which is a university city. But there's a serious transitional problem. The businesses can't, and don't, survive. Unless you build or transform a really large area, the businesses have to live in the real world, which means they need parking. Alas, "smart" or "new urbanist" development is a theme park too, and adequate parking for the businesses to survive doesn't fit in.
It can be really difficult to transform society based on Grand Plans.There are different kinds of people in this world. I live in Manhattan with shops all around me. People pay astronomical rent to live here so they can participate in this kind of lifestyle. Other people like to live in older-but-Smart-Growth-esque towns like Tenafly, NJ or some of the older Boston suburbs that have town centers with movie theaters, boutiques, coffee shops, and ice cream shops. Homes in these places are also expensive, presumably because people want to live there. So not only is the Smart Growth idea not new, but there are plenty of people in the U.S. who are desperate to live in just that environment. It's not a lost cause.
When I was a kid, we still had the corner grocery store, and this was before the 7-11-ification of the small grocery stores. Sure it cost a little more, but if all you needed was a loaf of bread or a can of soup, I could just hop on my bike and pick one up without anyone needing to get in a car. Heck, it was even walking distance.
In some neighborhoods, you still see the houses that used to be the corner grocery. The front door is on the corner of the house instead of the middle of one of the sides.
I have to admit though that even the large grocery stores have become 7-11-ified. Entire aisles filled with potato chips. The next aisle over is filled with sodas. The next one over is a freezer case filled with frozen snacks and pre-made dinners. It is pretty damn clear that not many people even make an attempt to cook any more. Even the Asian market that I shop at has aisles filled with various jars of pre-made sauces, or bags of quick frozen dumplings - it still seems better than a regular grocery store.
For all of those folks who cannot even be bothered to pick up a quick-frozen dinner of some kind, there is always the drive through - even crappier fast food, and burning even more fuel in the process. If that doesn't work then order a pizza and they deliver it to your home.
You could argue that people don't have the time any more to cook a proper meal, and to an extent it is true. These days you have both parents working, so if you are coming home tired it is easier to pick up some take-out rather than go to work in front of a stove.
Now take this and multiply it by 10. Virtually everything we buy these days involve getting in a car and going someplace. Heck, virtually everything people think they need to do involves getting in a car and going someplace.
I dispute that. I've evaluated hundreds of new urbanist plans, and sat in on several charrettes (week-long design/planning sessions). New urbanist designers are terrifically concerned with parking in their designs -- I've even heard the mantra, "parking is destiny." The best policy for parking is to base its cost and supply on market demand whenever possible. The bible of parking reform is Donald Shoup's book, "The High Cost of Free Parking."
New urbanist town centers have proven very popular and profitable for developers; those are some of the reasons why the Urban Land Institute offers seminars, books and guides on the subject. Also, the leading industry organizations, ULI, NAHB and NAR, have each adopted smart growth as a focus area.
If this tax does lower gas consumption (unlikely, see vote buying, pork above) what will government do when they see revenues declining? Governments don't like declining revenue.
Smart growth sounds marvelously idealistic. The implementation will be Cuba, that paragon of another marvelously idealistic and smart political movement. Don't think so? By your own words, "MAKE the US population see it."
I have enough experience running my own life to state with confidence that you aren't smart enough to run my life. (And don't you just hate it when those proles get uppity)
Was this really necessary, Fred? I was just putting an idea out there. I happen to think Smart Growth is an interesting movement. I invite people to state their opinion about why Smart Growth is a terrible idea, but personal attacks aren't really called for.
Sounds like you prefer the libertarian way, where no one is forced to pay for somebody else's needs.
Right on.
But did you ever think about the numerous ways in which the automobile and oil industries have been subsidized by everybody, including people who don't own cars and don't drive them? Think about this:
The United States federal goverment has a highway department which is well funded by taxes, taken from the people - all the people - by gunpoint, if necessary. Billions of dollars a year (I don't know the exact figure, but you get the point), are taken from the people to fund this department alone. This money goes into road construction and repair. You only need road construction or repair if you intend to burn oil on those roads. If you aren't a direct oil consumer, it is not your concern how business gets products to your local stores. They pay a trucking company who burns oil to move stuff to your town. The trucking company, therefore, is receiving a subsidy from the non-driving taxpayer who is funding the highway department.
And of course every State in the US spends their tax money, taken at gunpoint, if necessary, on road and highway construction. So, the libertarian principle of eliminating force and fraud from human interaction has already been violated.
