Let's Talk Gas Tax (Poll)

When I look to our energy future, and consider all of the possible scenarios and how we can potentially transition to a more sustainable way of life, there is no option that makes as much sense to me as taxing gasoline at a much higher rate. I want to open up a dialogue with TOD readers - especially those who don't think this is a good idea - to see if we can work our way through the obstacles that would prevent a gas tax from being enacted.

First, I would like to poll the readers to get an idea of where people stand on this issue. The current federal gasoline tax is $0.184/gal. How high do you think gasoline taxes should be?

The advantages of having a higher gasoline tax, or more appropriately a fossil fuel, or carbon tax, would be many in my opinion. They include:

  • It would obviously lead to conservation, which would help preserve our remaining fossil fuel endowment.

  • It would encourage mass transit.

  • It would make alternative energy sources more competitive with fossil fuels, without favoring a particular option.

  • It would encourage more efficient city planning, and reign in some of the suburban sprawl.

  • It would make the price of fossil fuels more reflective of the negative externalities that are not currently priced in (global warming, military expenditures, etc.).

  • It would penalize alternative energy sources with low EROEI and reward those processes with higher efficiency.

Of course the most often cited disadvantage is that the tax would hurt lower-income workers the most. I think we can work to give them back a tax credit to offset the additional taxes they pay. If they choose to adopt conservation measures, they will end up with more money in their pockets in the long run, and we will have improved the energy security for the next generation.

So, what do TOD readers think? I am looking for critiques, disagreements, and just general discussion on the advantages and disadvantages of a much higher gasoline tax. I would like to come up with something that is palatable to the majority of people, and I want to push this idea to our political leaders. The knee jerk reaction will almost always be "no new taxes", and this is why I want to work through the issues with TOD readers before I start to push too hard.

I have a BIG problem with any form of FED tax--The FED is so corrupt that the revenues raised would just be wasted through the usual pork barrel, earmarked appropriations that line pockets and get us no where. I think taxes need to be levied, but at the state and local level where there's much greater accountability and transparency and citizen input as to how revenues are spent. [With our federal form of government, I know interstate projects must be federalized. But until the federal gov shows several years worth of fiscal responsibility, I'm not giving it a penny more than I must.] It's really a sad commentary on our times that just when we need really good competent governability and direction setting from our national leaders, we have exactly the opposite, a situation unlikely to improve until 2009 at the earliest.
Agree.  This, IMO, is the biggest obstacle.  

Look at what happened recently with the "Transportation Bond Act" passed by NY voters last year.  It passed because it was supposed to be earmarked for transportation.  In reality, a chunk of it was used to pay off the previous transportation bond act, enabling the state to use the money that was supposed to go toward that for their own pet projects.  IOW, the money the voters thought was going to transportation infrastructure was siphoned off and used for other things.  

Blue states like NY seem to accept that as part of the price of doing business.  Red states like Ohio don't buy it, and vote down such propositions.

New Yorkers are not very clever, are they? The still nonexistent Second Avenue Subway was first bonded in 1951, if not before. And it's been bonded several times since, with negligible results. It's not even a "cost of doing business" since no business has been done. And NYers keep voting for these bond issues? Sheesh, are blue state voters just damned romantic fools?
I dunno, why don't you ask TOD:NYC?  They were pushing the Transportation Bond Act last fall.
Hey, I can vouch for the fact that they would not be doing the Second Ave Subway without that latest Bond Act. And they are doing it, I've been to the engineering meetings and the financing is 100% in place.

The problem we had in NYC was decades of corruption, unresponsive public authorities and a state government that vetoed many good city projects and moved the money upstate. Robert Moses personally blocked all major mass transit projects and moved that money to highways for about 35 years. Then we hit the financial crisis of the 1970s and everything was put on hold while they put the finances back in order.

Mind you, New York City pays out more than $24 billion in taxes than it gets back in government services from the state and Federal level.

We have some very uncorrupt, competent and capable leaders right now in the city at least. Trying to clean up the mess of earlier generations that put the present ahead of the future.

Well, OK, but the two giant holes that are still in the ground down by Vesey St., after five long years, don't exactly reassure me that the corruption and endless obstructionism have even slowed down, much less stopped. So I suppose I'll entertain the possibility that it will happen for real this time - which was the pre-referendum spiel every other time - when some major construction - not just more studies - starts. And I don't suppose I'll fully believe it until the first train runs...if I should live so long...
.. and of course, this wouldn't be the first train, more like the 20th, while 2nd ave (and all the other aves) are also served by bus service as well, so it's not like NYC has been Anti-transit.  Far from it.

The People ride in a hole in the ground.. it's a helluva town.

The FED is so corrupt that the revenues raised would just be wasted through the usual pork barrel, earmarked appropriations that line pockets and get us no where.

I agree, but I think the funds must primarily be given back as tax credits in order to sell the tax increase. I envision determining how much the gas tax would impact the average income family, and giving back a tax credit to offset this. That tax credit would gradually vanish at higher income levels. A portion should be earmarked for funding NREL and similar agencies, or for giving rebates to help purchase fuel efficient cars.

I think taxes need to be levied, but at the state and local level where there's much greater accountability and transparency and citizen input as to how revenues are spent.

If every state would implement a similar tax, that would work. But they won't. California might put on a $1 tax, and if Nevada and Oregon didn't follow suit there would be a lot of Californians driving across the border to get their gas.

State and Local accountable?

Bwahahahahahaha!

Here in Illinois, we just sent a governor to prison. Chicago corruption is legendary.

The problems arise when you don't send them to prison, not when you do.
A lot of Californians already do drive into Oregon for gas, mostly along 101 from Crescent City to Brookings; otherwise, the distances are too far and negate any savings. [Local taxes in Humboldt and Del Norte counties create quite a price disparity, which at times I've seen at 50-60 cents/gal.] When I was in Tahoe about 18 months ago, the same dynamic was in place as CA tax is lower than NV tax.

If you provide credits to offset the tax, then you severly decrease the revenues for your project. IMO, monies for PO and AGW must come from the general fund because the monies needed to do anything serious is far greater than the amount raised by a gas tax net of credits alone. I offered a national solution for this quite awhile ago at TOD.v1--The dismantling of the global US Empire and its support structures would free up over a trillion dollars per YEAR to use toward mitigating AGW and PO, with no new taxes needed other than the repealing of Cheney's tax cuts. And just think of the drastic reductions in carbon emissions and petroleum use rolling-back the Empire would make possible. IMO, Powerdown starts with Imperial rollback.

If you provide credits to offset the tax, then you severly decrease the revenues for your project.

The objective is not to generate (net) revenue. I agree that going that route would kill any chance of success. The objective is merely to raise the price of gas, raising the incentive for conservation and alternatives - without punishing consumers. It has to be more or less a "free lunch" in order to sell.

We could even sell it as a "punish Big Oil". Because conservation will cause less gasoline to be sold, it will have a negative impact on revenues. So, I might have to fight Big Oil on this one.

If it has the effect you hope, it will have to increase it each year if it's to remain revenue-neutral.  

Personally, a gas tax refunded via a cut in payroll taxes would be a great deal for me.  I don't drive much, since I live walking distance from my office.  

But if everyone does what I'm doing, the government will be losing money, unless the gas tax increases or the rebate decreases.

You probably would need to pay attention to careful matching of revenues to credits.

Interesting, there are two potential stimuli to the economy: revenue would decline, increasing the deficit, and so would the transfer to oil states: the "oil tax" effect.  

In theory you'd need to reduce the credit faster than revenues declined, to keep the economy on an even keel.

RR: I think it is a grand idea, but as I said to WesTexas some time ago, I think it a political dead end.

There are enormous constituencies for low gas prices, and very few for raising gas prices. Any politician who voted to raise the prices of gas would be voted out post haste.

I don't believe that our present Congress would pass such a bill, and I'm positive Bush would never sign it into law. In addition, I find it hard to believe that ANY future Congress would vote to raise these taxes. And what future president would sign it into law?

Better to let progressive shortages do the price lifting for us. Even if the price is coming down now, nothing short of a major recession will protect prices from going up next year. And the year afterwards, etc.

>The objective is merely to raise the price of gas, raising the incentive for conservation and alternatives - without punishing consumers.

Another words, you want a solution where everyone can continue to chow down two large pizzas and a large cake without gaining a single ounce. Do you remember the phrase "No Pain, No Gain"?

What makes you think the program would have no pain?  Every gallon would come with another dose of financial pain; the fact that the average person would get more money back than their extra fuel taxes wouldn't change that.  Bulk purchasing power and marginal cost are two different things, and incentives are set at the margin.
>What makes you think the program would have no pain?  Every gallon would come with another dose of financial pain

Because Roberts plan is to refund tax money back. Therefore consumers aren't truely burdened by the tax.

You just moved the goal posts; you changed "incentive" to "burden".  (You also fail to note that the effect on profligate users probably would be a burden.)

Most people aren't burdened by the cost of home lighting, but they still have a strong incentive to buy CF lamps and capture the savings.  Same thing with a gas tax and per-earner (i.e. not influenced by gas consumption) refund.

When traveling between Michigan and Iowa I always top off the tank before crossing into Illinois. Last trip the difference between Iowa and Illinois was 33 cents. We already have a race to the bottom between the states over other forms of taxation.
A fossil carbon tax needs to be effectively global to prevent even more flight of manufacturing to the 3rd world. A tarriff on goods based on embodied fossil energy could bring this close to reality.
I still think Carter's oil import quota concept would be more effective than a simple tax.
I don't think that import quotas would be productive.  All they would do is (if there was enough oil in the world) make it cheaper for overseas consumers than those in the USA.  It would also tend to divert oil-intensive activities to the rest of the world, which might be less productive overall.
No go. Congress would probably credit it back on some awesomely complicated, corrupt, and/or counterproductive basis, like a lot of other things. Maybe they would use the revenue to make the mortgage deduction even juicier, thus defeating the purpose. They can't resist the urge to play dictator, to engage in social engineering.
I agree with Robert. The magic words that would get a significant gas tax on the books are "revenue neutral".

The gas tax scheme that I invision would be very simple:

  • Tax all fossil fuel sales at a rate determined by the TOD poll.
  • Split the proceeds equally among all citizens.

Since most people think that they are less than average users, this scheme might actually sell.
"Since most people think that they are less than average users, this scheme might actually sell."

ha ha!  That wouldn't suprise me a bit.  But one thing I'd try for is a zippy name.  Because you can't fly anything unpopular without a good name.  So I propose the the following:
Patriot Tax
Energy Independance Tax
Energy Security Tax
Homeland Defense Tax

I'm sure someone out there will have something better...any takers?

"If every state would implement a similar tax, that would work. But they won't. California might put on a $1 tax, and if Nevada and Oregon didn't follow suit there would be a lot of Californians driving across the border to get their gas."

***
I don't think so.  Very few Californians live within 100 miles of either the Nevada or Oregon borders.  It COULD work in California if there were the political will here.

AS

No kidding.  The areas bordering Oregon and Nevada are fairly low population compared to the rest of the state.  Most of our biggest cities are on the coast, and there's really not much of anything North of San Francisco.  And seriously, how many people are going to drive 100 miles to get cheaper gas?  I'd say driving even 50 miles round trip would be stretching it (25 miles from the border).  Even if it made sense from a strict financial standpoint, because the difference in cost was large enough, most people value their time, or simply don't have enough time, to be driving an extra 100-200 miles round trip per week.  We totally could make a big difference on our consumption by levying a gas tax.  

But, same problem as at the Federal level, we don't have the will.  People in the U.S. don't have the right mentality for a gas tax.  Put simply, collectively we just don't give a damn.  This is different than how things our in Europe where there is real concern about the impact of pollution and thus people are more accepting.  I've said this before elsewhere when discussing this topic and I'll say it again here: our problems are not political, they are cultural!  And changing an entire culture is extremely difficult and it doesn't happen over night.  

>I envision determining how much the gas tax would impact the average income family, and giving back a tax credit to offset this

If understand this correctly. You want to impose a gas tax and then refund the money back to consumers? How will that curb consumption? All consumers will do is funnel that tax credit back into their consumption. Some enterprising business will offer loans on their gas tax credit (as the do for income tax returns) so that consumers can continue immediate gradification spending habits.

Plus how do you track consumption? Do you think major of will keep all thier gas reciepts. I can't imagine the waste of man-hours (and energy) involve in managing all of the paper work.

The only real way for the US to curb global consumption is to raise interest rates.

>. That tax credit would gradually vanish at higher income levels.

Thats silly. For high income families, even high prices of 4 or 5 dollars isn't going to change their consumption habits. Hell some of them charter private jets for $7K to $10K for a weekend getaway. An gas tax that can be afforded by the low and middle classes is peanuts for the wealthly.

>A portion should be earmarked for funding NREL and similar agencies, or for giving rebates to help purchase fuel efficient cars.

Fuel efficient cars are already tax deductable. A better option would to increase the gas-guzzler tax and increase the milage rating so that more vehicles are exposed to this tax. The Tax revenues should be used to fund PO mitigation projects, such as water projects to supplement aquifier depletion in the mid west. If people cant eat, it does really matter if they can drive a efficient car or can use public transportation.

You want to impose a gas tax and then refund the money back to consumers? How will that curb consumption? All consumers will do is funnel that tax credit back into their consumption.

But they won't necessarily spend it on gasoline. They might consume, but they have an incentive now to conserve. They will have more money at the end of the day by choosing conservation options.

Plus how do you track consumption? Do you think major of will keep all thier gas reciepts. I can't imagine the waste of man-hours (and energy) involve in managing all of the paper work.

You wouldn't do it like that. You figure out what the average consumption is, and you base refunds on that. Those who consume more than average will be penalized, and will give that penalty to those who consume less. Those who consume less will be rewarded.

Thats silly. For high income families, even high prices of 4 or 5 dollars isn't going to change their consumption habits.

Then they shall surrender cash to those who do change their consumption habits. That is the point. The winners will be those who decrease their consumption. Their winnings will come from those who choose not to.

>But they won't necessarily spend it on gasoline. They might consume, but they have an incentive now to conserve. They will have more money at the end of the day by choosing conservation options.

Spend it on what? What ever they spend it on is going to use fossil fuels. What if they use the refund money to on a vacation 3000 miles away. So instead of using refined gasoline, they use refined jet fuel from the supply of oil. How does that make a difference? What if the gas tax makes it cheaper to fly instead of driving? Or perhaps they will fill up with Ethanol or diesel or some other fuel that does have the tax?

>You wouldn't do it like that. You figure out what the average consumption is, and you base refunds on that. Those who consume more than average will be penalized, and will give that penalty to those who consume less. Those who consume less will be rewarded.

How do you do that?  What if I am a handman, repairman or a plow man that requires me to travel for my job. Do you penalize them when its absolutely necessary for them to use a large amount of fuel? Sorry, but you haven't thought this through at all.

>Then they shall surrender cash to those who do change their consumption habits. That is the point. The winners will be those who decrease their consumption. Their winnings will come from those who choose not to.

It wouldn't work that way. The money given back will simply be use to consume products and services that use fossil fuels. All you will accomplish is shifting consumption slightly different and perhaps into different refined petro. products.

If you haven't figured it out yet, Money is stored energy that can be redeemed in just about any form the consumer wishes it to be. The only real way to cut consumption is to cut GDP or decrease the population.

Spend it on what? What ever they spend it on is going to use fossil fuels.

Use fossil fuels at what level? The fact is that countries with high gasoline taxes have lower per capita energy consumption. Coincidence?

What if I am a handman, repairman or a plow man that requires me to travel for my job. Do you penalize them when its absolutely necessary for them to use a large amount of fuel?

Were they penalized over the past year due to high gas prices? What's going to happen to them after oil production peaks and prices skyrocket? Well, they could certainly raise their rates to cover the fuel increase, and I believe they can deduct the cost of fuel that they consume doing their job - even now.

All you will accomplish is shifting consumption slightly different and perhaps into different refined petro. products.

Countries with high gasoline taxes refute your argument. There is a strong correlation between the size of the gasoline tax and per capita energy usage - even in the U.S. among different states.

>Use fossil fuels at what level? The fact is that countries with high gasoline taxes have lower per capita energy consumption. Coincidence?

Robert FWIW, If I have a Chemistry question or a need a someone to dispute Ethanol, your the guy I would ask. When it comes to discussions involving economics and consumption, not so much.

  1. How does decreasing US consumption affect consumption in Asia?

  2. What affect on global market oil prices with a decrease in US consumption have?

  3. What will happen to consumption in Asia if global Oil prices decline?

  4. How can we (the US and Europe) enact policies within our govts to reduce the consumption of fossil fuel in nations that we can't regulation or enact laws in?

>Were they penalized over the past year due to high gas prices? What's going to happen to them after oil production peaks and prices skyrocket?

I am not disputing that we need to reduce consumption. The argument that I trying to get through is that a US gas tax isn't the answer, and isn't going to reduce it if your intention is refund gas tax money back.  From my propective you think you've only got a hammer (gas tax) and every problem is just a nail. Your trying to solve one problem, that prevent the gov't from using new income as a source for more wasteful spending, by refunding gas tax money back to taxpayers. If you give them money back, they just use it to consume energy, perhaps in a different form or perhaps not. You have no way of determing how that refunded money will be spent.

>Countries with high gasoline taxes refute your argument. There is a strong correlation between the size of the gasoline tax and per capita energy usage - even in the U.S. among different states.

None of those countries refund their gasoline taxes back to their tax payers. The use them to find there entitlement programs which is a another whole big discussion. BTW, does European gas taxes and regulation affect US consumption? How will a US tax affect consumption in China, India, and the Middle East?

Hopefully I am getting through!

Best of Luck.

Robert FWIW, If I have a Chemistry question or a need a someone to dispute Ethanol, your the guy I would ask. When it comes to discussions involving economics and consumption, not so much.

Also FWIW, I work in the Planning and Economics group. I do lots of economic analyses.

How does decreasing US consumption affect consumption in Asia?

How has decreasing European consumption affected consumption in the U.S.? Does this mean that European's lower consumption is effectively meaningless? Of course not. They are much better prepared for price spikes and Peak Oil, because they have designed a society around high oil prices. Since we are the world's largest consumer of oil, we need to worry about reducing our own consumption before worrying about what Asia is doing. At the least, we will be better prepared for Peak Oil.

If you give them money back, they just use it to consume energy, perhaps in a different form or perhaps not. You have no way of determing how that refunded money will be spent.

I also have no way of determining how they spend any of their current take home income. But you have no chance of implementing something like this unless it is revenue neutral. Their take-home pay won't change, unless they start conserving. Of course the people who conserve are the least likely to spend extra money on energy, IMO.

Hopefully I am getting through!

I understand Jevon's Paradox quite well, I just don't fully accept it. I also understand your wish to raise interest rates - it is just that I see no path to getting something like that implemented. I see more resistance to that - which might be difficult for Joe Consumer to understand - than a revenue neutral gasoline tax designed to reduce our consumption.

>>How does decreasing US consumption affect consumption in Asia?

>How has decreasing European consumption affected consumption in the U.S.?

Now your are spining by answer my question with an off topic question. Please answer the question "How does decreasing US consumption affect consumption in Asia?" Any  reduction in US consumption will be consumed by Asia. US gas taxation is not a realistic method to control global consumption. Until you can prove that a US gas tax can reduce global consumption your just wasting time. You have not achived any goal.

>They [Europe] are much better prepared for price spikes and Peak Oil, because they have designed a society around high oil prices.

This isn't true, Europe is still very heavily dependant on heating oil, and Natural gas. And I can prove it. Just look at the European Natural Gas crisis and how a lot of business might need to shutdown if they can't get adquite supplies of natural gas. The Gasolinediesel tax has shifted consumption to Natural gas.

Europe's high population density will make it impossible to sustain a modern economy without adquite fossil inputs. For instance, Europe Agraculture is very depend on fossil inputs to maintain high crop yields to feed the population. They are just as unsustainable as the US, and perhaps even worse because they lack any significant coal reserves.

>Their take-home pay won't change, unless they start conserving. Of course the people who conserve are the least likely to spend extra money on energy, IMO.

You cannot increase energy taxes without raising interest rates, otherwise inflation will rise, resulting in higher wages that will remove the expense of the increased taxes. Once inflation kicks in no one will bother to save and opt to spend everything they make in fear of losing it to inflation.

>I understand Jevon's Paradox quite well, I just don't fully accept it.

This isn't about Jevon's Paradox. Its a simple Economics. Global Demand for Oil is already above supply. Therefore if any one nation reduces consumption some one else will immediate use. India and China can not fulfill there current Oil demand. You can read all about their Oil crisis in the India Times. If the US cuts demand by 5 mmb/d tommorrow, it would be immediately bought by China and India. The demand is already there, there will be zero lag.

Am I getting through yet?

>But you have no chance of implementing something like this unless it is revenue neutral

Taxes are not revenue neutral. What other tool is? Answer: Interest rates.

Please answer the question "How does decreasing US consumption affect consumption in Asia?"

This is really silly. This is just Jevon's Paradox. But I reject that argument that we shouldn't try to decrease U.S. consumption just because people in Asia might consume more. Decreasing U.S. consumption decreases the worst-case scenario possibilities in the U.S. Steps that we take to make our society less dependent on fossil fuels are good steps to take, whether Asia increases their consumption or not. It goes right back to my question about decreasing European consumption. Application of your argument would say that this didn't accomplish anything for them.

This isn't true, Europe is still very heavily dependant on heating oil, and Natural gas. And I can prove it.

Reread my statement: Europe is better prepared for Peak Oil. That they are still dependent on heating oil is a straw man, because it doesn't address my argument that they are BETTER PREPARED than we are. And the reason is because fossil fuels are more expensive there. This has lead to less per capita energy usage, fuel efficient vehicles, widespread mass transit, and little suburban sprawl.

>But I reject that argument that we shouldn't try to decrease U.S. consumption just because people in Asia might consume more.

Its not "if they will consume more", its is absolutely asurred. Growth of consumption of Oil in China is constrained by supply. Remove the supply contraint and they will continue to consume more.

Jevons Paradox discusses that conserveration will lead to savings that will fuel growth in the future. In our present situation the demand is already exists. Consumption is contrained by supply. By reducing the US consumption would permit additional oil to flow to India and China help meet their current demand. There would be zero net decline in global consumption

Consider the 1973 Arab Oil embargo. During this time, the demand for oil was above consumption because of supply contraints. When the embargo ended supply consumption immediately increased. This is the situation China and India. have. They already have the infrastructure and population to consume a much larger amount of Oil. The only thing that is holding them back is the amount of oil they can purchase on the open markets.

>Europe is better prepared for Peak Oil.

This isn't accurate. This is would require a lengthy off-topic discussion, and is far off topic anyway.

I am not disputing that we need to reduce consumption. The argument that I trying to get through is that a US gas tax isn't the answer, and isn't going to reduce it if your intention is refund gas tax money back.
So long as gas is cheap, US consumers aren't going to act to use less of it.  We've subsidized ethanol (a failure at less than 5% displacement) and tried CAFE regulations (a failure which did not even prevent the SUV phenomenon).  Taxes are the one thing we haven't tried.
If you give them money back, they just use it to consume energy, perhaps in a different form or perhaps not.
Maybe they use it to buy energy-saving vehicles, solar panels, or the like.
You have no way of determing how that refunded money will be spent.
This is by design.  Purchases with less embodied energy will be more attractive to the consumer.  Purchases which replace energy consumption with other things will be more attractive.  All virtuous choices become more attractive; the government wouldn't have to go picking them out one at a time, allowing the markets to find solutions that policy-makers never would.
None of those countries refund their gasoline taxes back to their tax payers. The use them to find there [sic] entitlement programs which is a another whole big discussion.
The US doesn't have huge entitlement programs aside from Social Security and Medicare.  Even Medicaid is being cut back.  If you think voters will accept diversion of tax funds after they've been promised a full offset, I think you misjudge the electorate.
How will a US tax affect consumption in China, India, and the Middle East?
How does Chinese dependence on Middle East energy affect US energy security?  Aside from making it far more difficult to market foreign-built guzzlers to the US consumer, that is.
>So long as gas is cheap, US consumers aren't going to act to use less of it.  We've subsidized ethanol (a failure at less than 5% displacement) and tried CAFE regulations (a failure which did not even prevent the SUV phenomenon).  Taxes are the one thing we haven't tried.

I am not disputing that we need to reduce consumption. I am disputing the method of using a gas tax to achieve that goal because it will fail on a global scale. Any policy enacted must reduce global consumption period.

>The US doesn't have huge entitlement programs aside from Social Security and Medicare.

I was referring to Europe's entitlement programs. Robert said that the High gas taxes curb demand in Europe and that it works. But Robert plan is to refund gas tax money back, which is pointless since consumers will just use the refund to buy more gas or use it on something else that also uses fossil fuels. Robert is attempting to slap on a band aid to remove gov't waste on tax revunues. No matter how many band aids you slap on, you cannot fix the fundemental issues with a high gas tax policy.

>>How will a US tax affect consumption in China, India, and the Middle East?

>How does Chinese dependence on Middle East energy affect US energy security?  Aside from making it far more difficult to market foreign-built guzzlers to the US consumer, that is.

Why must everyone answer my questions with another off topic question? Please just answer the question or don't respond.  The point I am trying to drive home is that its pointless to conserve at home if some one else is just going to waste it anyway.

Slapping out a simple plan to cut US consumption isn't going to address the fundemental issues. Lets come up with a realistic plan that addresses total global consumption.

Thanks

 

I am disputing the method of using a gas tax to achieve that goal because it will fail on a global scale. Any policy enacted must reduce global consumption period.
And you think that cutting consumption in the nation which accounts for ~22% of the total wouldn't address the global issue?

Cutting US consumption would also address the balance of trade and a bunch of other things.  If there were fewer petrodollars out there, more of the money going to oil producers would be other currencies.  This would cut the value of those currencies (like the yuan) and reduce the amount of oil that they'd buy.

There is also the issue of economic vulnerability.  Right now the US can't do anything which would substantially affect the world supply of oil because we'd suffer the most.  But if that weren't true, China (as the imperialist force in Asia at the moment) would have to cut oil dependence or leave the US able to squeeze Beijing into submission just by fiddling with the taps somehow (say, by helping some Shiites bomb pipelines in S. Arabia and starting something with Iran).

Why must everyone answer my questions with another off topic question?
It is as on-topic as your constant changing of definitions and shifting of goalposts is.
The point I am trying to drive home is that its pointless to conserve at home if some one else is just going to waste it anyway.
Right now I am lighting my whole place with two CF lamps (total consumption ~25 watts), editting on a flat-screen monitor (large savings over the CRT it replaced, and the next one will be even better) and driving about a mile to work.  The savings make me better off than the people who are wasteful.  Eventually, those people will be forced to change their habits and I'll be here as an example.
>And you think that cutting consumption in the nation which accounts for ~22% of the total wouldn't address the global issue?

No, it would not. China has the fastest growth in Oil consumpion. In 1997 China was a net exporter, by 2004 it was the second largest importer. China's Oil import growth was slowed because of lack of supply. If the supply constraint was removed (perhaps by declining US consumption), it would probably surpass US imports in less than a decade. China has 1.4 Billion people, all eager to share the american dream. Slightly behind China is India with about a billion people, also very eager to obtain the american lifestyle. In addition, both of these countries lack any regulation on consumption, nor are there any significant enviromental laws. Both also subsidize fuel prices below market prices into order to prevent excessive fuel prices from curbing economic growth.

>There is also the issue of economic vulnerability.  Right now the US can't do anything which would substantially affect the world supply of oil because we'd suffer the most.

The real vulnerability is declining access to oil in a oil dependant economy and society. Raising the interest rates would be effective in curbing global oil consumption.

Suffering will happen no matter what policies are inacted. Ideally, it would be far better to have some sort of semi-controlled landing instead of a straight vertical crash. The gas tax does nothing to affect the trajectory since it will not result in a global reduction in consumption.

> The savings make me better off than the people who are wasteful.  

Good, but you need to get the entire globe to do the same to make a difference. Using a Gas tax will never achive that goal. FWIW: Even with the minor changes you have made, you are still very much dependant on fossil fuels, and these changes will not make much of a difference. When Oil production declines in just a few years, you will still be facing the same problems as everyone else.

>It is as on-topic as your constant changing of definitions and shifting of goalposts is.

I noticed you still haven't answered the question. How about another go?

BTW: I haven't changed my definitions or shifted goalposts. When you or someone else had posted an off-topic statement, I have done my best to respond to it. The points that I have been driving from my original response to Robert's comment are:

  1. A gas tax will not reduce global oil consumption, only shift consumption to other parts of the world.

  2. Refunding gas tax money will not curb consumption since, consumers can just rotate the refund to purchase gas or other good and services that use corpus amounts of energy.

I can't make it any easier.
China has the fastest growth in Oil consumpion.
Okay, what do you want to do about it?  More to the point, what good does it do them?

Note that you could stem that trend by proper allocation of the tax receipts - see below.

The real vulnerability is declining access to oil in a oil dependant economy and society.
Oil is only a vulnerability if you continue to need it; the less the national economy depends on it (relative to others', e.g. China) the less it matters.  Further, the only way to change the current situation of vulnerability is to get the economy to move to something else.  Taxes and other negative preferences are the most efficient and effective method.
you need to get the entire globe to do the same to make a difference.
Not true.  You could allocate the fuel taxes to fill the SPR or other reserves; this takes oil away from other economies and also reduces carbon emissions.  Allocating taxes to fill reserves places costs upon those parts of the economy (and not just the US economy) which are dependent on oil and gives relative advantages to those parts which use other sources of energy or dispense with need altogether (through efficiency measures).

Taxing imports based on their embodied oil prevents the displacement of demand overseas.

A gas tax will not reduce global oil consumption, only shift consumption to other parts of the world.
You're assuming that the production of oil will continue at the same level regardless of net demand and price.  Given the cost of developing new fields, this assumption is highly questionable and probably wrong.
Refunding gas tax money will not curb consumption
Incentive or disincentive to consume is a function of marginal cost.  As the fuel tax with flat refund increases the marginal cost without any increase in disposable income across the spectrum, consumers will be rewarded for cutting their consumption and more will do so.  Those who favor goods and services with less embodied petroleum will have more disposable income than those who favor the opposite.  This builds a reward for cutting oil consumption.

What gets rewarded gets done.  Your assertion is not just baseless, it is the opposite of reality.

>>China has the fastest growth in Oil consumpion.
>Okay, what do you want to do about it?  More to the point, what good does it do them?

Raise Interest Rates. The US is still the worlds reserve currency. By raising rates in the US, it would force the entire world to do the same in order to keep capital from moving to nations with higher rates and to prevent domestic inflation.

Raise rates cuts wasteful consumption across everything, not just personal transport. It would force consumers to also purchase smaller homes (likely consume less energy) and purchases goods and services that they need, not what they want since they will no longer be able to afford to use debt to fuel their lifestyles. For instance, how many americans would be able to afford SUVs without loans.

On the flip side, higher interest rates also protect savings from inflation, while higher taxes promote inflation. It also forces business to become more efficient in using capital to expand their business. Higher rates will force business to spend money more wisely and not jump foolishly into developing or expanding their business into wasteful enterprises. Higher rates will also help protect existing pension plans by lowerer the risks associated with reaching for yieldreturn on investment. Today because the interest rates are so low, many pension plans have turned to very risky investments (hedge funds, etc). Finally, interest rates do not unfairly penalize low income families and those that live on a fixed income (retirees). These people usually don't have much credit anyways and usually only buy what they absolutely need. Inflation also affects these folk harshly since they generally lack the capacity to increase their income and  keep up with inflation.

>Not true.  You could allocate the fuel taxes to fill the SPR or other reserves; this takes oil away from other economies and also reduces carbon emissions.

This would have been a good idea if we could guarentee that the SPR was managed correctly. The issue with using the SPR is that the politicians in office can use it to influence elections. For instance dumping oil from the SPR to help them get re-elected. It is impossible to determine how this reserve will be used or wasted in the future. The SPR Oil reserves can be used just as unwisely as tax revenue.

>You're assuming that the production of oil will continue at the same level regardless of net demand and price.  Given the cost of developing new fields, this assumption is highly questionable and probably wrong.

Decliningn oil production (or declines in new production) is irrevelevant. The objective of any conservation effort is to husband remaining resources so that they last longer. At the minimum, we want to reduce demand below production. Ideally we want to end all wasteful consumption of fossil fuels globally, and use a the remaining reserves to migrate the infrastructure way from dependance on fossil fuels. If consumption in Asia is left unchecked, they will continue to expand another oil dependant infrastructure.

>Those who favor goods and services with less embodied petroleum will have more disposable income than those who favor the opposite.  This builds a reward for cutting oil consumption.

It doesn't work that way, because gas taxes penalizes low income families more than middle class and the wealthly who already live fairly frugally. Those that have money will simply use to refund to consume energy anyway. Even if you refunded tax money disapportionally by refunding the lower income families more than the wealthy. These people would simply use the extra income to purchase goods and services that use energy.

Consider this simplified scenero. Every day from now on a family puts away one dollar for every gallon of gasoline they purchase. At end of the year, the family can spend that money on what ever they wish. What would the average american family do with that money? Most likely they will use to purchase good or services that use energy. Maybe it will be used for a vacation to the bahamas, or to buy a new car, a wide screen tv (shipped from half way around the world) All of these purchase use considerable amounts of oil, and therefore a program that refunds gas tax money is not an affect method to create conservation. It does really matter where oil is consumpted in the form of gasoline, jet fuel, or plastics. Oil is a finite resource.

For a gas tax to cut consumption, control of the refunded money would need to be restricted to a set of good and services that disapportionally use less energy. This would be an extremely difficult objective to achive.

Raise Interest Rates. The US is still the worlds reserve currency.
Good, a concrete proposal.  That's far more cogent than I usually get.  But raising interest rates both increases the rate of increase of government debt, and it also damps down economic activity in general.

I don't see why economic activity in general is a problem.  Emission of fossil carbon in general, and use of petroleum in particular, is the problem.  Economic activity which displaces or replaces these things is to be encouraged, while a general increase in interest rates would oppose it.

Last, this would not necessarily affect China.  China's banks are government-controlled and are unlikely to move investment away from the mainland in response to the Fed.  The way to hurt China is to disadvantage inefficiently produced or subsidized goods via tariffs; China's are both.

higher interest rates also protect savings from inflation, while higher taxes promote inflation.
A tax shift is not a tax increase.
The objective of any conservation effort is to husband remaining resources so that they last longer.
Didn't you just complain that US conservation efforts would just shift consumption to e.g. China?

My purposes in conserving and replacing oil are to reduce GHG emissions, make the US less dependent on (and ultimately independent of) despotic regimes such as Saudi Arabia and Venezuela, and play to our relative advantages in non-fossil energy supplies and thus strengthen the USA compared to e.g. China.  There is no point in making oil last any longer than we need it.

Those who favor goods and services with less embodied petroleum will have more disposable income than those who favor the opposite.  This builds a reward for cutting oil consumption.

It doesn't work that way, because gas taxes penalizes low income families more than middle class and the wealthly who already live fairly frugally. Those that have money will simply use to refund to consume energy anyway.

So consider the following hypothetical example:
  • A $2/gallon petroleum tax is applied, which generates roughly $400 billion/year.  This is refunded as a deductible on Social Security taxes, averaging $2780 per wage-earner over the US's ~144 million workers.
  • Mr. and Mrs. Low Income, who both work and earn a combined $30,000/year, currently use 1180 gallons of motor fuel per year between them.  Their after-tax income increases by $5560 per year, offset by $2360 in fuel taxes and some increase in consumer costs for transport.
  • Mr. and Mrs. Low Income decide to replace one of their old vehicles with a new hybrid car, which cuts their fuel consumption to 550 gallons/year.  They get to enjoy a nice car and offset the payment with another $500/year in reduced fuel taxes.

Are you saying that nobody would do this?  Really?

You might also be right, that mostly the rich would buy the hybrids to save money.  But the rich eventually trade in the hybrids, which are purchased by poorer people like Mr. and Mrs. Low Income.  Either way the benefits of economy trickle down to the less-affluent, while they benefit from the tax offsets immediately.

Every day from now on a family puts away one dollar for every gallon of gasoline they purchase. At end of the year, the family can spend that money on what ever they wish. What would the average american family do with that money? Most likely they will use to purchase good or services that use energy.
And if they paid back into savings based on the embodied energy of what they bought, they'd be more likely to purchase less energy-intensive goods and services simply because they would be cheaper and yield more for their savings.
>But raising interest rates both increases the rate of increase of government debt, and it also damps down economic activity in general.

Increased interest rates would very likely have the opposite affect on gov't debt and spending. The increased interest would force congress to cut spending and get serious about debt reduction. As it stands because interest rates are low, the gov't has no issues with deficit spending and actually incourages them to go on using credit to finance wasteful spending. Low interest rates cause wasteful spending.

>I don't see why economic activity in general is a problem.  Emission of fossil carbon in general, and use of petroleum in particular, is the problem.  Economic activity which displaces or replaces these things is to be encouraged, while a general increase in interest rates would oppose it.

To be fair, there is very little economic activity that does not use fossil fuels. I believe we will see a fairly dramatic drop in oil and gas production soon. It very likely that two largest fields, Gharwar and Cantarell are about to go into terminal decline(probably sometime in 2007 or early 2008).

>Last, this would not necessarily affect China.  China's banks are government-controlled and are unlikely to move investment away from the mainland in response to the Fed.

US interest rates do affect China's economy. There is a lot of foriegn capital that has left the US and Europe because the interest rates were so low (hense the drop in the dollars value compared to other currencies). By raising US raises investors will move capital away from China (and Asia) because of the higher yields and implied lower financial risks. Chinas gov't controlled banks would be force to follow US rate hikes to prevent capital from moving to the US. China, Europe and the majority of major central banks usually adjust their rates when the US fed makes significant changes to US rates. For instance, when the US lowered its rates (down to 1% in 2004) the ECB (european Central bank) and the Chinese central bank both lower their own rates (although not to 1%). When the US began raising rates, both the ECB and Chinese raised their rates (although not as much as the US did). If Central banks do not raise rates and print money to maintain liquidity in their domestic market, it will lead to inflation cause a whole set of new economic problems.

>A tax shift is not a tax increase.

Taxing energy always leads to inflation. This is because businesses pass on their higher energy costs to consumers, which in turn demand higher wages to adjust to the higher costs. The cycle feeds on itself causing inflation.