And what about the oil wars? Who pays for that? I think it's about $200 billion for just the latest war in Iraq. A whole lot of non-driving muthers are subsidizing the oil indistries by having their money taken, by gunpoint if necessary, in order to fund incredibly expensive 'police actions' in other people's countries.
So, an oil tax to pay for wars, protection of shipping on the open seas, and highway subsidies, is more than fair - it's much-needed justice for those who don't actually use so much oil!
Now, if you want to argue that we all benefit from this high oil consumption lifestyle, so we all should pay what is pathetically referred to as a 'fair share', then you might as well throw out the whole libertarian principle of each man paying his own way. Because the same argument can be made for education spending, socialized medicine, and even corporate welfare!
There's nothing wrong with making oil users pay for the services which the US Federal Government provides to the oil industry. Except that it's never made explicit, in which case, it's a flawed agreement anyway.
I do like the idea of setting a tax that causes a major societal shift upfront an changes fixed asset investments while also insulates the incremental effects, but there should be a basic minimum exposure to the oil markets on their way up.
The idea is that, when gas is really that high, it all by itself is going to motivate alternatives. What we really need is a way to motivate alternative energy sources when the price comes down (as it's been doing the last few weeks after the Katrina spike).
The gas tax is used to fund infrastructure improvements, and for many communities is the only funds they have.
If you remove the gas tax you won't be able to pay for any road work, or if it is federal funds, purchases of mass transit vehicles (& for smaller communities, those under 200,000, some funding for operations). Work in the right-of-way can (& should as appropriate) include bike lanes and sidewalks.
If the gas tax is at the State level, then how the money is used is determined by their state constitution, ie. whether gas tax money can only be used on roads, or whether it is for all transportation modes (bus, rail, boat etc) or even if it can go into the general fund (few if any allow this).
One is a "Shell" station, that sells Regular at $3.14 (today's price). Across the street is a "U.S. Gas", which I guess is a smaller company. They sell Regular today for $2.86. That's a 28 cent gap for two gas stations right across the street from each other -- with no median island that would make it difficult to cross.
There is always a 10+ cent gap between the stations, and I always get my gas from "U.S. Gas". But, there is always an equal length line at both places.
I have no idea why anyone ever goes to the Shell station. The only possibilities I can figure out is that Shell is a bigger "name brand" and people pay more for that, that U.S. Gas is run by Sikhs and people will pay more to be served by a generic mix of white and black attendants at Shell, or that U.S. Gas doesn't have the thing where you stick your card in the slot, so the Sikhs have to run inside to swipe your card, which takes 20 seconds. (This is New Jersey -- no self serve).
Anyway, the fact that every week I see lots of people paying 28 cents more than they have to for no good reason makes me wonder whether people actually care as much about gas prices as people pretend to in news stories, and whether taxes will do much about it.
I never look at the price of gas nor does anyone I know.
we all live at the end of cul de sacs,(on golf courses, of course!) drive SUV's, our kids drive SUV;s and so on... There is a large segment out here that will pay whatever and really doesn't care-- will drive the same as always whatever the price
An excellent example of why tiered pricing will have to be introduced eventually. At some price ($6, $8, $10? per gallon) Confederate and his buddies will respond to the price of gas. This is the price that should be the top tier of a tiered pricing scheme.
Can we tax oil AND complain to OPEC about high energy prices?
Or do new taxes signal to OPEC that they can raise prices? We can hardly complain. Why should oil consumers profit from oil?
During much of the first age of oil -- with gluts always looming unless production regulated by the Standard Oil Trust, the Texas RR Commission, or OPEC -- oil consumering nations profited more than producers via taxes and profits of the major (western owned) oil companies.
The attraction of taxing oil is easy to see. A lavish new source of unearned & undeserved income, while at the same time doing good -- energy security, conservation, fighting global warming.
A politician's dream. A wonderful alternative to building new energy sources!
Sounds too good to be true. Probably is too good to be true.
But by and large the rest of the USA will experience a radical shift in demographics if gas goes over $3 forever. unless someone or small town USA can live 50 to 100 miles away from a major Metropolis, there will be a major shift in people migrating to cities.
I think a Tax (big enough) will start a revolt against the govt. i may be far out there. but the sheep can only take so much. then they snap!
!?!?!?!
PLease explain.
Today it isn't realistic, but if the pain gets to be bad enough, people will become more open minded to different solutions and ideas.
Introducing similar gas tax in the US is of course late, if we speak about conservation of oil. There is no time for those structural changes. The facts are that in Europe and Japan the gas has always been much more expensive than in the US. And in the developing world gas is expensive compared to the purchasing power. This has not prevented the consumption from rising quite close to the the geological constraint curve.