>Didn't you just complain that US conservation efforts would just shift consumption to e.g. China?

A higher US interest rate would force the worlds Central banks to raise their rates resulting in decreased economic growth and reducing demand for fossil fuels. Higher rates would also promote businesses and consumers use energy more efficient and spend capital more wisely. ie smaller homes, cars, etc.

>A $2/gallon petroleum tax is applied, which generates roughly $400 billion/year.  This is refunded as a deductible on Social Security taxes, averaging $2780 per wage-earner over the US's ~144 million workers.

Social security surpluses are used by politicians as a "slush fund" to pay for programs that will help encumberments get re-elected. That last place you want higher tax revenue to end up is in entitlement program funds. ie politician X campaigns to raise entitlements using the extra revenue or use it to build a new highway to create local jobs, etc.

>Mr. and Mrs. Low Income, who both work and earn a combined $30,000/year, currently use 1180 gallons of motor fuel per year between them.  Their after-tax income increases by $5560 per year, offset by $2360 in fuel taxes and some increase in consumer costs for transport.

What ever money that is refunded to them can be used to consume fossil fuels. What ever increased tax revenues received by the gov't will be used for additional wasteful spending. Over a period of about 3 to 5 years, the gas tax will result in increased inflation (proportional to the increased tax rate), as businesses pass on higher energy costs to consumers and increased tax revenue coupled with poor gov't spending managent. Higher interest rates is by far a better choice.

>And if they paid back into savings based on the embodied energy of what they bought, they'd be more likely to purchase less energy-intensive goods and services simply because they would be cheaper and yield more for their savings.

They won't consider saving money if there is inflation. Why save money if its just going to be inflated away? However higher interest rates does persuade consumers to save. Higher interest rates causes lower inflation and increased yields on savings.

>My purposes in conserving and replacing oil are to reduce GHG emissions, make the US less dependent on (and ultimately independent of) despotic regimes such as Saudi Arabia and Venezuela, and play to our relative advantages in non-fossil energy supplies and thus strengthen the USA compared to e.g. China.  There is no point in making oil last any longer than we need it.

When Oil production collapses GH emissions will increase. This is because gov'ts, consumers, and business will turn to dirty fuels that produce far more GH emissions. They will increase us of fossil fuels and use renewable sources in non-renewable ways. For instance, in the Northeast, lots of consumers purchased wood stoves to help heat their homes. As oil and gas become expensive, the demand for wood to be used for fuel will soar, causing deforestation. Before the development of Oil and gas, much of the Eastern US was deforested from the demand for winter heating, and running equipment. When Oil and gas became accessable, cheap, and easier to use, the trees grew back.

Today, the US population is more than twice as large as it was during the begining of the 20th century when oil and gas began development. It wouldn't take very long to deforest the region again (we have better technology to harvest wood and more people that need fuel). This time around it won't just be the US destroying the local enviroment, it will happen all over the world, especially in Asia. I have now doubt that GH emissions will more than double once oil and gas become expensive.

Because I'm short on time (won't even be able to read much until Monday night) I'm only going to be able to address a few of your points:
there is very little economic activity that does not use fossil fuels.
Wind power uses very little compared to what it displaces.  There are also huge variations between activities which are net consumers.  Changing the balance of activities and investment from heavy consumers to light consumers or net producers is a positive step.
It very likely that two largest fields, Gharwar and Cantarell are about to go into terminal decline(probably sometime in 2007 or early 2008).
Cantarell has been in decline since last year.
Taxing energy always leads to inflation.
That's the point, to increase the price of oil-intensive goods and services.  Feeding the tax back as an addition to wages automatically increases purchasing power to compensate.  Goods and services which are less oil-intensive will increase their prices less or not at all, thus becoming more competitive, more attractive to consumers and tend to shoulder out oil in the marketplace.
Social security surpluses are used by politicians as a "slush fund" to pay for programs that will help encumberments get re-elected.
It can only do that if they're allowed to keep it.  A full refund of the tax as a rebate doesn't leave it in their hands.
What ever money that is refunded to them can be used to consume fossil fuels.
You keep repeating that, without ever acknowledging - or realizing - that the net effect on purchasing power is zero and that the increase in the marginal cost of oil and oil-consuming goods and services creates an incentive for all consumers to buy something else, and all producers to economize or replace oil in their businesses.

Tonight, I paid $2.499 for diesel.  Saving a gallon would leave me two and a half bucks to the good, or roughly 6 cents per mile the way I drive.  If diesel cost $4.499, it would be a lot more attractive to spend time closer to home and drive slower when heading elsewhere.  It would make the closer destinations relatively more attractive.

They won't consider saving money if there is inflation.
The same can be said for high interest rates.  If you can get a 7% return on investment by insulating your house, but a 10% return on a bond, most people will put their money in the bond.  2% interest makes insulation more attractive than bonds, especially because the insulation is a hedge against inflation in energy supplies.
When Oil production collapses GH emissions will increase.
Doesn't this mean that it is REALLY important to get the pro-efficiency, pro-wind, pro-solar, anti-GHG regime into place now?  If we don't get the R&D and industrial investment moving that way pronto, it may be too late.
>Wind power uses very little compared to what it displaces.  There are also huge variations between activities which are net consumers.  Changing the balance of activities and investment from heavy consumers to light consumers or net producers is a positive step.

Then simply provide special low interest rates on loans that promote the construction of energy efficiency systems and sustainable enegry. What ever incentives work with tax breaks would work equally or better with special low interest rates. If one is going to go into debt in order to save money, you can bet your bottom dollar they will make every effort that it pays off. This is not so with a tax incentive, since they can come out ahead even if it doesn't save the money.

>Cantarell has been in decline since last year.

The key word is "terminal" decline. I believe production from these fields will drop below 50% of current production probably either next year or in early 2008. The water cut is rising rapidly and neither producer is willing to cut production in order prevent billions of barrels from slipping by (never to be recovered). They are literately sacrificing billions of barrels just to maximumize production.

>Goods and services which are less oil-intensive will increase their prices less or not at all, thus becoming more competitive, more attractive to consumers and tend to shoulder out oil in the marketplace.

It doesn't work that way. If inflation gets a hold in the economy, people just go on consuming their usual way. If it gets real bad they will increase their wasteful spending habits. For instance, during the 1970's, a period of stagflation, there was no effort made by consumers to conserve, nor was there any sigificant effort to build more fuel efficient vehicles. It wasn't until interest rates rose significantly during the end of the 1970's that the nation took interest in efficiency. When the interest rates rose, the auto industry was forces to produce smaller cars because people could no longer afford to purchase large vehicles.

>The same can be said for high interest rates.  If you can get a 7% return on investment by insulating your house, but a 10% return on a bond, most people will put their money in the bond.

Not really, If interest rates are high, consumers do everything to cut costs. For instance, they use lower wattage light bulbs, turn down the thermistat, use fans instead of AC, etc. If installing insulation saves money they will do that too. What your missing is that majority of US consumers have little savings and a lot of debt. As interest rates rise debt become painful, and they act to cut costs so they can pay down their debt. They also can't afford to take on more debt to continue their wasteful spending lifestyles.

>Doesn't this mean that it is REALLY important to get the pro-efficiency, pro-wind, pro-solar, anti-GHG regime into place now?  If we don't get the R&D and industrial investment moving that way pronto, it may be too late.

To be honest its already to late to prevent severe hardships. I believe we only have a few of years left before oil and natural gas shortages begin. There simply isn't enough time make a transistion now. The way gov't works (special commitees, feasibilty study, yada, yada) it will take them a decade before any serious contruction effort begins anyway. Then consider NIMBY and all the  resistanct change by the public. Look what happen to the wind farm project off the coast of Massachusetts.

Only investing in wind is feasible. Solar is not practical because of a number of factors. For instance the manufacture of solar panels uses lots of energy, lots of water, can creates large amounts of chemical wastes. If you include all of the associated costs (mining, processing, clean up (toxic wastes) solar panels have a negative EROI. Although Wind does have an issue since it can only produce electricity when the wind blows, but can be offset using man made lakes than can used excess wind to fill and be drained through hydro-turbines when the wind isn't blowing enough.

The real issue is one of transportion fuels and the our massive economic dependance on petro chemicals, fertializers, pesticides, plastics, etc. These can't be replaced with electricity. Its also not practical to heat tens of millions of building using electric heat.

FWIW: I don't see america or the rest of the world making any serious investment in replacing fossil fuels until we experience a severe energy crisis. There are probably less then a dozen politicans activity speaking about peak oil in the US. The rest are either looking to pass laws to develop the remaining reserves or to go after the oil companies. Neither of which will make the slightest difference in the long term.

In my opinion, your best option is not wait for gov't action, but start work on your own preprations as soon as possible. Ideally you want to avoid living in urban centers and become as self sufficent as you can. If your holding out for some national effort, you will very likely be disappointed, plus you'll be left up a smelly creek with out a paddle and a boat when the crisis begins.

Best of Luck to you.

Then simply provide special low interest rates on loans that promote the construction of energy efficiency systems and sustainable enegry. What ever incentives work with tax breaks would work equally or better with special low interest rates.
That would produce the precise corruption you claim to be against.  Preferences would be given, not to the most efficient or effective responses, but the ones with the most powerful backers.

Certain business models might be a highly effective way of reducing petroleum use and GHG emissions, but how do you aim loan incentives at a business model?  Taxes do this quite effectively, as the business in tax shelters proves.

Worse:  if a new and more effective scheme was developed after the passage of such a program and wasn't included under its terms, it might never get any investment because it would require changing the law and going against entrenched interests already profiting from the flow of money.

Worse yet:  no system of subsidies is going to reward people who just stop doing something fuel-consumptive.  Taxes do that implicitly.

Last:  it's mighty ironic to read a proposal for subsidized loans from someone who is virulently opposed to gas taxes.  Just where do you think the government would get the money for subsidies, bake sales?

If inflation gets a hold in the economy, people just go on consuming their usual way. If it gets real bad they will increase their wasteful spending habits.
That must be why American's consumption of gasoline rose during the period of inflation and afterward.

Oh, wait.  It fell from 1978 to 1983.  It was only when Reagan's deficit spending got going (and Carter's energy-efficiency programs had been dismantled and discredited) that gas consumption took off again.

If interest rates are high, consumers do everything to cut costs.
Hogwash.  If interest rates are high, capital expenditures get pushed out by consumption.  At a high enough interest rate, an incandescent bulb is a better investment than a compact fluorescent; you pay for the lamp in advance, but electricity is purchased with discounted future money.
To be honest its already to late to prevent severe hardships.
Yeah, but what does that have to do with the most effective response?  Nothing.
The way gov't works (special commitees, feasibilty study, yada, yada) it will take them a decade before any serious contruction effort begins anyway.
Then why does all your thinking revolve around GOVERNMENT subsidies and the like, rather than private enterprise working on minimizing oil/GHG taxes (and thus oil/GHG problems)?  It's like you WANT failure.
The real issue is one of transportion fuels and the our massive economic dependance on petro chemicals, fertializers, pesticides, plastics, etc.
Transportation fuels are the only one of importance.  The rest are consumed to the tune of a few tens of pounds per capita per year, and could easily be made from biomass.
These can't be replaced with electricity. Its also not practical to heat tens of millions of building using electric heat.
The people living in buildings with electric heat would beg to differ with you.  I'm living in one now.

I wish you'd get your facts straight.  It's like you've got these ideological blinders on, and refuse to compare the bogus map you've been given against the landscape right before your eyes.

>Worse yet:  no system of subsidies is going to reward people who just stop doing something fuel-consumptive.  Taxes do that implicitly.

I was comparing tax incentives vs interest rate incentatives.

>Oh, wait.  It fell from 1978 to 1983.  It was only when Reagan's deficit spending got going (and Carter's energy-efficiency programs had been dismantled and discredited) that gas consumption took off again.

In late 1977 the US Fed began raising interest rates. In 1978 the Fed rate was just under 8% and in 1982 it was above 12%. It wasn't until 1983 that rates began to fall. See the table using the link below:

http://www.federalreserve.gov/RELEASES/h15/data/Annual/H15_FF_O.txt

You can see from the next link below, that during the period of 1959 to 1983 the US fed Gasoline tax was flat.

http://www.artba.org/economics_research/reports/gas_tax_history.htm

So if we to create a chart plotting energy consumption taxes versus consumption it would have no net impact on consumption. In fact, as taxes on gasoline increased consumption increased. During periods of rising interest rates we can see decreased consumption.

>Hogwash.  If interest rates are high, capital expenditures get pushed out by consumption.  At a high enough interest rate, an incandescent bulb is a better investment than a compact fluorescent;

Nope, Sorry this is incorrect. As I tried to explain earlier, as rates rise debt becomes difficult to manage, businesses and consumers do what ever they can to reduce costs. The cost difference between a incandescent bulb isn't that much from a CCFL bulb and makes economy sense to switch. Athough some efficiency improvments would be off the table. For instance, homeowners aren't going to bulldoze their homes to replace them with new homes that are three times more energy efficient. But few if any americans would consider this an option that no matter what financial situation they are in.

Of course if you really want to make homes switch to CCFL or purchase more efficient devices, a better solution would be to ban production of less efficient designs (incandescents). For instance, we could ban the use of inacadence bulbs just like CFC were banned in the 1970s. This could be applied to a signficant number of applicances. Of course CCFL have their issues, since they contain heavy metals and other toxic pollutants that will eventually contaimate ground water.

>you pay for the lamp in advance, but electricity is purchased with discounted future money.

I see where your logic is coming from but it doesn't work that way. For starters, people don't plan ahead. The majority of people go about there daily business and at the end of the week see how much money is left for discreationary spending. Second, in a inflationary cycle incomes rise to offset declining purchasing power. As long as they have extra money left over and their expenses are lower than their income, they won't act to become more efficient. Why would they and they have absolutely no incentive to save money either. In a deflationary cycle consumers and business have no choice but to reduce costs. Cost reduction can come from reduced spending or improving efficiency, or a combination of both. Either way they cut costs, resulting in reduced consumption.

>The people living in buildings with electric heat would beg to differ with you.  I'm living in one now

The issue is that the grid cannot handle adding millions of buildings for electric heat. Only a small portion of buildings use electric heat today. By a far majority, buildings are heated using fossil fuels. Using electric heat is also very inefficient (like incadencant bulbs). There are huge losses converting thermal energy into electricity back to thermal energy. I suspect that when constriction of fossil fuels begins, a significant number of people will begin to start using portable and very inefficient electric heaters (especially in apartments). In this situation, the grid will become overloaded resulting in rolling blackouts during the winter. This of course will be very unpleasant.

>It's like you've got these ideological blinders on, and refuse to compare the bogus map you've been given against the landscape right before your eyes.

I have no ideological beliefs period. I am a realist and strong believer in practical solutions.

>Transportation fuels are the only one of importance.  The rest are consumed to the tune of a few tens of pounds per capita per year, and could easily be made from biomass.

You have grossly under estimated the use for fossil fuels as feedstock for petrochemicals. For approximately every food calorie you consume at least 10 heat calories are used to produce it. Every single product made uses oil or requires some other fossil fuel to produce it.  Second using biomass as a replacement would be converting a renewable resource into a non-renewable resource. When you take biomass off a field you deplete the soil of carbon not just nitrates. It takes a long time for nature to naturally enrich soil into carbon rich top soils. Farms usually only take the crop off but leave the stalk and roots on the ground so that most of the carbon remains. However, if you intend to pull the entire plant and burn in a gasifer for fuels or chemicals, it won't take very long to deplete the soil. This will also result increased GH emissions as soil carbon is remove from the land and put in the atmosphere as CO2.

I was comparing tax incentives vs interest rate incentatives.
You're not really doing it honestly.  There's only one kind of interest-rate incentive, but two kinds of tax "incentive":  one is a legislative discount on taxes for certain activities (same weakness as I noted above), and the other is just the ability to avoid taxes by cutting back or eliminating certain activities (like drinking liquor or burning gasoline).

Some people say that income taxes are a disincentive to work, as they amount to a tax on productivity.  I happen to agree, which is why I propose to tax (oil/carbon) instead.  If the power to tax is the power to destroy, let's destroy OPEC and our environmentally hazardous activities.  If it pays well enough, people will create alternatives and switch to them.

In late 1977 the US Fed began raising interest rates. In 1978 the Fed rate was just under 8% and in 1982 it was above 12%. It wasn't until 1983 that rates began to fall.
It was in 1985-86 that oil prices seriously fell.  It was also right about then that GDP started heading up again.  It's easy to see that these things are coupled; when less money started going to OPEC, more was available for investment and job creation.

The only way to uncouple those two is to disconnect the price of products from the price of crude oil.  If it's expensive to buy OPEC crude and foreign LNG (because of taxes), it makes it relatively cheaper and more attractive to use wind instead of NG-fired turbines, a hybrid instead of a guzzler.  Europe has shown the way; European consumption of motor fuel has remained roughly flat even while GDP has risen.  US GDP has risen faster, but our oil consumption has skyrocketed despite CAFE regulations and other half-measures.  It's well past time to bite the bullet.

As I tried to explain earlier, as rates rise debt becomes difficult to manage, businesses and consumers do what ever they can to reduce costs.
And any cost will do, while you want people to preferentially reduce their spending on fossil fuels.  You're not aiming at the target.
if you really want to make homes switch to CCFL or purchase more efficient devices, a better solution would be to ban production of less efficient designs (incandescents).
I wouldn't ban them, some purposes still require them.  I'd just tax them instead:  1¢/watt on bulbs, 10¢/watt on the rating of fixtures.  CFL's are already discounted down to the $1.50 range, so such a tax would make the retail prices roughly equal.
The issue is that the grid cannot handle adding millions of buildings for electric heat. Only a small portion of buildings use electric heat today. By a far majority, buildings are heated using fossil fuels. Using electric heat is also very inefficient (like incadencant bulbs).
You didn't specify resistance heat (there's a heat pump about 10 feet off my right elbow).

You do show that it's important to ask the right question.  I blogged on that a year and a half ago; I think you'll agree that the combination of cogeneration, wind and resistance heat could save a lot of fuel for very little money.

You have grossly under estimated the use for fossil fuels as feedstock for petrochemicals.
No, you have; only about 11% of US petroleum usage goes to "other", and that inclues aviation gas, kerosene, lubricants, naptha-type jet fuel, pentanes, petroleum coke, refinery gas, waxes and crude used directly as fuel.  The US and Canada only consumed about 110 billion pounds of resins in 2005.  That's roughly 330 pounds per capita.  Compared to US oil consumption of 7.3 billion barrels/year (almost 8000 lb/capita/year), that's chicken feed.

I'll let you do your own research on the contribution of surface-lying crop wastes to soil carbon, vs. roots left in situ with zero-till practices.  The answer I found some time ago is very different from what you're claiming.

>You didn't specify resistance heat (there's a heat pump about 10 feet off my right elbow).

The losses are acculative no matter the technology used. For instance, a fuel is used to heat a working fluid Such as water to a gas (liquid to gas losses), which drives a turbine (further losses) to drive a generator (further losses), that is passed through a transformer (further losses) that is transported a substaintial distance (further losses) to another substation transform (further losses) to your street (loses) to a another transformer (loess) to your heat pump. Before it even reaches your heat pump, more than half of energy is lost, therefore its terribly inefficient. A modern gas furnance can be better than 90% efficient. If you thinking of bring up the losses to transport fuel to the building, consider that there i also considerable losses transporting the fuel to the power plant.

The reason why the majority of buildings today use fossil fuels is because is more efficient and does burden the grid. You cannot simply ignore the gigiantic load using electricity for heating would create. The Grid is no capable of handling it. Lets also not forget about the load required to create domestic hot water too.

>It was in 1985-86 that oil prices seriously fell.  It was also right about then that GDP started heading up again.  It's easy to see that these things are coupled; when less money started going to OPEC, more was available for investment and job creation.

That was mostly geopolitical as KSA opened the spigots causing the price to fall. It has nothing to do with economics. By late 1990 after Iraq invaded Kuwait, the price rose.

I think I have done a good job of proving to you that interest rates are an effective tool to curb consumption and promote energy efficiency. Its not perfect but its effective and has the ability to curb global consumption which a domestic gas tax can't do.

>I wouldn't ban them, some purposes still require them.  I'd just tax them instead:  1¢/watt on bulbs, 10¢/watt on the rating of fixtures.  CFL's are already discounted down to the $1.50 range, so such a tax would make the retail prices roughly equal.

Sure, I was just pointing out a way a better way than a gas tax to get people to use more efficient products. Although banning would be better since its likely the taxes will be used wastefully, ie fund new road construction or entitlement spending. I see no reason to just ban them to simplify the issue, and give manufacture a grace period of a few years to make the adjustments.

>No, you have; only about 11% of US petroleum usage goes to "other", and that inclues aviation gas, kerosene, lubricants, naptha-type jet fuel, pentanes, petroleum coke, refinery gas, waxes and crude used directly as fuel.

That's only for Oil, you need to look at the "other" fossil fuel. The US consumes more btus in n. gas than it does in oil. N. Gas is also running out. Consumption of N. Gas by BTU was nearly double of oil consumption in 2003.

>US GDP has risen faster, but our oil consumption has skyrocketed despite CAFE regulations and other half-measures.  It's well past time to bite the bullet.

Cutting transportation fuels will help but it is not a solution. Any like I said energy taxes on the US does not prevent consumption growth in Asia. Managing interest rates are the only means at our disposal to curb global consumption. Any efforts less then curbing global consumption will be pointless.

Unfortunately it looks like a higher gas taxes are in our future, both parties are now seriously discussing increasing the gas tax. I think we will see some reduction in US consumption (not from the higher fuel costs) but from a pending recession, which will permit China and India to expand their consumption do to the drop in US consumption. China and India currently have major construction projects to add substaintally more refining capacity. The total global consumption will remain flat (plus or minus total global production). I suspect that whatever new taxes are added, they will not increase prices above the gasoline prices experienced this summer.

None of this is a migation program which is absolutely required. The US would need to invest between 5 and 10 trillion in replacment infrastructure, but the US gov't is affectively bankrupt (explained by both a Fed reserve governor and the US comptroller). We have no funds to pay for such a massive project. In a few short year millions of boomers will begin to retire and begin to drain what ever credit is still available. The politicians will do what ever the boomers want (more entitlements) in order to get elected and the will ignore the systematic risks until the system crashes.

You are either grossly ignorant or a liar.  You keep asserting "facts" which are completely false.  Example:
That's only for Oil, you need to look at the "other" fossil fuel. The US consumes more btus in n. gas than it does in oil. N. Gas is also running out. Consumption of N. Gas by BTU was nearly double of oil consumption in 2003.
In a word, bull.  Sayeth the EIA, US oil consumption in 2005 was 40.44 quads, while gas production and all imports under "other" came to about 23 quads.

This not the first time you've asserted something which is exactly opposite to fact.  I refuse to try to carry on a debate with a liar.  Goodbye.

I think the gasoline tax should be substantial ($3/gallon) to bring US prices in line with European prices. Use the enormous revenues to build an electrified intercity high-speed rail network as well as expand urban rail transi systems.

Corruption it a secondary issue, which shouldn't be used as an excuse to do nothing. As long as the bulk of the money is used to build the infrastucture, it will work.

To get from US prices (inc tax) to European prices (inc tax) cannot be done overnight. It would cause mayhem and kill your economy and cause riots. In Europe, we are used to relatively high gas taxes, but we nearly had mayhem in the UK in 2000 when diesel prices started to ramp. The tax escalator for gas was then de-coupled from Inflation and has not really kept pace since. (We are not immune, but the instantaneous impact on the US would be much more severe)

It would have to be done in a series of steps over time.

Say over 5 years (pick a number between 3 and 8)

This would give people time to adjust, reduce engine capacity, change vehicles, move etc.

Also, to make it palatable, the tax should be hypothecated / ring fenced for public transport esp in exurban - urban areas. BUT: any such projects should be started straight away. You would need physical evidence that projects were actually starting and not just on the drawing board: Light rail, trams, bus services.

It would be the toughest set of choices that the US will have ever made since the American Civil War.

But first you will need Leadership...

For what it's worth, a $3/gallon tax (to reach rough parity with European prices) is approximately equivalent to a $130/barrel increase in the price of oil.

Oil went up about $30/barrel between summer 2004 and summer 2006, with no serious effect on the economy.  At that $15/bbl/yr rate, phasing in this tax would take 8-9 years, assuming oil stayed at a constant price (which the tax would probably help to ensure).

It could be done faster (given sufficient political will), but evidence suggests that a $15/bbl/year rate of increase -- about 2.5 cents per gallon per month -- should be a relatively safe rate for the economy.  (Except for the GM and Ford part of it, of course.)

Yeah, but if we phase it in so slowly, couldn't it be argued that the market might end up reaching the same price anyway?  If we peak in 2010 we're already looking at a fairly high increase in gas prices by 8-9 years from now.  If we peaked this year, then things obviously look that much worse.
"I have a BIG problem with any form of FED tax--The FED is so corrupt that the revenues raised would just be wasted through the usual pork barrel, earmarked appropriations that line pockets and get us no where."

Ditto.  How many TRILLIONS are "missing" from the Treasury?  The cronyism and corruption in WA DC makes the Sopranos look like a bunch of kindergarten bullies.

"I think taxes need to be levied, but at the state and local level where there's much greater accountability and transparency and citizen input as to how revenues are spent."

Yes, transparency will be greatest at the local level.  Westexas has the right idea with his re-localization mantra.

IMO, reforms that have the best chance of providing long-term solutions and a basic quality of life will only come from the bottom on up, not the other way around.  We should put the vast majority of our energy into grassroots community-based reorganization.

My impression, from Norway, is that there is far more corruption on the local level, and probably inefficiency as well. A tragicomic expression here is the proliferation of "aqua parks", glorified swimming pools which are inevitably hyped as tourist magnets, revitalising the economy, profitable... and they get loan guarantees and sometimes free building sites.

There must be hundreds of aquaparks and similar projects dotted around in the norwegian kommunes (counties). Hardly anyone visits them, they are spectacularly unprofitable and they usually go bankrupt within two years, taking the loan guarantees with them. And who profits? The entrepreneurs who build them - who usually have buddies in the local council, if they don't sit there themselves.

Sounds like a lot of Big Box stores here in 'Murrica
If only the Big Boxes were actually going bankrupt too.  
Indeed, certainly we don't want the government to have the kind of revenue that a sufficiently high gas tax would generate.

A solution (Heh, The "William" Solution):

Set a price for gasoline (and other fossil-fuel based transportation fuels), based on what the economy can support while curbing consumption. Make it so that the price increases over time (as the economy allows & as minimizes consumption).

Levy a tax at the beginning of each month. The tax would cover the difference between the lowest priced retail-gasoline & the afore-mentioned target price. (For instance, the lowest price is 1.50, the target price is 3.00, the tax would be 1.50 for the next month). This keeps the market competitive while minimizing price variance and allowing companies to count on the price of gasoline decades into the future while keeping the tax from magnifying spikes (if the retail price went up to 2.98, the tax would go down to .02).

Because the income from said tax would be fantastically undependable and the government doesn't need that much money anyway, all the money would be given back to the consumer on a per-capita basis. At the end of every year, the revenue (minus some of its interest to pay administrative costs) would be split up amongst all US citizens of 18 years or more and mailed to them.

Thus those that consume more than the per-capita amount of gasoline would be punished, those who consume less rewarded, and everybody would hurt enough when they went to the gas station to make the development of alternative fuels & the purchase of higher mileage cars very attractive (especially because you know the price won't be getting any lower).

If you want to get really fancy, you can refrain from giving back the money, instead putting it in a special account from which they can only extract money to buy non-fossil fuel consuming products, creating an enormous market for alternatives, but that sounds incredibly complicated.

While I believe that a per gallon tax in excess of $5 would make the most sense. I also believe that there is zero chance that will happen.

The problem I see is that the for too many Americans our social awareness is seperated from our individual lives. So, the same person can be aware of the pending problems with oil supply and in the very next breath complain that <insert favorite scapegoat here> are responsible for high gas prices or for not reducing prices.

So, please save the planet, but I don't want to pay for it.

I also believe that there is zero chance that will happen.

This is what we need to work on. As someone said a few days ago, we have to get past this. We need to understand why there is zero chance, and address that to the satisfaction of most people.

Frankly, I wouldn't waste my time working on this issue. If you want to understand why there is zero chance, just look around you. The vast majority of Americans put their own pocket book issues ahead of social responsibility. That's essentially what you are working against. And you know what, that's the culture we live in - every message we receive is that we are to look out for our own economic well-being first. Once that's secured, then you can move on. You are not dealing with a mere political issue - you are working against the most basic underpinnings of our culture. You are threatening our "way of life" when you propose such things. I'm afraid that the vast majority of americans agree with the our "leaders" that the american "lifestyle" is non-negotiable.
Frankly, I wouldn't waste my time working on this issue.

It is too important an issue not to waste my time on. Even if there is a low probability of success, I consider it one of the sure-fire ways of mitigating Peak Oil. Therefore, for me it is worth exploring the issue to see if we can come to a compromise that most people can live with.

I don't dispute your sentiments, because I have found them to be true. But, I have also found that almost every person that I discuss this with one-on-one agrees that they personally could live with this arrangement. I am not talking about Peak Oil aware people here. I had a meeting with a group on Friday night in Palo Alto, and I passionately argued the case for higher gas taxes. I think I convinced the fence-sitters that this is a workable, and much-needed solution.

I really do hope you are successful. I think our most hopeful outcomes will come as the result of many people working on many different levels and issues. Personally, I want to continue to work one on one with people - targeting not so much how to deal with peak oil, but how to live in the now. It is a much more all encompasing task for those few that I can work with, so I will undoubtedly have less of a "global" impact than if you are successful. Perhaps I am aiming small, but I believe if I can help a small number then those people might help lay the foundation for a different way of living.
The problem with any gas tax of more than 50 cents per gallon is it will likely kill the US economy. The US has a "dead economy walking" as it is, real estate is tanking, the working poor are working harder and becoming poorer, and we can't become Europe overnight by installing European gas prices.

Whoever puts in the gas tax will be considered the devil, and their party along with them - look at how Jimmy Carter was treated for being reasonable about energy.

This isn't a Weight Watchers meeting, this is a drunken oil parrrrrrty!

Well, if we'd be honest, what we need to do more than anything else, is destroy this economy. Not just it's current business cycle, but the entire thing. I just don't see how that can be done without substantial pain.
A 50 cent gax tax won't kill the US economy any more than the $1.00-plus increase in price since 1997 has.  What matters is the total burden on the economy, and if taxes are shifted from goods (like working) to bads (like petroleum) the economy could easily be better off.
The greatest hurdle is probably getting something through that the vast majority of people are going to believe will make them poorer.  I agree with markincalgary above:

    * Split the proceeds equally among all citizens.

Since most people think that they are less than average users, this scheme might actually sell.


It's that last part that's the key, since most people are going to believe that they're going to profit from it because they think they use less than everyone else.

There may be some semi-affluent people that will squawk because they know it'll affect them, but the wildcard is probably the bajillionairs who may find it against their business interests.  Since the bajillionairs weild much money, and thus political influence, some kind of carrot may have to be devised for them.

You are not dealing with a mere political issue - you are working against the most basic underpinnings of our culture.

Perhaps it would be more apt to say that one is "working against the basic pinnings of human nature."

Is there any country or people in the world that is really that much different in their attitude to the good things of life than the Murcans?

Murcan values are, in fact, the values of 99.9% of the human race: indoor jobs without heavy lifting, flush toilets, cheap gasoline, etc.

I can not accept that there is any such thing as "human nature" (similar discussion in today's open thread).

Do most people in the world pursue what they perceive to be "american values" - sure, but that doesn't make them "human nature," it only testifies to the global impact of western civilization. Are there and have there been other ways of organizing human society? Without a doubt.

but they will unequivocally be organized around the principles of inclusive fitness.
Actually people's attitudes are quite different in many different countries.  Take some time traveling and you will see that while there are many similarities, there are also many substantial differences.  Americans like to believe that we are some sort of pinnacle of the world, and everyone wants to be like us, but things really could not be further from the truth.  
What do opponents of higher gas taxes in the USA say when they hear about european gas prices?
We pay $6 for a gallon - and the living standard isn't lower than in America. Admittedly, our cars are not as big as american most cars...
and the living standard isn't lower than in America.

Most Americans who have been to Europe would probably disagree.  Probably most Americans who haven't, just don't care.

A friend of mine who actually moved to the U.K. for several years put it this way: "I keep forgetting Britain is a Third World country."  (When she came back to the states and saw the way we live, or when American visitors commented on her small house, small fridge, lack of a car, appliances, etc.)

Yes, almost everything in Europe is smaller than in the USA. However, high fuel taxes don't account for third world countries. The so called third world is characterized by heavy fuel subsidizing, not fuel taxes.
Probably most Americans who haven't, just don't care.

I was just about to write that. Most Americans haven't been to Europe, and probably couldn't find Switzerland on the map if you spotted them France and Italy. We generally have a severe America-centric view of the world.

I didn't realize how profound this view was until I moved to Germany, and watched German or British news on a daily basis. It gave me an entirely different perspective on the world.

Yeah.  Heck, most Americans can't find Canada on a map.  And probably half of those who can think it's the 51st state.  ;-)

And lately, American insularity has gone past the usual indifference, to outright hostility.  Driven by the anti-"old Europe" sentiments of the current administration, perhaps.  

Does it get any dumber than boycotting french fries or french toast?  French toast isn't even French, fer crissakes.

there was an attempt in colorado a few yrs ago to make it a crime to insult a vegetable  does that law apply to french  oops i mean freedum  fries ?
Good thing it didn't pass. A lot of Bush critics would be in Colorado jails.
"Yeah.  Heck, most Americans can't find Canada on a map.  And probably half of those who can think it's the 51st state.  ;-)"

Blasphemy!  An uneven number of stars on the flag?  Perish the thought!  It'd have to be a territory.

Speaking of which...how many USAins actually know we have territories?

U.S. Territories and Outlying Areas:
Puerto Rico
Guam
U.S. Virgin Islands
American Samoa
Northern Mariana Islands
Midway Islands
Wake Island
Johnston Atoll
Baker, Howland, and Jarvis Islands
Kingman Reef
Navassa Island
Palmyra Atoll

If you really want to play a trick on someone...ask them if some famous Canadian or such (i.e. Alex Trebek) is an american.  Unless they're super sharp or having a good day, they'll answer "no."  Then you can say the answer is "yes" because indeed, they are a North American...The USA (strangely enough) does not take up the whole continent.
I doubt that your statement that "most Americans who have been to Europe would probably disagree."  I have been to Europe and I think that statement is ridiculous.  I know others who have been there or even live there, and I don't know anyone who thinks the standard of living is lower over there.  

Different is not the same as it being lower.  Smaller houses don't really count as a lower standard of living either.  That's just one of the assinine "American values" we have, absurdly oversized McMansions with one or two people living in them.  Do people in New York city have a lower standard of living because they have more cramped living space?  

Probably most Europeans would say our standard of living is lower because we work longer hours, have to pay outrageous sums for health care, have little social safety net, etc.  It's all a matter of perception.

But the key issue is which sort of lifestyle is more sustainable.  Is the American or European model better for an energy scarce and energy expensive world?  I think the answer is clear (granted Europe will still need to work at it a bit more).  Whether American lifestyle is better or worse is irrelevant, it's too energy intensive and thus unsustainable.  

I actually think it's more accurate to say that most Americans who never have been to Europe probably think they have a lower standard of living.  Most people who have actually traveled, in my experience, tend to be a bit more open minded and have a better perspective on different countries and how people live.  
Sure, 6$/gal is fine for you europeans, but how would the US be able to afford to outspend the entire rest of the world on our military?
You are exactly right.  It may take a long time and seem impossible at first, just like most every other new public policy initiative.  But it is something that needs to be done.  As it stands now, I think politicians are afraid to even ask the question.  

Revenue neutral is one thing to explore.  Allocating the proceeds such that the local governments have control over how it is spent is another.  

In yesterday's paper, one of the editorial writers for the Dallas Morning News, Mike Hashimoto (a self-described conservative), advocated a one dollar per gallon gasoline tax, with proceeds directed toward mass transit.  

Copy of my e-mail to the editorial staff follows:

IMO, Peak Oil is not a left versus right issue.  Instead, I think that there are two types of people, those who believe that we can an infinite growth rate against a finite resource base and those who don't.

Note that lifelong conservative Republican and Texas oilman Boone Pickens has endorsed a sharply higher gasoline tax, offset by cutting the Payroll Tax.

Lifelong Democrat and environmental activist Al Gore is still refusing--insofar as I know--to endorse a higher gasoline tax.

Net oil exports worldwide, based on data from 12/05 to 6/06, are falling at close to a double digit annual rate.

The Cantarell Field, the second largest producing field in the world, is crashing, and we have a credible report that Ghawar, the largest producing field in the world, is also declining/crashing.

In any case, Saudi oil production is down by 4% to 5% since last year.

I think that we need a crash wind power and nuclear power program (given coal versus nuclear, I'll take nuclear), combined with a crash Electrification of Transportation Program.  We need to rebuild the electric trolley car systems that we had at one time.  When the Swiss were cut off from oil supplies in the Second World War, they got by on stored oil and by electrifying their transportation system.  The average Swiss citizen in the Second World War used about 0.25% of the average American's per capita oil consumption today.  (Check out Alan Drake's articles on the Energy Bulletin)

There are two types of Americans:  those who realize that the old suburban model--that was based on Americans buying and financing ever larger autos and homes--is dying, and those who will realize that the old model is dying.  

Virtually the only model that makes sense is Transit Oriented Development along new mass transit lines.  This is not, as they say, rocket science.  We basically perfected the electric trolley car system about a 100 years ago.

Congrats to Mike Hashimoto for having the intestinal fortitude to recommend a higher gasoline tax.

Jeffrey Brown

Nice letter, but I think you omitted a word:

"those who believe that we can ? an infinite growth"

you are correct

"those who believe that we can have an infinite growth"

Hey Westexas,

I just saw this quote from Big Al on Raw News:

The former Vice President also called for a "revenue-neutral tax-swap," eliminating all payroll taxes in exchange for pollutant taxes.

He says he's been saying it for years.  I guess I need to watch more MSM so I can be up-to-date on these things.

On ABC a few weeks ago, George Stephanopoulos asked Al Gore if he supported a higher gas tax, offset by cutting the Payroll Tax, and Al declined to say that he would support it.  