Rising oil prices will now hit less the Europeans because the cost of crude is a smaller part of the gasoline price. In the US it will show directly at the pump. But in general those countries with high fuel efficiency will be not be in better position when the oil peaks. Conservation and increasing efficiency will be more difficult for them. They have already done a lot here. From the '70s on there has been much effort in the world for conservation of oil. Here we are. Increased efficiency has only proved Jevons' paradox.
Advocating biofuels is a bad idea. It would only increase oil use and the overall volume of driving and slows down the necessary adaptation. If it substitutes oil it will help keep its price a little bit lower and increase its use. But most important are the indirect effects: producing biofuels require fossile fuels. And driving with biofuels means in every case using oil for tyres, for making cars, maintaining them, for paving roads etc. Every mile driven will mean using oil indirectly, not only gasoline int the tank. In this sense increasing mpg will not help much if it helps to increase miles driven.
The depletion will take care of conservation anyway. The real problem is allocating the remainining fuel inside societies and in the world and coping with the unavoidable effects.
The necessary consrvation can very well be achieved by having fewer people use oil like before but more people using none. It could be achieved also by having all use less. But for the society this is not the same.
tax is the whole explenation. An important part is that our contry is
old, much of the expansion and increase in standard has followed the
old roads and towns. Completely new large scale suburbs have only been
built around major cities with mixed results, the high rise ones have
a larger share of people with social problems. Two major forming
factors have been nostaliga and socialist concrete rationality. Thus
we have lots of houses looking much like grandfathers house would have
looked on his farm if he would have been a wealthy farmer and lovely
areas in manny towns and lots and lots of city centerns with boring
concrete boxes with department stores and council administration and
the very "aerial view" rational million-apartment-program areas from
the 60:s and early 70:s with mostly closely spaced 2-3 stories high
apartment blocks and a smaller but more infamous part with 8-12
stories apartment blocks. Most of these areas have been ornare being
renovated and some of the high rise ones are being partly torn down.
They have been critizised for low quality since they needed major
renovation within 25-30 years.
The major structural change happened during the 60:s when car use was
booming, oil was cheap and oil taxes low. But the largest high rise
suburbs were anyway planned around subway stations and it was
everywhere built for easy bicycling.
Perhaps the difference was that most people anyway wanted to live
close to their workplaces? But on the other hand it is extremely
common to have a summer vacation house (No dictionary handy, sorry),
much often an inherited house from when most of the population were
farmers. We industrialised very late about 150 years ago and had
phenomenal growth for 100 years.
If peak oil makes car commuting less attractiv I expect the same thing
to happen as during the industralisation. The current disperse
permanent houses in areas with a long driving distance to cities will
become summer vacation houses and often used by retired people untill
the get to old to run their house on their own. We will some use out
of this old infrastructure since most of it is in nice surroundings.
> But in general those countries with high fuel efficiency will be not
> be in better position when the oil peaks. Conservation and increasing
> efficiency will be more difficult for them.
How come since a larger percentage of our infrastructure now is the
right kind of infrastructure for a peak oil future? We can then use
our resources for refinements instead of the most basic stuff.
> Advocating biofuels is a bad idea. It would only increase oil use
> and the overall volume of driving and slows down the necessary
> adaptation. If it substitutes oil it will help keep its price a
> little bit lower and increase its use. But most important are the
> indirect effects: producing biofuels require fossile fuels. And
> driving with biofuels means in every case using oil for tyres, for
> making cars, maintaining them, for paving roads etc. Every mile
> driven will mean using oil indirectly, not only gasoline int the
> tank. In this sense increasing mpg will not help much if it helps to
> increase miles driven.
Yes but we absolutely need vehicles in a post peak oil world. Changing
to biofuels and synthetich fuels made from nucler/hydro/solar power is
a necessary part of the adaption. The figures I have seen is that the
energy input for the whole cycle of makin ethanol from field crops in
the latest plant in Sweden is about 70% of the energy content of
the output. But a large part of that is electricity for making
fertilizer and biomass power for process heat. I guess 50% will be
reached fairly soon. The calculations for synthetic diesel made from
gassified pulp industry "waste" now only burned to give steam and
process heat is a lot better. But that and large scale making of
methanol and ethanol from forest biomass is ongoining research.
It is better to start the changeover early but nobody should expect
that the cost and car use will stay the same.
But what happens when they will have to do with still less oil? They just have to cut transportation. In a sense these communities are made for some optimal transport = optimal fuel use. What happens when they have to go under that optimum?