As everyone knows, I personally like scrapping the entire Payroll Tax, replaced by an energy tax.  In contrast to the conventional wisdom, I've always thought that this issue--properly presented--was potentially a winning political idea.  

 http://www.rawstory.com/news/2006/Gore_calls_for_elimination_of_payroll_0918.html
Gore calls for elimination of payroll taxes, CO2 freeze
Published: Monday September 18, 2006

Excerpt:

The former Vice President also called for a "revenue-neutral tax-swap," eliminating all payroll taxes in exchange for pollutant taxes.

http://www.energybulletin.net/17009.html
Has oil peaked?: Yes
Published on 10 Jun 2006 by Dallas Morning News.
Archived on 11 Jun 2006.

by Jeffrey Brown (With Alan Drake & Bart Anderson)

Excerpt:

Without question, we have to reduce greatly our energy consumption to account for this new reality. What can we do? I have seen two very sensible proposals.

The first is that we fund Social Security and Medicare with a tax on energy consumption, especially at the gas pump, offset by reducing or eliminating the highly regressive payroll taxes. Doing this would unleash enormous free market forces against profligate energy use.

The second proposal is that we electrify our freight railroads and encourage freight to go by rail instead of truck with any of a variety of economic incentives while building electric urban rail systems, such as DART, at a rate much faster much faster than today's pace.

Incidentally, both strategies will also find favor with those concerned about global warming.

WOW!!!

The cultural winds are indeed blowing in a new direction, and politicians will sense the change and go that way or be left behind for those who will.

No, I do not think it will be an easy shift to make in our culture or our politics -- we need to continue to work to educate and demonstrate the need for change and the very real solutions which we can start implementing right away.

If Gore and Clinton will put their shoulders to the wheel, they can lend tremendous momentum to the "Carbon Cousin Causes" of Peak Oil and Global climate change.

Grassroots efforts (like TOD) and political efforts could bring about some big changes and positive suprises.

I think we could get to a $2.00/gallon gas tax over a year or two, and switch some additional tax burden to coal and NG as well.

Gore is on track!

I agree. And,further, while I understand the negative tone of many of the comments on this thread, I think all who care should take every opportunity to educate their local and national representatives on this matter, to include writing our local and national media at every opportunity.  I too, am subject to frequent bouts of despair and am all too aware of the political realities.  But as Gore implies, we need to break through the current political landscape and bring this discussion to the next level.  

One argument is that a high gas tax or high carbon tax will hurt the economy. People like Amory Lovins would disagree and make a very good case in books like Natural Capitalism that incentives to cut carbon would help, not hurt the economy. We all need to address that issue and demonstrate the benefits, not drawbacks of a high tax.  

It is the middle and lower classes which have not benefited from our so called fabulous economy. If we create a new economy based on low carbon use and redistribute some of the income that has gone to the top 1% of our economy under the Bush years, we can make this a positive experience for most people.  

Of course there will be winners and losers associated with any change. But I still think there could be more winners than losers and that a radical change in our carbon use could be an exciting time, especially for young technically oriented people coming down the pike.

It used to be that the way to create excitement and purpose was war.  War isn't cutting it lately.  All it has helped create is cynicism and despair, much of which is evident on this site.

Your Dallas Morning News article is excellent.  You and your co-author strike a good balance between historical fact and future prediction/modeling.  And finally, you provide a course of action.  

This is one I will share with interested friends and other open-minded people.  Thank you.

While Gore is not advocating a gas tax per se, he just came out for a carbon tax with offsets against payroll taxes.  While you are technically correct, I think you should use some other Democrat as an example. I agree with your point, but Gore may not be the best example.

Actually, I think Gore's approach makes more sense.  To just focus on transportation is to ignore sectors with major impacts, like housing, for example.

I think the best way to deal with a gas tax is to bundle it with tax reductions in other areas - specifically the payroll tax.

I think a great idea would also be to, say, increas the gas tax but then have a standard deduction on folks' income taxes that that is equal to what an average person would pay over the course of the year. Folks who drive less than average would actually make money. Folks who drive average would break even. Folks who drive more than average would pay more. This deduction would be recalculated every year in order to ensure the average was getting smaller and smaller.

 

The problem with a tax break is that the really poor do not pay taxes.  But they would still be affected by a increase in the gas tax, even if they don't own cars.  

The problem with a cut in the payroll tax is that the AARP would strenuously object.  They get ballistic at anything that might affect social security funding.  Moreover, retirees who do not work would not benefit from a cut in the payroll tax, but they would be hurt by an increase in the gas tax.  

Unless we can find a way to get the AARP on our side, this isn't going to fly.

Good points. The iron triangle strikes again.
Actually, the gas tax deduction would work just like the dependent deduction. Everyone gets that, even the folks who file the 1040 EZ.
Don't be so sure that the elderly would not benefit from a payroll tax cut. Most pension benefits including Social Security are taxed just like payroll income. The only portion that is not taxed is a portion of the actual monies that the individual contributed and there is a complex formulae based on life expectancy that determines what proportion of the monthly check is not taxed. Turns out the non-taxed portion is rather small.
The problem with a tax break is that the really poor do not pay taxes.

But we handle that now by giving them an earned income credit. You could give everyone a gas tax credit, and give the majority of the benefit to those making the least money.

Unless we can find a way to get the AARP on our side, this isn't going to fly.

I hadn't thought about the AARP. It might be nice to open up a dialogue with them and see if it could be sold to them. They have children and grandchildren, so it should not be hard to stress the importance of this. The exception will be the childless abiotic oil advocate and global warming denier, but that is probably a rare combination.

As an AARP member I see the way to lessen the effect of a gas tax would be to increase benefits by that amount. My mother-in-law who has never owned a car would love it. Millions of other elderly and disabled who don't own cars would also love the idea.
OTOH taxes have a way of working themselves into everything we buy including services. How much would a fossil carbon tax raise nat gas and electricity rates. That's why I favor rationing and import quotas instead of taxes.
That's why I favor rationing and import quotas instead of taxes.

The problem with import quotas, is that it will have an unpredictable impact on prices. They could spiral much higher. And rationing takes choices away from us that the average voter is not going to find appealing. I think a gas tax/tax credit is passable because most people are going to believe that they can conserve a bit and be financially better off.

If you think a rationing and import quota wouldn't affect prices throughout the economy, you're smoking the good stuff.  That was imposed on the US in the 70's and 80's and resulted in inflation and stagflation.
Couldn't it be made into a tax credit similar to the Earned Income Tax Credit?  It is my understanding that in certain situations a person who pays no income tax can still get a refund through the EITC.  The "American Transporation Tax Credit" could work in a similar fashion.  Since it is pretty much a guaranteed bit of income, it would incentivize the poor to make better choices.  I realize that those low on the economic totem pole do have less options than the rest of us but they still shouldn't be completely sheltered from making wasteful and bad decisions.  Their options are often limited but usually aren't limited down to just one.
The problem with that is that you'd have a lot of resistance to it from everyone else.  As it is, it's extremely controversial, particularly in "Red America."
"The problem with a tax break is that the really poor do not pay taxes.  But they would still be affected by a increase in the gas tax, even if they don't own cars."

Do you see how you defeated your own statement, which is a great untruth?

When I was poor, I paid SSI and SDI taxes, gas taxes, sales taxes, excise taxes, property taxes [through my rent], and income tax; never was poor enough for food stamps or applied for unemployment "insurance."

The myth that the poor pay no taxes, that there were many "Welfare Queens," is no more than Right-wing wedge issue proaganda made credible by the echo of corporate media.  

I meant they don't pay income taxes.  He was talking about refunding the gas taxes via a tax credit against income tax paid.  An income tax credit doesn't help if you don't owe any tax.
An income tax credit doesn't help if you don't owe any tax.

Sure it does. That's how the earned income tax credit works. Even people who don't make enough to pay taxes can get a tax credit, which they get as a tax refund (on taxes they never paid).

Exactly. Everyone pays into, some just recieve a bigger refund - which in effect is what the EITC is.

Having the gas tax credit work exactly like the # of dependents deduction makes it easy to administer. Everyone gets the deduction, rich, poor, drivers, non-drivers. That's how it works to reduce miles driven.

Unless cancelled by the EITC, the poor pay Social Security and Medicare taxes from the very first dollar they earn.

Of course, that only applies to the working poor.  Non-wage income does not incur those taxes.

I think it is a mistake to think that the poor do not pay taxes.  

They (we?) may not pay much income tax, but SS and Payroll taxes as well as all of the sales taxes and state fees combine to confiscate a substantial percentage of many a poor earner's income.  Indeed, the lack of resources and education about tax preparation mean that many overpay or fail to get refunds and earned income credits.

That said, despite their lower rates of taxation, the poor and their labor facillitate higher wages for others.

Granted, you were speaking of the "really poor" but there are alot of so so poor too.

" really poor do not pay taxes"

I don't consider myself 'really poor'. Not even poor.

I am retired and the execs stole my pension and promised benefits(so they could drag home millions)....30 yrs of working in IT.

Yet I don't pay any taxes. There are many like me. In my state they do not tax pensions(what little I get).

In fact I can make quite a bit before I have to pay taxes , either federal or state.

Yet we all sit around stating how bad it will be when gas gets so high that our economy tanks and now RIGHT HERE its being proposed to push it to that level.

What the f**k???????????

Well, if there's a forest fire coming and you're standing with your back to a cliff, you can either start climbing down, or wait till you are forced to leap off.  I think that is the logic behind a gas tax.  We're being pushed toward a cliff and there is no turning back, one way or another we're going off the edge.  What plan would you suggest?  
My plan. I am a doomer , remember?

What I would is an all out assult on photo voltaics.

I am an electronices technican first and foremost so I belive in PV and the nano technology looks promising.

Being able to place panels and cover your entire roof seems to  me the best idea yet.

There are problems to be worked out but that would be where I would put the emphasis. Maybe its too late. Maybe anything is too late.

I think taxing the shit out of gas is not a good idea.

I asked a few folks yesterday at what price of gas would we (our county) go belly up. $6.00 seemed to be the answer, even though I suggested it.

I was then told that for the last 8 months many businesses are not doing well at all. Primarily this was the hair dressers who have seen a 50% drop in receipts. From $700 a week to $350 or so per week.

In other words the energy crisis is already here in the flyover...at least my area.

I think taxing the shit out of gas is not a good idea.
If not, then how would you get people to demand transport which doesn't depend on petroleum?  What reason do they have to change?
Jimmy Carter tried to do an oil import increase/payroll decrease thing back when he was president. It almost passed. It came very close. It would have made a huge difference today.

I'm for oil import tax, rather than a finished gasoline tax. The US has huge unsustainable trade deficits (see today's news) to go along with our appetite for petroleum.

I'd be happy with an across-the-board tariff on imports. Perhaps selective rates of tariff on imports from countries which don't allow trade unions, freedom of speech, minimum wages, environmental protections, etc. The Fucked Country Import Tax.

I think the US should can their auto emissions and safety regulations and adopt European rules -- forming an ISO standard if there isn't one already. Small cars are not imported in the US now, and I blame weird US safety and emission rules which favor heavy, large cars.

Not really related to the thread but I see that Thunder Horse is delayed again, now until 2008.  

I have kept an eye out for delayed start dates over the past years to see who are the experts. TOD posts immediately after the huricane appear to be more accurate than the quarterly revisions by the owners.  This is why I come to this site to get accurate data and assessment, not the most optomistic spin of bad situations.

Impossible to forcast gas prices unless you have a Holistic understanding of supply and demand of oil, which I don't yet.

I guess this pushes Jack to 2015 (at best).
IMHO, we need both a gas tax and a tax on vehicles with lower efficiency ratings. Hit the SUV and pickup owners with a double whammy.
I think the most appropriate gas tax would be one that escalates over time and the schedule for which is known.  We want people to have time to adjust, which an immediate gas tax would not allow, but we want them to have an incentive to do things with a higher future gas prices in mind.

I have no idea what the correct level would be, but given the relatively small demand response we have seen from the price fluctuations so far, I can't imagine that a tax of less than a couple of dollars per gallon would get us where we need to be, so maybe raise the tax 25 cents/year for 10 years.  On top of the probable price increases over that period of time, it might be enough.

The other question is how to offset the hardship on the relatively poor.  For the working poor, raising the zero-bracket amount on the Social Security tax would be easy and make sense.  Raising the EITC would be another option.  I am not sure how to compensate the elderly, disabled, and non-working poor. In the hypothetical world where any of this could happend, some of the tax money should be diverted to transit projects which would benefit them.  I am not sure there is any feasible way to compensate the rural, non-working poor. I suppose some kind of gasoline analogy to food stamps might be possible.

I agree with the graduated tax increase.  Slamming a sudden and harsh tax is not going to help anyone, and will slam this country economically.  It would be the government induced equivilent to an oil shock event.

By graduating the tax over a period of years and informing the public of a steady increase, it would provide the public the ability to adjust, and provide the market the oppurtunity to figure out ways to profit on the new industries that will arise out of it.

Also I think this tax needs to be a state/local kind of thing.  I know someone brought up the Federal Highway funds, but the whole point of this idea is to reduce driving and therefore reduce the need for a federal highway.  State/County/City tax structures could take this money and use it for transportation initiatives internal to the province administering the tax.  This could include roads, but preferrably, a federal matching program of some sort which would match non-road based initiatives would be more productive and place incentive for local governments to build alternatives.  i.e. if Houston spends a million on rail, the Feds would match a million or some percentage of.

(As an important aside, the matching funds initiative would allow the federal government to keep their baseball bat at hand when they need to force states on certain issues.  Highway funds currently serve this purpose, and if you are looking for political angles to push, this is one the Federal Government would want.  The ability to tie highway funds to things unrelated like Education and Healthcare bills have been a major tool in Federalism.  I know its an unpopular concept in these forums, but RR wanted points for a sales presentation, and know the customer, this would be an appealing factor.)

As for the tax refunds... absolutely not.  Again a graduated tax introduced over a slow period would allow people the ability to make adjustments.  But we are trying to get drivers off the road, and the poor and middle class make up the most numbers of drivers.  Sorry but treat them all the same, and no refund.  Its incentive to change their ways, poor, middle, or rich.

I understand this is a pinch on a lot of families, but the slow progression of a gradual tax will be way more merciful to them, than a sudden economic event caused by more spikes in oil prices.  That benefit alone should suffice for the poor (and for everyone for that matter), because ultimately in the end the poor just as much as the middle class or rich need to be weened off gas usage.  Besides, those refunds would be more useful in the form of infrastructure based around alternative transportation, which would benefit the poor, middle class, or rich, all equally.

I agree with the graduated tax increase

"An ecotax has been enacted in Germany by means of three laws in 1998, 1999 and 2002."

More in http://en.wikipedia.org/wiki/Ecotax

Here's an idea on a gas tax I had back in April ..
I think it would be easy to administer and
would encourage the desired social changes ..

RE: Gas Tax
Here's my idea ..

I believe that there are 6 or so pricing
districts for wholesale gasoline prices
nationwide ..

Fix state and federal taxes as a percentage of the
wholesale price per district at say 15% for the
state and 15% for the Feds ..

Adjust the district price weekly per market forces

Give each licensed driver a national gas card
that must be presented at point of purchase
good for 500 gallons at whatever your district
price is .. Tax additional consumption in
100 gallon increments by $1.00 gallon above
your district base price ..

If base price is $2.00
then with taxes price would be $2.60

So, under my proposal each licensed driver
would pay as follows ..

0-500 gallons @ $2.60/gal ( weekly price adj )
500-600 gallons @ $3.60/gal
600-700 gallons @ $4.60/gal
etc etc  

Gives all drivers access to fuel at market price
Encourages conservation and replacement of
inefficient vehicles .. Taxes excess consumption
and inefficient vehicles .. Places tax burden
on those most able to pay ..

Triff ..


500 Gallons @ ~20mpg = 10,000 miles.

I'm assuming this is per year?

And If I burn less then 500, I can refund the gas to the IRS for a tax credit in direct proportion to the tax.

If 100 gallons refunded = $100.
If 200 gallons refunded = $300.
If 300 gallons refunded = $600
If 400 gallons refunded = $1200
If all 500 gallons refunded = $2400

This should make the black market a lot less and really encourage conservation.

All additional tax revenues should go to Federal Rebate programs designed to help consumers switch to more fuel efficient appliances and devices.  (Furnaces, Hot Water heaters, kitchen appliances, Solar Panels, High MPG vehicles, Etc...)

Plus allow the moving credit for any move that brings you within a 5 mile radius of your workplace or mass transit station.

Garth

Sounds like a good way to create a new black market.
I think an instantanous tax hike is much better than a gradual gax tax increase. If you look at the former east block countries, those that instituted fast and hard reforms were better off a few years later than those who dragged their asses. Shock treatment shakes people out of their complacency, forces them to react, and is very effective. The initial hardship, painful as it may be, is quickly forgotten once the benefits of the new order become apparent.
That's all well and good for the Eastern block states which had limited connectivity to the world market.  Do that to the US, and send us into a recession due to the economic slowdown, and you will impact not only the economy of the US, but also of quite a few other nations who count on the US for their markets.  Further depending on additional factors, that may in turn hasten the decline of the dollar and bring additional destabilization to the world economy not least of which would be the oil market itself since it is currently tied to the dollar.

Not saying I like the impact the US has on the world economy, but not liking it doesn't mean it doesn't exist.

Agreed. Unless it hurts it won't be noticed enough to make the changes necessary.

I'd suggest a minimum pace of cost increases, say ramping $1 over a course of a year, for 5 years. If the cost of oil goes up, the tax only rises slightly to ensure a stready $1 pa rate. Otherwise if costs decrease, the tax take increases more markedly to keep the ramp up. Cost increases greater than $1 pa are allowed to play through.

Net effect is both a predictability to prices that isn't currently possible, and a rate that forces real action. You know that next month prices will be 8c higher, and again the following month, etc.

I would say that any numbers less than $1 are pointless, and that pressure has to be kept on over time.

Great piece on Gasoline by Jerome a Paris yesterday

He has been pushing a gas tax for a while. The 200+ comments are always fun to read as well.

Thanks for posting that. I hadn't seen it, but I will read through those comments as well. My objective here is to come up with, and pursue a workable solution. I think we spend too much time mentally masturbating, and I want to see us try to get some real changes implemented. I think this gas tax idea (which others have advocated for a long time) is very good energy policy.
I don't know how familiar you are with Jerome, he posts here once in a while usually about natgas pipeline stuff. He did a bunch of work this spring on a gas tax. Check back through his old diaries.

In this particular one I highly recommend going through the poster HiD's comments. He's a trader and quite well informed.

Except HiD thinks peak oil is a crock.
It's funny you should say that. I really hadn't thought about it. But if you check out post 177 or something, it's the last one now on the Sept. 16th "Countdown to $100 oil" - he starts it...

"No one with a brain disbelieves 'peak oil.' Hubbert's peak is just math."

I'm still mulling that one over. What do you think? We could just ask him.

What is HiD?
It's just the guy's screen-name. I don't know what it might actually mean.
Got it. I finally followed the link just now. There are so many acronyms floating around I figured it meant that doom was going to strike any minute or something.
My objective here is to come up with, and pursue a workable solution.

Until such time that governments can be open and honest with accounting, how do you expect people to support MORE to government?

Just to normalise expectations here, as close as I can make out the UK currently pays approx $4.34 tax per US gallon - an option confusingly missing from the poll values.

In addition there are roadtaxes, insurance taxes etc. that increase the total tax burden.

The average fuel consumption of UK cars is 35 mpg. Average annual mileage is 8000-9000 miles for personally own vehicles, much more for company cars.

And isn't the largest proportion of personal driving still done with company cars? Is the true amount of personal driving any less than in North America, or is there any way to know?
I'd guess personal driving in company cars in higher than purely personal cars, maybe 10-12k per year, with the rest down to purely business driving.

Something to take note of: because we are used to much larger tax levels on fuel, any increase in oil costs has correspondingly less impact in percentage terms. What would double the cost of fuel in the US might only result in 10-15% extra cost here - a lot easier to deal with.

Which is interesting because an awful lot of business driving in the USA is done in personal cars, and the general USA mileage figures are not broken down except as between "commercial" and "personal" vehicles. I wonder then, is the notion that Americans drive far more than UK-ers purely myth based on counting business trips against personal vehicles in the USA but not in the UK? I don't know. But if it is a myth, that might (at least partially) falsify the thesis that high fuel tax would reduce mileage. RR, are you listening?
I don't really see how it could be a myth.  We'll have more driving here just based on the layout of the country-- it's a lot larger, with more open spaces.  We have suburbs that stretch further out than in most other European countries (I cannot speak for the UK in particular, but I suspect that since they are on an island, space constraints would be larger).  Also our public transportation system is woefully inadequate in many cities.  On average I suspect UK cities have better alternatives to driving.  So, all things being equal I would expect more driving in the US due to lack of any alternatives.  

Also, bear in mind that it's not just a question of miles driven, but also MPG.  The difference between the UK's 35 MPG and our 20ish is massive.  

No we definitely drive smaller distances even allowing for business miles.  But the country is a lot smaller.

This is particularly true when one realises that of 60 million people, about 50 million live in England whereas Wales+Northern Ireland+ Scotland is something like 65% of the land mass.

And a disproportionate slice of economic activity and population is still within 100 miles of London-- something over 20 million people and 40% of GDP.

Agree that the price of petrol plays a role in keeping our cars more efficient-- about half of new car sales are diesels.  Still, one in 12 cars sold is an SUV, and in London 1 in 8 (our SUVs are mostly smaller than yours, but one sees plenty of Range Rovers/ VW Touaregs/ Porsche Cayennes etc.).  A Range Rover would get about 12mpg in the city.

Public transport is better than many American cities (what a surprise ;-).  But outside of London it is not comprehensive and I would say 90% of trips by middle class people are by car.  Few cities have subways (Glasgow, Newcastle, London) and a few more have non-comprehensive light rail systems (Manchester, Birmingham, Sheffield (anyone see The Fully Monty?).

The story with light rail is familiar.  A lot of the systems were badly damaged during the war by German bombing which hit town centres hardest.  After the war the conventional wisdom was 'cars good' so a lot of the systems were closed down by their municipal owners and then replaced with buses.

As traffic worsened and incomes rose, buses became the reserve of the working class and poor, not the middle classes.  Margaret Thatcher is alleged to have said 'anyone over 26 who takes the bus is a loser'.  She was certainly very pro-car, inaugurating a massive expansion into out of town supermarkets and shopping centres, which has left the traditional English High Street looking threadbare-- charity shops, down at heel chains, pubs and restaurant chains.

Thatcher also privatised the bus networks outside of London.  The result was a 'tragedy of the Commons'.  More buses, with smaller loads, at rush hours, jamming the roads and increasing congestion.  this makes sense from the marginal cost curve of the average bus entrepreneur.  Outside of rush hour, fewer buses, therefore inevitably smaller ridership (longer waits for the buses) and so on in a downward spiral.

The real cost of taking the train or bus has risen by over 40% since the 1970s.  The real cost of motoring has fallen by about 10% (taking into account insurance, petrol and depreciation and road tax).

So miles travelled by public transport has been almost static.   London is something of an exception: Tube traffic has doubled since the late 1980s and bus traffic has just begun to revive (see below).  On most of the major Tube lines, at peak times, capacity is now less than demand, and the system is crippled by constant reliability and security problems.

(another feature of the 70s and 80s in the UK was constant underinvestment in public infrastructure-- roads, school buildings, hospitals, public transport.  The government is racing to catch up now, but there is a 30 year legacy to reverse)

In the late 1990s, traffic got bad enough that long distance rail has enjoyed a renaissance.  Something like a 50% rise in passenger traffic since the mid 1990s.  However, again, the system is near capacity.  Freight rail operators have been rationed due to the demands of the commuter system.  major commuter stations like Waterloo habitually operate above their theoretical passenger capabilities.

About 90% of UK freight traffic now goes by road.

Another feature has been the steady decline of walking and cycling.  Cycling was once as much as 20% of all journeys (90% of all journeys are still less than 5 miles).  It is now around 5%.  Over 90% of UK children are driven to school (by parents or by bus), less than 10% walk or cycle.  As the roads have fewer cyclists, it has become more and more unsafe to cycle.

One positive feature of public transport has been '4% intermodal shift, car mode to bus mode' in London since 2002.  This is unprecedented, worldwide, in the history of transport.  The middle classes have again embraced the London bus (despite the end of the famed Routemaster conductor bus, phased out now except for tourist runs).

This was achieved by the ex-Trotskyist mayor, Ken Livingston.  Thatcher had gone so far as to abolish the government of London in 1981 and sell its headquarters to a Japanese property developer, she hated 'Red Ken', then chief of the Greater London Council, so much.

The Labour government reinstated the Mayor of London, and despite their best efforts, 'Red Ken' won again.

In 2002 he imposed the London Congestion Charge.  Now £10 ($18) to enter the core from 7am to 7pm M to F.  Disaster was predicted: a campaign was orchestrated in the leading tabloid newspapers (circulation over 6 million) to prevent it being brought in.

The result was an almost immediate drop in city centre traffic by about 15%.  Road speeds increased by a similar proportion.  Daily life continued as usual.

And Ken pumped money into buses, leading to an explosion in the number of bus journeys, and the famed 'inter modal shift'.

He hired the ex CIA, former head of NY Transit, Bob Kiley, and sued the government to prevent privatisation of the London Underground (Tube/ Subway) by Blair's government.  He failed, and we are now paying the consequences of the failure.

But Ken has shown us that radical action can, indeed, change things.  But you need to have political courage-- his actions have been almost Churchillian (and he has Winston Churchill's character flaws).

Unless there is a crisis, I don't see that kind of leadership emerging at a national level, in the UK, US or Canada.  In fact in Canada, Tom Harper thinks global warming doesn't exist, and the global warming and renewable energy sections of the government websites have been taken down.

B-I-N-G-O

A phased-in tax starting at a dollar going to at least three
over the course of a couple years. But the bigger question is how to distribute it so that it best goes to  

1)efficiency including mass transit
2)alternative fuels
3)helping those transition who are hurt the most

The greatest problem with a gas tax is that it instantly brings up the problem of our broken and corrupt politics and government. It necessitates looking at how we reform both, for example not a penny should go to DC bureaucracies. What's post-oil politics and government look like, becuase oil has been a big shaper of the mess we got now?

As a transition to a gas tax I would recommend an annual registration surcharge based on EPA mileage estimates and only applied to new cars sold. The surcharge would be $50 a year for every mpg less than say 30mpg. As an example, a buyer of a new car getting 20 mpg would pay an annual $500 registration tax. Commercial registrations would be excluded. This would give poor people a break and also encourage people including the poor to make fuel economy a top priority. The 30mpg standard could raised each year.
It's not just the fuel economy.  If all fuel economy was doubled tomorrow, people would adapt by raising speed limits, living farther away from their work, driving more.
Drivers should be taxed based on how much fuel they use (miles / mpg), not on how much fuel per mile (mpg).  Inefficient vehicles would then gradually get transferred to those who need the hauling power but only for a relatively few miles per year.  Taxing based on MPG is like an income tax based on, e.g., education, as a predictor of income, with no regard to actual income.

Of course in the real world of US politics any such MPG surcharge would be based on "fuel economy within class of vehicle".  Just like a single-occupant hybrid SUV is allowed in some high-occupancy lanes while far more efficient small non-hybrid cars are not.  Oil is finite but stupidity is infinite.

"Taxing based on MPG is like an income tax based on, e.g., education."

Agreed, but taxing based on fuel economy would eliminate a lot of new low mileage vehicles fast. A buyer would know ahead of time he was going to be penalized for buying one, what the penalty would be and in many cases (most I hope) choose a vehicle without an embedded tax penalty. There would be no discrimination between hybrid and non-hybrid vehicles. There would still be plenty of used vehicles for those needing hauling power for a few miles per year. Why would someone want to buy a new vehicle for this purpose anyway? I was trying to think of a transition mechanism to not penalize the poor. After 10 years I would go with a straight mmpg tax. By then I assume there would be plenty of used high mpg vehicles available for those who couldn't afford new ones. I think a gas tax with an earned income tax credit would be more difficult to administer.

   

For pure simplicity, nothing beats taxing retail fuel directly. There's no loopholes. The more you use, the more you pay. Forget about trying to be easy on the poor. There's no practical, low-cost method to make it fair.
After thinking about it I realized we don't have 10 years to phase in higher mpg vehicles. We may not even have 5 years and what we really need is the kind of 80 mpg vehicles they have in Europe and considerably more mass transit. We need a quantum jump in efficiency we aren't going to get in time. The poor are going to get hurt however hard we try to help. If we try too hard with subsidies, the working middle class, who seem to bear the brunt of taxation and will also be struggling with higher energy costs, will revolt. It is probably already too late and politicians won't budge but we desperately need something to move people towards efficiency. Keep it simple. Thanks for pointing this out Frugal.
The best way to help the poor is by building better public transportation.  It may "hurt them" not to be able to afford to drive, but the impact won't be that bad if they have alternatives.  Eventually none of us will be able to afford to drive.  At least not if we're powering a car based on petroleum.  
Europeans have 40 mpg cars, maybe 50 if you buy a l.2 litre diesel Opel Corsa (small car).

We don't have 80mpg: not even in Imperial gallons (one fifth larger than US gallons).

London has a small number of all electric runabouts

www.gwhiz.co.uk -- but not suitable for highway driving.

Peugeot has a 70mpg diesel hybrid, not on the market yet, but since it has effectively 2 expensive engine technologies (diesel and hybrid) it will cost $5k more than its comparable petrol engined counterpart, when and if it is released to market.

http://www.greencarcongress.com/2006/01/psa_peugeot_cit.html

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PSA Peugeot Citroën Unveils 69MPG Diesel Hybrid Prototypes
31 January 2006

One of the pair: the C4 diesel hybrid.
As promised, PSA Peugeot Citroën unveiled two prototypes featuring diesel-electric parallel hybrid powertrains, the Peugeot 307 and the Citroën C4 Hybride HDi.

The hybrids deliver average combined city and highway fuel consumption of 3.4 liters per 100 kilometers (69 mpg US), with 90 grams of CO2 emitted per kilometer--a tank-to-wheel record for compact cars, the most popular segment in Europe. This is about 25% better than a similar vehicle equipped with a gasoline hybrid system, or as much as a liter per 100 kilometers in combined city and highway driving.

Hybrid technology using a petrol engine is not very competitive financially, and does not offer significantly better fuel economy or CO2 emission performance than a conventional HDi diesel engine. However, PSA Peugeot Citroën believes that combining a hybrid powertrain with an HDi engine would constitute a step change in terms of improved fuel economy and lower CO2 emissions in Europe, where diesel engines are already widely used

Thanks for this Valuethinker, I had read about VW Lupos and mini hybrids, but even some of the cars you cited get so much better mileage than what we have going here now. Diesel hybrids are what we should be shooting for.
 
If you want to get into the larger issue of consumption in general, we should eliminate tax credits for dependents. We might even help the poor out if we discouraged them from having extra children. As has been discussed here many times the world can't support 6.5 billion people with renewable energy sources.
Something that might not even be related to fuel mileage but would probably have an effect along the lines you're talking about is a change in the way insurance and registration is taxed...the more you drive a car, the more likely you are to have an accident so that's intuitive.  Base insurance on mileage per year, the less you drive the less you pay for insurance.  That would be incentive to drive less.  It could be coupled to the registration (road tax) that would also tax based upon mileage but have different brackets for different classes of vehicles, thus being an incentive to drive a smaller higher mpg vehicle.  Both of these would allow you to keep around a larger vehicle (truck, etc) without much penalty for those times you need them, but be an incentive to drive the smaller and frugal vehicle.
I think that in this sick sick world of ours there are only 3 things that motivate most people:  greed, spite, and resentment.  Perhaps if President Dwayne "The Rock" Johnson went on TV and said that we've got to stop paying the A-Rabs to blow us up and we're going to spite those bastards by refusing to buy their oil, MAYBE then we could get people to cut back.  
Economically, the government should not be in the business of picking winners and losers in energy or any other area. The reason is simple. Nobody knows what will turn out to be the best thing to do.

Gasoline may turn out to be a very effective and useful future for ten more years or even more, in some scenarios. Even Peak Oilers would agree that if we fall into a serious and long-lasting recession/depression, and if it also turns out that world oil supplies are near the top end of the estimated range, our oil supplies would be adequate for at least a decade and possibly much more. In that situation, putting on a gas tax now could be a mistake, dragging down a struggling economy and reducing the economic growth that ultimately fuels research into alternatives.

Furthermore, a gas tax is unnecessary if and when oil starts to be in short supply, because supply and demand will drive up prices, probably much more than any politically feasible gas tax. And this won't just happen at the peak, it will start happening as soon as people become convinced that the peak is coming in the next few years. Such a belief would drive up futures prices, which due to the storability of oil will drive up present day prices.

Much of the sentiment among Peak Oilers for a gas tax is really due to frustration that people still don't believe their story and so the market price is not climbing the way it should. Well, if your story is so unconvincing that market investors and the general public aren't buying it, you're not going to succeed in getting the government to put in a gas tax, are you? The real problem here is that near-term Peak Oil is still just a theory, one which has not yet persuaded a critical mass of the public. Calling for a gas tax skips over the hard part, which is making the theory more believable. And once that's achieved, prices will climb anyway due to market action, making gas taxes unnecessary.

In general, government intervention only distorts economic incentives and produces less than optimal distribution of society's scarce resources. This is a fundamental theorem of economics and should be used to judge any proposed tax. However, there are important exceptions. One is in the case of externalities, costs which market activity imposes on other people. A classic example is air pollution - a rubber factory may put out chemicals into the air whose costs are born by the neighborhood, and not by rubber sellers or buyers.

To minimize social costs, taxes to address these kinds of externalities should be set, as precisely as possible, to equal the total costs of these externalities on all the people who are harmed by them. In the case of gasoline, the main externality being considered today is global warming. In that context, we should not be looking at a gasoline tax per se, but at a more general carbon tax. Estimates of the cost of CO2 emissions vary, but a widely used benchmark is $100 per ton of carbon. That's the high end of the range of analyses I've seen but it is at least arguably justifiable. This would correspond to about twenty cents per gallon for a gas tax. Such a tax would make economically sense.

Another exception comes if the government is subsidizing an economic activity; such a subsidy is an artificial stimulation, and could appropriately be countered with a tax. For example, much of our current gas tax is used for road construction, a government activity that subsidizes driving. However as we have seen from experience, finding this kind of balance and maintaining it is politically almost impossible.

Many government activities have been interpreted as indirect subsidies of oil usage. Some argue that the whole cost of the Iraq war, or even of the entire U.S. middle eastern foreign policy, should be counted as a subsidy for gaoline. But by some measures this can produce outrageous estimates like $100 per gallon; yet if the U.S. had no middle eastern foreign policy expenditures, we would obviously not be paying $100/gallon for gasoline (that would not be in the interests of oil producing countries). So this chain of argument doesn't really work. The bottom line is that it is very difficult to realistically estimate how much existing U.S. government activity subsidizes gasoline.

Summarizing, a carbon tax of ten or twenty cents per gallon is arguably justifiable to minimize the net costs due to global warming. Beyond that, taxes to compensate for subsidies should be OK in theory, but in practice the analysis falls into a quagmire of political debate centered on the motivations for the Iraq war, and it is doubtful that a meaningful figure can be assigned.

The real problem here is that near-term Peak Oil is still just a theory, one which has not yet persuaded a critical mass of the public.

I would say that the real problem is that PO has not yet persuaded a critical mass of the scientific public.

For every thousand articles on global warming in the scientific literature, there is just one about peak oil (approximately, I haven't checked this).

When was the last mention of PO in Science or Nature?

To ask that question is to answer it. Campbell and Laherrere's landmark article in the Scientific American way back in 1997 appears to be the exception that proves the rule.

It's a pity, but without serious scientific credentials a theory is not going to be considered to be 'scientific'. The only way to obtain such credentials is to have one's contributions accepted for publication in scientific journals -- not just in the blogosphere or the mass media.

"When was the last mention of PO in Science or Nature? "

Nature, 11 days ago...
Solar energy: A new day dawning?: Silicon Valley sunrise
Oliver Morton1

Oliver Morton is Nature's chief news and features editor.

Abstract  Sunlight is a ubiquitous form of energy, but not as yet an economic one. In the first of two features, Oliver Morton looks at how interest in photovoltaic research is heating up in California's Silicon Valley. In the second, Carina Dennis talks to Australian researchers hoping to harness the dawn Sun's heat.
====
RELATED STORIES
Solar energy: Radiation nation
Resolving the energy crisis: nuclear or photovoltaics?
Leapfrogging the power grid
Applied physics: Solar cells to dye for
A power that's clean and bright
http://www.nature.com/nature/journal/v443/n7107/full/443019a.html

=

Science... 17 days

ENERGY:
Enhanced: A Road Map to U.S. Decarbonization
Reuel Shinnar1* and Francesco Citro1
Alternative energy sources could replace 70% of fossil fuels in America within 30 years at a cost of $200 billion per year.

http://www.sciencemag.org/cgi/content/summary/313/5791/1243
--------------------------------------------------------------------------------
National Geo...

6/04  
The end of cheap oil...
http://magma.nationalgeographic.com/ngm/0406/feature5/

Future power....8/05
http://www7.nationalgeographic.com/ngm/0508/feature1/index.html

Thanks -- much appreciated!
In general, government intervention only distorts economic incentives and produces less than optimal distribution of society's scarce resources.

Well, Halfin, you certainly get us all thinking ...

I wonder if it is at all possible even to determine the 'optimal distribution of society's scarce resources', let alone achieve such an objective.

What is 'optimal' for a 20-year old with a life expectancy of 75 is not what is 'optimal' for a retiree in his late sixties. The latter, if he has no children, may quite happily and rationally allow society to 'go for broke' -- after me the deluge.

That may partly explain the reluctance of politicians to plan for the future -- a growing percentage of their voters are so aged that they don't have any future!

So let's eat, drink and be merry, since tomorrow we die -- and we won't be around to have to clear up the mess we left behind us.

You have some excellent points as always. I try to separate the two ideas. I know that I had considered and supported the issue of a gas tax long before I knew of the concept of peak oil. Peak oil was the culmination of a long road of energy issues for me. A gas tax came near the beginning of that road.  They can be treated as separate, unrelated issues.

For me, it is not so much about taking some risk in the face of peak oil that might turn out badly. It is about implementing an intelligent energy policy that will benefit society and the earth no matter what turns out to be the case with peak oil.