Biofuels make sense when they are made from waste. This is done in Brazil (sugar cane waste). But this is only secondary source of energy and is tied to primary product. The primary product absorbs most of energy used to produce it and so the energy efficiency of the waste is better.
The former Sovjet Union probably have a lot more "compacted" population then Sweden.
Higher energy prices will give more market driven "compaction". A key difference between the former Sovjet Union and Sweden is that our economy is in much better shape. A much larger percentage of our population can win a bidding war with for instance the former Sovjet Union populations, or large parts of the US population if the "suburbia will crash" scenario plays out.
The one who only needs 10% of the fuel can pay more per litre if they are on roughly the same income level.
My methane example is an energy source that is dependant on a primary production that covers a lot of the energy cost. It will only work as long as we produce a surplus of food and reject fermentable material as unfit for human consumption. And it is small, the yearly production is only equivalent to about 4500 m3 of gasoline (4,5 million m3 of methane). My 30% gain ethanol example is not dependant on other primary production covering for the energy cost. But it is also fairly small, 50 000 m3 of ethanol per year and it can not compete with brazilian ethanol, the world market price has to about double. You could nitpick that it shares roads and tractors with other production.
The energy inputs for the pulp industry is mostly via electricity and from wood and bark, if a larger percentage of the material flow is converted into methanol or ethanol or synthetic diesel it would not change where the processing energy comes from. The additional electricity can be had from savings since we use electricity in an inefficient way (Can easily happen if you overinvest in about 2 kW of continous fossil fuel free capacity per capita. :-/ ) or expansion of nuclear power or hydro power. The nice thing with forest biomass is that it require very little work and energy to grow but it grows slowly in our climate, the total production is limited and it is of course sensitive to changes in climate. We do not yet know if we will benefit or be harmed by the global warming.
An intresting thing is what the infrastructure can be used for if the times do get realy bad. Supermarkets in big buildings close to dense cities should be quite easy to both reach with better public transportation or convert to other uses. The "big square building" store area in my town is currently expanding and getting new access roads with underpasses for bicycles. I am not worried about my next door IKEA with friends.
Local - local - local!!! Federal is loco!!
Here in Lithuania, many of the same landscape/lifestyle decisions were made over the years as in Sweden -- e.g., readily available public transit, housing located within a reasonable distance of amenities, workplaces, and summer homes, and so on. A non-automotive emphasis in general. The 30-year-old building in which my family lives, for example, consists of 20 apartments, but the adjacent parking lot contains less than a dozen spaces. And keep in mind that the apartment we now own once housed three families. So you get an idea of how unusual it was to have an automobile, and how even more unusual it was to rely on it for everyday living.
Despite having all the advantages of a legacy of a non-car-dependent infrastructure, the population has gone crazy over the automobile during the last 15 years. Gasoline prices spiked to over one euro per liter in the aftermath of Katrina...and yet people don't hesitate to buy an auto with as large an engine as they can afford. This, in a country where the average monthly wage is 425-450 USD. The housing bubble is here, too, with new homes and apartment buildings sprouting up like mushrooms after a good rain. Many (most?) of these new developments are not being designed with Smart Growth / New Urbanism principles in mind.
My point is that, as crazy as the American resistance to gas taxes may seem, the thought process elsewhere can be even crazier. In much of central and eastern Europe, you'd think the positive legacy of a non-car-dependent way-of-life would persist, especially in the face of spiking fuel prices. You'd think people would build on the positive foundation they have. But they aren't. Suburbs, traffic jams, single-occupant commuting, shopping centers surrounded by acres and acres of parking lots -- all this, and more, has appeared in the past several years.
I admire the Swedes for their common sense. But I'm afraid that much of the developing world (in Europe and elsewhere) is not rushing down that path, necessarily. Americans are (unfortunately) not so unusual after all, in their predilection for the automotive culture.
The end result is it would be much easier for Europe to go back to a nineteenth century lifestyle since it's settlement patterns still have that shape (but much easier for the US to go back to an eighteenth century lifestyle since there's far lower numbers of persons/arable acre here).
Could it be that producers have done something that would be political suicide for the government, but is instead for them a road to higher profit margins? It is like a passive/aggressive strategy that turns economics on its head, where behavior that is inefficient is rewarded (Actually, this sounds alot like our government right now).
How would the "tax" revenue be distributed? The direct rewards go to the refiners, but by recognizing their prescient behavior through the purchase of stock, anyone could enlist as a beneficiary.