If we have to prove peak oil before pushing a gas tax, or simultaneously, we're screwed. It's just not the right strategy. And I've seen many economists and journalists make the case without ever bringing up peak theory.

Yes, you are correct. It is highly likely, that the market will eventually push up prices that will make a tax unnecessary. That's excactly what I'm trying to avoid. The higher the percentage of the price that is tax, the better. It works all around the world. It dampens effects on the retail price from rude swings in the underlying crude oil.

I know I've got a plan.

Anyway, I pretty much agree with everything else you're saying.

Well, Buggerlugs (I have an absurd urge to use that nick for you, Oil CEO) you are the first person in this thread to mention what I consider to be the most important aspect of an increased US gas tax: it buffers and protects against actual oil price increases and, because of the disproportionate US consumption, may well have a depressive effect on global oil prices. The net result may well be lower real US gas prices, the upside price risk without increased tax could be greater than the tax impact.

Those of you reading this in 2007 will be aware that the US is now in recession. Having low gas taxes didn't protect you from that, odds are they made it more likely. Had the US introduced an escalating gas tax (let's say 2 to 3 cents / month) in late 2001 in response to the WTC atrocity I would bet that the WTIC price now would be about $40 rather than $64.

It is significant that UK petrol ( = US gas) prices have moved in but a 10% range over the last 18 months, whereas US prices have had a 30%+ range in that time.

Where Halfin sees the market as "efficiently allocating scarce resources" I see it as "liquidating our life support system as quickly as possible for short term profits."

Where Halfin sees the ability to price in the externalized costs of carbon emissions, I see that the atmospheric levels of greenhouse gases are beyond any seen in ca. 1 million years or more and have increased at a rate about 1000 times above any previous measurements.  With that kind of assault on climate and ecosystems literally anything goes in terms of rapid, unforeseen, catastrophic changes that may make life untenable for millions or perhaps billions of people.  There is no way to calculate in dollar terms this kind of scenario.  

This is a major difference between what is called environmental economics, which is an extension of neoclassical economics attempting to internalize externalities, and ecological economics, which says that ecological systems are too complex to understand in full, prediction of change is imprecise, externalities impossible to calculate, and so the precautionary principle needs to apply.  The proper role of the market is dramatically shrunk in this perspective.

JB -- I could not agree more!

What some people see as "the free market" I see as "the suicide economy."

We are burning up the real "capital" we have -- if we can use the capitalist paradigm for a moment.  When one uses up one's capital(the planet), one goes bankrupt.

I see real capital as carefully husbanded resources, including human labor.

Real wealth is created when we labor to create food, shelter, clothing, or other things that enrich our lives without depleting the capital of the planet we inherited.

We do not create so much real wealth these days.  We make plenty of junk by depleting resources and spewing toxins into our nest.

We are actually making ourselves poorer while pretending to get rich.

Economic suicide ends in a game of "Last Man Standing."  The winner gets to die anyway, because resources are depleted and the toxic wasteland will be inhospitable.

Now I will try to cheer myself up by commenting with regards to the gas tax:

I think that a concerted effort on the part of grassroots and political activists could get us a $2.00/gallon tax pretty soon.

If the likes of Gore and Clinton can use the bully pulpit of their political status, and if Democrats will really face the real ***Inconvenient*** issues, there are a few Republicans who would join in.

Combine the political strategy with a real grassroots movement amoung environmentalists and those concerned with building a new, sustainable energy infrastructure, and the tax may be seen as a way to revitalise our economy by employing folks to work on sustainable energy projects from Transit Oriented Development to Continuous Productive Urban Landscapes to Green building.

Not at all impossible.  We may see the cultural winds blow politicians in a new direction.

The main thing is to develop some rational targets and to keep talking about why we need change and ways to implement very real solutions for the very real problems.

I'll point out that here in Maine gas tax is constitutionally required to go to road work. Another concern I have with it, the PTBs would simply reduce other taxes. But the biggest issue I have is fairness. I don't think fairness should be administered via the tax system and tax credits. The powerful own the system and it will not be fair.

I'd like to see an initial investment in public transit, and then increase the gas tax big time in places that have it. The gas tax would have to be imposed by local communities, not by state or fed, according to local transit mix. Of course, a driver would just skip over and buy gas elsewhere. All sorts of practical problems.

Reward people without cars. Everyone gets gas tickets, allowing them to purchase x gallons of gas. Don't have a car? Sell it. If you don't have a ticket, then the tax is way higher, so much higher that the tickets have real meaningful value. That amounts to a real cash credit for those not using gas, paid for directly by those who want more.

Other things, like tax policy, so as to destroy parking lots.

cfm in Gray, ME

The majority of the US States are constitutionally required to use taxes on gasoline and diesel on roadway or right-of-way projects.  Meaning no money for transit, no funds for land-use reform, no money for anything other than roads, sidewalks and bikelanes.

It is unlikely that local gasoline taxes could be substantially different from those of nearby communities and still be effective (take in money and keep the stations open).

US Federal gas tax does provide money to the mass transit trust account.

Step one of increasing the federal gas tax requires changing the percentage going to mass transit account.

Step one for increasing (many of) the state gas tax is to modify their constitution(s) to allow funds to be used on mass transit issues.

"I'll point out that here in Maine gas tax is constitutionally required to go to road work."

It's a sham anyway, it just sounds good.  I'll demonstrate.

Pre gas tax:
Money from General Fund going to Road, etc: $4 million

Post gas tax:
Money from Gas Tax going to Road, etc: $4 million
Money from General Fund going to Road, etc: $0 million

Just a shuffle.  They can now spend the extra $4 million on pay raises for themselves for shnooking the citizens, because technically the money from the gas tax is going to road contruction and whatnot.

http://fairpriceenergy.com/FairPriceEnergy/Fair%20Price%20Energy.html

Encourages two of my three pet taxes, carbon and security(leaves out depletion), but  it advocates massive wealth redistribution - we simply pour all the money into a fund and then dole it out equally to every American taxpayer annually.

It's the only MAJOR (major enough to affect consumption) tax I think is politically possible - the bottom two quartiles of Americans who don't use as much energy would get money in their pockets.

the bottom two quartiles of Americans who don't use as much energy would get money in their pockets.

They would also presumably reproduce more rapidly, thanks to that 'extra money', and the patter of more little underclass feet would merely accelerate our rush to the abyss.  

Remember the law of unintended consequences? I certainly wouldn't bank on 'massive wealth redistribution' having any positive impact on society.  

I would not bet on these folks just having more babies.

The folks in my working-class-and-poor, racially-mixedneighborhood are well aware of the need to seek education and to put off having kids and also limit the number of offspring!

I think that the unintended consequence of which you speak might be overstated!

Hello R-squared,

I voted $1.00/gallon--I have a small scooter and a bicycle to compensate for the increase.  Bring it on! Make all this money raised go strictly to mass-transit, bicycle paths, and rebuilding RRs: put AlanfromBigEasy in charge at DOT, he will cut the bureaucratic crap.  No earmarking for any pork allowed.  Tell Ford and GM to put their employees back to work building the equipment for this transportation shift.

Pick one city to be very quickly relocalized so the rest of the world has an inspirational model of how it can be done.  For example, take the Asphalt Wonderland of Phx.  We have weather that would allow relocalization construction to proceed year-round.  They could build a massive spiderweb of bicycle paths very quickly.  The high fuel cost would force most inhabitants to busses, car-pooling, and scooters leading to a rapid decrease in road congestion until the mass-trans infrastructure was completed.  This would allows us to tear up all sorts of concrete and asphalt to restart urban permaculture.

If boat-shipping is 10 times more energy-efficient than RRs, we can extend the hundreds of miles of canals already here in Az for bulk loads that don't absolutely, positively have to be moved quickly.  This will greatly reduce big trucks rumbling around.

I believe AZ is in drastic Overshoot: abolishing Air-conditioning and forcing everyone to swamp-cooling will make a lot of people move elsewhere first.  This energy savings alone could easily power the electrified mass-transit and RRs with no additional building of power plants.  This mass exodus of the wealthy would facilitate the scale and speed of the relocalization for those that remain because all sorts of materials could be recycled from abandoned buildings and homes.  Having those wealthy people [with the largest energy footprint] leave early, means that the new urbanism can concentrate on walkable density and very small living quarters saving even more energy going forward.  If >75% of Az inhabitants moved elsewhere, then our habitat could rebound quite quickly because we would not need to continue to drawdown our acquifers.

Ok, this is just a brief proposal and overview, many details would need to be finalized.  Nonetheless, I still think converting the Asphalt Wonderland to the Permaculture Wonderland ASAP would be very inspirational to the rest of the world as an example of detritus powerdown and biosolar powerup. If all this money from the $1/gal gasoline tax was funneled directly to AZ--could this transformation be done in five years?

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

If boat-shipping is 10 times more energy-efficient than RRs, we can extend the hundreds of miles of canals already here in Az for bulk loads that don't absolutely, positively have to be moved quickly.

Ahhh, but tax law punishes you for having stock.  So now people expect oil to be burned to move items into stock.

For such a vision, holding inventory needs to change also.


Actually, I beleive if the inventory is "in transit" it is not considered in stock.

Spag's, one of the very first discount retailers (in Shrewsbury, MA) effectively utilized this loophole for years by owning their own trailers.  They would pick the merchandise up and then leave it IN THE TRAILER in their parking lot until they were ready to put it on the shelf.

Garth

ggg71 Many moons ago I sold to Spag's. Even knew the owner, a cantankerous shit with a big cowboy hat. It was the first big box and I think Harvard business school still does a case study on his operation. He was brilliant at keeping costs down. "No bags at Spag's" meant that customers used his shipping boxes to take home their low cost goodies and he didn't have a trash removal problem.
Yeah, it was an institution in Central Mass.  Cash only.  Christmas bonuses for all the employees.  Loyalty.  

It's a shame that the daughters destroyed the business.

How does tax law punish you from having stock?

I think this is a misunderstanding. Maintaining high inventory levels requires the use of capital. The stock market rewards efficient use of capital and punishes excessove investories. This is part of what has led to supply chain managemnt and just-in-time manufacturing.

I don't think tax law has much to do with it.

How does tax law punish you from having stock?

Go read the tax code.

I think this is a misunderstanding.

Show where the claim of "the tax code charges you for your inventory" is wrong then.

The stock market rewards efficient use of capital and punishes excessove investories.

And at the moment, the cost of bringing more inventory to the business is cheap due to cheap energy.   When the transportation costs rise and stores are still taxed on inventory...how do you think things will play out?

I don't think tax law has much to do with it.

The tax law is what motivates me from carrying inventory.

Funny reply.

I'm not attacking you. I would genuinely like to get an answer on this as I have heard it stated before. I don't think there is anything in the tax code that penalizes inventory.

Before reading this reply, I thought you might be able to enlighten me. Now it sems pretty clear you just made that up. Then it seems you are shifting to saying that even if the tax codes doesn't penalize you, future energy costs will. OK.

So, let's try one more time. How does the tax code penalize inventory?

I don't think there is anything in the tax code that penalizes inventory.

Go read the tax code.  

http://www.irs.gov/businesses/small/industries/article/0,,id=100355,00.html

"Valuing Inventory

The value of your inventory is a major factor in figuring your taxable income. The method you use to value the inventory is very important. Generally there are two methods for valuing inventory. These methods are cost or lower of cost or market."

Even the IRS agrees on the importance.

Then it seems you are shifting to saying that even if the tax codes doesn't penalize you, future energy costs will.

You (and consumers) get hit 2x times.  1st time is an inability to "buy in bulk" to push up your margins (discount on a bulk buy) and the 2nd time is the shipping cost (inability to fill a truck, share a truck-barge-train, and the need to satisify the 'want/need it now' consumer via air shipment).

You are confusing methods of valuing "cost of goods sold" with a tax on inventory. If inventory is not sold there is no tax.
"If inventory is not sold there is no tax."

Then show that to me in the US tax law.  

Best to agree to disagree. I was once a CFO, with a lot of inventory. You will have to take my word for it at this point - or not.
Called the tax lawyer I've known for years.  Seems that my reading of the tax law is wrong.
Inventory is a balance sheet item. Balance sheet items are not taxed. When inventory is sold taxes are levied on the profit which is the difference between the sales price and the cost of cost of goods sold from inventory (less overhead costs). There are some local communities which levy property taxes on machinery and equipment. There are also sales taxes based on sales prices. This is accounting 101, as you know Jack, which is why you are pushing it. People should live up to their mistakes here. This is a forum for learning.
Hey Jack,

Just posting to hear what's up. You got internet access? What's going on?

Thanks, RR for a very relavent and timely poll!

In an earlier post, I suggested $1 at the pump, up from the current federal number, as a reasonable tax to levy on gasoline.  I'll stick to that here, but with the proviso that it should be defined as motor fuel, that is, gasoline (including aviation gas), diesel and ethanol.  The receipts should earmarked in an ironclad fashion for local and regional public transit -- mostly electric.  NO NEW ROADS OR INTERSECTIONS, except such that woud facilitate public access to new or existing transit facilities. Think here, commuter/shopper parking lots and protected bicycle storage.  

I am generally not in favor of mitigation that involves complex details, especially a scheme that uses the income tax.  Some will fall through the cracks in any case, but a tax credit for those who would need it the most, if they do owe the IRS probably can't wait for next year's refund.  One kind of indirect mitigation that might pass muster would be to couple the gas tax to a minimum wage increase to $7 or so.  Mainly, the concept should not be encumbered with details.

-- Mort.
 

I think there are two important aspects to the tax being acceptable:

The revenues must be evenly divided between public transportation initiatives and  an X-prize type competition for renewable transportation solutions. The prizes would be awarded 2 or 3 times a year.
There would be different categories for concepts, prototypes and finished systems.

The taxes must be phased in very gradually and predicatably, say adding 5 cents/gallon every 3 months to a maximum of $2.00/gallon

A 'cap and trade' system is reasonable if we all agree that we should do something about greenhouse emissions. One country that has taken the tax approach to its limits is Norway, and I believe there are several lessons to be learned. Norway is in a strange situation: All of its riches have been made selling the 'good stuff', but it taxes gas in excess of $3 a gallon, plus a hefty 25 pst. sales tax, and cars are from two through four times as expensive as in the U.S. depending on the 'fun factor'.

Despite enormous tax revenues - more than $1500 per citizen per year, which would equal 450 billion dollars a year for the U.S. - this money has not offset greenhouse emissions. (1) The country has gone from net exporter of hydroelectric 'green' power to a net importer of power from coal-based powerplants in Europe due to environmental 'ambissions'. (2) The average Norwegian car outputs about 30 pst. more than the European average. (3) The average car is more than ten years old, which makes it the highest in Europe, save Malta and maybe a few other low income nations. (Knowing that old cars emit as much as 200 times the level of NOx and CO as newer cars, I actually worry more about local pollution than I do about global warming right now.)

My point is that while gas taxes are the way to go, one should make sure that the money is invested properly in order to offset greenhouse emissions. Governments should not be allowed to tap into this vast source of revenue, neither should they be allowed to bias the selection of the best technologies to achieve the overall aim. Before any taxes are considered, make sure that the money can be spent wisely. Otherwise, as I have alluded to with my Norwegian example, the enormous cost may only empower politicians while doing nothing to the environment.

Robert - gasoline in $7 a gallon in Aberdeen.
Yeah, but I will get a car that gets 60 mpg. :-)
And because you're conservation-oriented, you'll use it with care. But Robert, who will buy your old gas guzzler, which won't be worth that much, and how much driving will they do with it?

Raising the price of gas will drive down the resale value of inefficient vehicles. The USA has an abundant supply of these, used, enough for at least a decade and probably closer to two. The cheaper they get, the more attractive they look (hence the sales incentives for new light trucks). Would they become cheap enough on the used car market to offset the increased fuel cost? A dollar a gallon is just hundreds of dollars a year for a lot of drivers. The asking price for used, fuel-inefficient vehicles is already dropping by thousands. A zero sum game?

But Robert, who will buy your old gas guzzler, which won't be worth that much, and how much driving will they do with it?

Yeah, but my gas guzzler gets 52 mpg. :-)

Just kidding, it doesn't. But the person who can afford to drive a vehicle that gets 20 mpg when gas prices are much higher may be the person who doesn't drive all that much. I usually put under 5,000 miles on a vehicle each year. If I could save thousands by getting a car that gets 20 mpg versus 40 mpg, I will be better off financially to do that. Bottom line: There will be a market for lower mpg vehicles, it just won't be people who use the most gasoline.

A year or two ago I somewhat jokingly predicted that it would be the poor who would end up owning all of today's SUVs. At the time SUVs were a status symbol (and I suppose still are to some extent) and the idea of them turning into ghetto vehicles was absurd. But if we do see a switch in sentiment towards ownership of high mileage vehicles being "cool" then it's possible that something like this could happen.

All those SUVs aren't going to shrivel up and blow away. They'll still be being driven ten years from now. They'll be cheap to buy but extremely expensive to operate. This is just the kind of trap that poor people fall into easily, because they are not able to store up capital. So they get things that are cheap up front but expensive in the long run.

I once read that a lot of American trade-ins are refurbished and sold in Mexico and South America.
One other thing to throw out there. Which special interest groups will probably oppose, regardless of how it is tailored? I can think of a couple: Big Oil and the (U.S.) automotive industry. I can't really think of a way to make this palatable to either group. But how about others? I don't mean the average run of the mill anti-tax citizen. I think it can be sold to them.
Practically all businesses would be hurt by this through higher fuel costs, unless you plan to give companies a tax credit as well.    

Farmers would be especially against this, unless they got a much larger rebate than everyone else because of their higher fuel usage.  

Farmers purchase tax free farm fuel - which has dye it it. There is a pretty good fine for using farm fuel in a personal or non-ag vehicle.  You also need to flush the tank and rinse well before the dye is no longer detectable.  One of the farmers in our area got busted for this a couple of years ago.
All businesses and agriculture that depend on oil at cheap prices must adjust. If they are not viable at twice current oil prices then they must change or die, in 5 years if they are not viable at ten times current oil prices they must change or die. I'm sorry, the carbon intensive model is over, if your business breaks when oil is 10x current price then best you exit soon, your recent success has been based on a temporary aberration.
Well, as well as farmers, your proposal heavily impacts upon truck transport groups, and the airline industry. Just think of any groups supposed to be effected by the direct 'liquid fuels' aspect to conventional peak oil parlance.

I admire the energy with which you pursue dialogue (in the face of such, dare I say it, hopelessness). Good luck.

To make a suggestion, I'd recommend that the gas tax be located well into the future at a well defined time. Some degree of conversion to efficient processes should be possible before the tax arrives. For example, introduce legislation in 2007 that implements a 30 cent gas tax in 2011, and becomes a $2 gas tax in 2014. Under this kind of arrangement, a significant portion of the costs to convert the economy are born prior to the introduction of the tax. If the near term peak oil thesis is correct, then these price rises are trivial, but they do force business leaders to initiate efficiency programs with a clear vision of the costs they will face. If the price of oil does rise enough by 2014 to make the tax unnecessary, it is reasonable that the tax increase would not be implemented. However, the hope is that the promise of a price rise by this time would have ensured active pre-emptive transition. A pre-emptive strike, if you will. So popular these days.

I see several posts expressing concern for farm, trucking and other businesses with respect to a gas tax.  It is noteworthy that such a tax would for them be a business deduction.  

-- Mort.

A deduction is not helpful for marginal (i.e. barely profitable) businesses.
How high they should be is an important question.  Also important are questions about:
  1. how fast they should be raised - it's likely the only way a gas tax could be politically palatable is if the increase is gradually ramped up over a period of several years at least;
  2. how best to offset the extra costs to those who cannot afford higher costs to get to work or otherwise function; and
  3. how to ensure that the revenue goes to efforts to conserve energy and develop renewables, or, perhaps to offset property taxes.

What's the goal of the tax?

Are we trying to minimize fossil fuel impact on global warming?  
Prevent a die off?  
Preserve crude reserves?  
Raise money for mass transit construction?

Here in Boston the MBTA is $8 billion in debt.  Not exactly a front runner in terms of fiscally prudent management.  I'm all for mass transit expansion, but I don't want to give this agency another nickel.

If we pass a gas tax in the USA, and it curtails consumption (thus reducing crude prices), who is to say China, or India, or other countries won't just start using more?

What we need is a Global Powerdown Treaty.

1% reduction in all fossil fuel user per year, every year, everywhere, globally.

Should I write a letter to the UN?  :)

Garth

Hello ggg71,

Are you aware of ASPO's Energy Depletion Protocols?  Best Idea I seen yet, but TPTB resist it.  They refuse to accept the Physics of Detritus Entropy and the nature-nuture of Population Overshoot--Jay Hanson's Thermo-Gene Collision.

"The best the poor can hope for is a quick and painless death"--Jay Hanson

That will be a large percentage of humanity, and many of us here unless global agreement is reached to optimize the squeeze through the Dieoff Bottleneck. Such is life, the choice of our decline is up to the collective "us".

Never forget 1,000 barrels/second + a newborn/second = disaster.

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

"What we need is a Global Powerdown Treaty.

1% reduction in all fossil fuel user per year, every year, everywhere, globally.

Should I write a letter to the UN?  :)"

No need.  

M. King Hubbert has written it for us already.  It's a-coming.

Question is what we replace it with.

  1. conservation: yay (good but limited capacity)
  2. wind: yay
  3. solar: yay (small capacity)
  4. nuclear: yay for now (large capacity)
  5. coal? not one frigging lump!
The way to get the "Biggest Bang for the Buck" (pun intended) is to phase a gas tax.

Today, raise gas taxes 2 cents/gallon/month with quarterly inflation adjustments, for 20 or 25 years.

Minimum current pain & economic disruption, maximum "structural change" will be pahsed in in anticipation of higher taxes.

I strongly oppose any increase in gasoline taxes, particularly as they are being proposed for primarily social engineering purposes. I.e. To force people to do something they do not want to do and would not do without being forced. If you want to reduce your consumption and encourage others to do likewise that is fine (and beneficial), but for you to force your views upon others through Government coercion is dead wrong. It is Totalitarian Governments that force their people to do things that they do not want to do. I stand foursquare for Individual Freedom and Individual Liberty.

Increasing the gasoline tax and/or putting punitive vehicle taxes based upon fuel consumption and spending these funds on mass transit severely punishes people living in small communities and rural areas as they have the greatest need to drive and in the case of rural people the greatest need for full size pickup trucks/SUVs. And those folks will not see any benefits from all the mass transit spending at all.
Raising the cost to produce and transport farm produce would work an increasing hardship on lower income people and any tax rebate program would not have any way to factor this in.

All of the current proposals for "Mass Transportation" are entirely for large metropolitan areas and therefore will provide no benefit for the people in the small communities and rural areas that are having to pay the large tax increases to support these.

The large metropolitan communities almost always have much higher income levels than those in the small communities and rural areas and the people in large metropolitan areas are therefore better able to survive any large gasoline tax increases. And the fact that people living in small communities and rural areas have to travel more miles for basic necessities (food, doctor appointments, etc...) compounds this inequity.

Raising gasoline taxes works against the small farmer and for the large farmer. There are no road taxes on "agricultural fuel" so they put dyes into all fuel that has not paid the Road Taxes. Large farmers use enough fuel to justify having two sets of fuel tanks - One for road fuel and one for non-road fuel. Small farmers cannot afford two fuel setups and so must pay Road Taxes on all their fuel. You do not want to be caught with any of that non-road tax dye in your carburetor or fuel injection system on your car or truck as the fines and penalties are very severe.

Reducing consumption in the USA will not have that great an effect in today's real world, as many times more increases in other parts of the world will consume any petroleum that the USA conservation efforts saves. Penalizing people here in the USA to benefit people in China, India, or other parts of the world in not in the best interests of the people of the USA (as separate from the Government of the USA). And the reality of reducing USA consumption not having any real affect on global consumption negates any beneficial effect on Global Warming. Only things that will affect global consumption are going to have any effect on Global Warming.

The attempt to raise the gasoline taxes and then give it back to the people is going to just create ANOTHER giant Government agency to suck more of our taxes into its operation. And because of all the side effects of the tax increases there is no way that it can ever be FAIR.  The idea of taking in taxes and redistributing them by the government smacks too much of the failed communist doctrine of "From each according to his ability and To each according to his need". It simply is never fair and does not work.

Letting the laws of supply and demand work their way though the problems with Peak Oil and declining oil production is the best and fairest way to deal with the problem.

What about privatizing the interstates?  Make them all toll roads.  Would you be in favor of that?  That would get the government out of the road business.  We could reduce government at the same time private companies increase the tolls.
So you advocate that the US do nothing to prepare for Peak Oil ?

Yes, rural people use more. So we WILL either have fewer rural people OR they will use less.  Farmers will use less fuel, and the non-farming rural population should move to where they use less oil.  Retire to the city.

gas taxes only speed up the effects of Peak Oil, nothing more.  But it allows us to make some preparations.

Your way leads to certain disaster.

That's a great point about how raising U.S. gas taxes may not reduce worldwide consumption. It is related to Jevon's Paradox which we have discussed before, that increasing energy efficiency can cause increased consumption. The idea is that reducing demand from one sector can lower the price so that other people are able to consume more at lower costs.

Of course we don't have to speculate on this, we can look at what's happened. Europe has had high taxes for years and that has done nothing to limit American consumption; in fact they have gotten their gas cheaper because Europeans can't afford to buy so much.

You're right that the only system with guaranteed worldwide impact is high prices due to supply and demand. If Peak Oil is true then as more people become convinced of it, we will see supply and demand both be reduced. Suppliers will want to hold oil in the ground because they know it will be worth much more in a future era of scarcity; this will drive up prices and cause consumers to use less.

"raising U.S. gas taxes may not reduce worldwide consumption."

You are right about this, but who will be better prepared for the much larger price increases ahead; those who have been forced to develop efficient transportation systems by their governments, as the Europeans have or us free market SUV loving Americans. The capitalist cheap goodies now system we exalt has driven us to waste, obesity and disease. The effects of depletion are going to be so severe we won't have the time when it does come to react with a long term strategy. Without leadership and planning there will be great hardship. Our "let everyone do their own thing" cowboy attitude is going to fail us. We are moving towards a paradigm shift with the majority in denial.

Reducing consumption in the USA will not have that great an effect in today's real world, as many times more increases in other parts of the world will consume any petroleum that the USA conservation efforts saves

If we act now, we can offer a carrot, by abolishing the Payroll Tax, and a stick, energy taxes, in order to start adjusting now to the much higher energy prices that are coming.  I would argue that Europe is far more better prepared for Peak Oil--because of higher energy taxes--than is the US.

In an ideal world, we could just let things take their course. Sorry, but don't believe any of this is totalitarian. Sorry you feel that way but the earth cannot wait for the so called free market to sort all this out.
I'm rather vehemently opposed to everything you said JK.

The US failure to buffer its economy against oil and energy price fluctuations virtually guarantees an increased risk of economic boom / bust cycles (more bust in the next decade, methinks).

Reducing comsumption in US will have several positive effects...

  • reducing global trade imbalances
  • probably reducing oil prices short term
  • reducing $ available to possibly hostile govts

It is absurd to say that decreased US consumption would have no effect on global consumption and prices. A 5% reduction in US consumption would provide a year's growth in global consumption.
Agree fully with all of your comment.

Well put. Right on.

Jon;
  I appreciate your points, and don't want to invite the government to take any more liberties for themselves and from us.. that said, this administration has done just that, even being brought in by the people who most oppose government intrusion..

  My main point, though, is a response to your issue of how much rural folk would be hurt by this, and only the cities would benefit.  As proposed, by sending the revenues to MassTransit, you might be right, with the exception of Long-Range Passenger Rail.. but there is the question of how much the Rural environment is built up unrealistically on this accessibility of cheap fuel, which is a benefit that is now largely Enjoyed by these rural communities, which puts a constant demand on these fuels.  The change will come.. how do we help the most road dependent Americans prepare and deal with this?

Bob Fiske

I would like to see a comparison of a tax based incentive system versus a cap and trade system.  Then compare different schemes for who has the right to pollute?  Do we allocate emissions credits to individuals or businesses or some combination?

Many renewable energy, alternative transportation, and agricultural projects/businesses can receive investment capital through either government largess or private investors with carbon credits.

If the poor have lower emissions, they then have also have credits that have exchange value.

The biggest opponents to a gas tax, in addition to the oil industry, are the industries devoted to sprawling land use patterns that require large and ever-increasing levels of automobile use. These include the asphalt, concrete and other industries involved in road building; land developers, home and commercial builders, as well as all the land use/real estate professionals who support sprawl-building industries. Combined, these industries represent a major portion of America's GDP. They have the resources to put millions into PR campaigns designed to sway political policies in their favor, and they do so regularly.

Another barrier to voluntary adoption of gas taxes is behavioral economics. People are loss-averse (a loss relative to some reference level is weighted more heavily in the calculation of utility than a gain of equal magnitude), and we choose smaller immediate rewards over larger rewards in the future. According to these theories, a distant future income tax rebate will not be considered adequate compensation for the immediate loss experienced each time one pays the gas tax at the pump.

And (for what it's worth), presidential approval ratings are correlated with gas prices.

Yet another thing to consider: Gas taxes fund only 35 percent of total highway expenditures in the U.S. If the gas tax is increased, there will be enormous pressure from states, counties and cities to devote the additional revenues to road building and maintenance, instead of any type of rebate.
Robert,

Through all the emotional and otherwise driven words here, there is only one way to set the tax on gas: let it reflect the cost.

And that was set by Milton Copulos in the US Senate as $11 per gallon, $480 a barrel. Minus the cost per barrel for the producer, and there you go. It's really a very easy-to-solve issue.

Anything other than the real cost is nonsense, because you can keep on twisting around issues, and people will. Arguing with the actual cost is much harder.

A financial statement cannot focus exclusively on the cost of running the operation. You have to take the revenues into account as well. Otherwise, I agree that there is no shortage of energy, so we should invest heavily to be able to take advantage of it.
OT:
BP thunder horse not operational till mid 2008.
You still looking for Norwegian field by field listings? I found them.
If taxing gas is a good idea --- then taxing all consumption would be even better!
Taxing all consumption would encourage saving and reuse in every area, not just energy.  One could even tax gas or other items at a higher rate if one wished to discurrage it even further.

This is exactly what fairtax.org hopes to do.  Abolish all income tax and replaced it with a consumption tax.
To make this fair on the poor, no one pays any tax up to the federal poverty level.
Wow!  That solves it, simply, fairly, etc.  See www.fairtax.org for more information...

Here is a summary from the web site:

  1.  Abolishes the IRS
  2.  Closes all tax loopholes and brings fairness to taxation
  3.  Maintains our current Social Security and Medicare benefits
  4.  Brings transparency and accountability to tax policy
  5.  Allows American products to compete fairly
  6.  Reimburses the tax on purchases of basic necessities
  7.  Enables retirees to keep their entire pension
  8.  Enables workers to keep their entire paycheck

There are now 59 sponsors of this bill in congress; and this has a much better chance at passing than a gas tax!
I'm a bit late joining the fray here, but a few thoughts:

I'm certainly in favor of using gas tax to accurately reflect the costs associated with gas consumption--however, I'm warry (as many people have noted) about the ability of the federal government to properly allocate these tax revenues to the actual costs incurred.  So that is the first concern:  the revenues must go into multiple, narrowly constrained "lock boxes."  Yes, I said "lock box."  Shoot me.

First cost:  environmental impact of gas consumption.  Someone who can quantify this better than I should do so, then devise a mitigation system that would be funded via a trust-fund paid into by gas tax revenue.  The goal is to actually mitigate all present and future impact of present consumption (per Lester Brown's concept).

Second cost:  other embodied costs of driving.  We effectively subsidize driving by paying for road construction, maintenance, and policing (not to mention other costs to society of car accidents, etc.) out of a general fund.  Instead these costs should be paid out of a consumption-specific tax (gas tax would be a close approximation).  

Third cost:  pre-payment on the future value of high-embodied-energy resources (like gasoline), decreased by the time value of money.  This is based on the premise that we accept Peak Oil, that gasoline will be far more expensive in the future than it is now, and that it will remain very valuable to society in the future, so this is essentially a punative tax that will encourage the policy goal of conservation and use of alternatives.  This punative taxation revenue should be use to favor structurally efficient forms of mass transportation, etc. (not to be confused with levelling the subsidies among various transportation alternatives).

Finally, I'd like to see fuel costs become a very predictable figure.  This requires two things:  a long-term forecast for gas-tax increase, and a partial market price mitigation mechanism.  The long term forecast is simple:  I'd like to see a fixed gas tax increase each year, say $.50 per gallon increase each of the next 10 years.  This gives business a predictable environment to plan and invest--I realize that it is highly dependet on future politics, but it is a goal to shoot for.  The second portion is the concept of partial market price mitigation:  a flexible portion of the tax that aims to lessen the impact of market movements on consumer prices.  This is a bit more theoretically challenging because of the potential side effects on production, but it can be done at a partial rate (e.g. taxation will swing within a $.50/gal range of X to mitigate 66% of price movements based on a X moving average, or something similar).  I don't have the details here, but it is a good point for discussion because it also helps achieve the interim goal of predictable prices to assist in business planning and investment in alternatives.

gas tax is a BAD idea    for the simple reason that the govt would just waste the money    a tax on all consumption  to replace the current corrupt income tax and elimination of govt debt would get my vote
Ahhh, but we already waste money in so many ways:

--individuals do it!
-- groups do it!
--NGO's do it!
-- corporations do it!

Everybody is doing it!

I do note that a government-initiated and sponsored project put a man on the moon when many thought it could not be done.

We need to leave aside some of the knee-jerk ideological nonsense and get to the real issues.

We are wasting our planet and all of its resources.  By the time the so-called, highly contrived and manipulated "free market" even knows there is a problem, we will have effectively bankrupted ourselves.

The free market as we know it is set up to screen out any information or analysis which does not support the premise that endlessly expanding consumption is the one and only good and the best of all possible worlds.

I've grown weary of these comments which denigrate government as wasteful out of hand, as well as those which tout the Free Market superstition as though it is rooted in reality.

We are killing our life-support system and calling ourselves successful.  We are going to have to make some difficult and quite radical changes if very naby of our species -- not to mention other species -- are going to survive the bottleneck of the next 30 years or so.

A significant gas tax -- made revenue-neutral -- is a very reasonable measure to discuss and to one day implement.  The proposals discussed here will be seen in retrospect as quite modest.

Oops -- typo in second sentence of next-to-last paragraph:

"We are going to have to make.....changes if very *many* of our species...."

Typing too fast, too late....

I would like to see a $1 tax - phased in over 2 years (about a penny a week).  I would then like to see this money allocated/split 5 ways.

20% into a federal MASS transportation project(s) - let the feds allocate the money as they see fit for large scale/multistate rail projects.

20% into state mass transprotation projects, including light rail and bus projects.

20% into efficency and conservation projects (federal grants).

20% into alternative/renewable energy research/projects.

20% into environmental preservation and clean up projects.

Even with the money earmarked the politicians would have plenty to fight about.  But this would take money from the biggest energy waster (single passenger vehicles) and put it into the areas that need to be addressed.
I agree that for a large gas tax to pass it either needs to be revenue neutral, or earmarked into areas that a large number of people will benefit.  Unfortunatly I don't see the mass transit, conservation or alternative energy as really hitting home.  Maybe the environment. . .but I doubt it.

Maybe by appealing to the
average Joes distaste to sending part of
their gas money to Arabs and Iranians and
Venezuelan dictators?

Read some of the ethanol related
posts on a website like
www.columbusgasprices.com. Many would
rather send their energy dollars to
American corn or cellulose farmers if
they had a choice.

So just from reading the thread I get the following gist from from people

1)Most people agree that a tax on gas or consumption makes sense as a premise.

2)Many people think that we can't trust our government with money from the tax, especially the federal government

3)Many people think that raising this kind of tax will unduly hit lower income Americans

4)Most people think that raising the gas tax is political suicide.

You know what I wish we could do on this blog and others was start some type of article or maybe a series of articles sort of like Wikipedia. Each article would be a particular plan that's aim would be to reduce the amount of gas we use as a nation.

For example have one plan that talks about raising the gas tax in graduated amounts for the next 5 years coupled with decreases if the price of gas sky rockets. Make it so that people can edit the article. Can have discussions over particular parts. Include with the documents lists of weaknesses and strengths of the proposals. May be major contributors to this site can guide on proposal. Then at the we should all take a good look at them and figure out what we would all support pushing to our government at a local, state and federal level.

I definitely understand people's frustration at their government, it doesn't seem that its working for us most of the time. But I guess I'm still a little idealistic and young enough (29 yrs old) to believe that we can still work to change things. I guess the reason why I brought up how the plan can be created was because I think having a plan of action grow organically from people at this site or others gives it more credibility and from the start you can get more people to buy in. Then from there we can all start talking to our reps at various levels and say many people created this plan and we need you to take a look. Most politicans I've meet are usually glad to meet people that will engage on important issues. I think the energy issue is something that we can easily get people on the left and right to focus on and come up with a plan to move forward on. On top of this if we know the plan well we should know how to hold our reps accountable too. We can control them, it takes effort but it can happen.

Just off the top of my head another idea we could tackle here is if we had the power to write a state wide voter proposition to help a state's energy needs what would it look like? Maybe we can come up with a couple documents that address these and other more local government ordances and such. This way we can start at the grassroots.

Any way that's my 2 cents.

Chris

Yes, a wiki.

cfm in Gray, ME

Its too bad we can't just make one or a couple and use this to create plans and then start to grow support around it.
There is a way round the political suicide aspect: Impose a sudden and drastic increase in gas tax at the beginning of a presidential term. The negative effect will dissapate within 4 years. It's hard to see any other route being viable except in response to external events.

"Most politicans I've meet are usually glad to meet people that will engage on important issues." Yes, but not that many listen, fewer actually engage their brain whan they do listen and almost none devote sufficient processing to grasp...

Agreed some pols will not cooperate, at that point you campaign against them or vote them out, we need to hold people accountable. Maybe I've met good politicans that do listen.
On the main question - I'll support a moderately stiff gasoline tax ($1-$2) under certain conditions. After all, this is something like a medieval sumptuary tax, so it ought to be applied fairly. So it only gets my support if (1) it's nearly revenue neutral (else it will just go to more boondoggles) and rebated fairly evenly, and (2) aviation and boat fuel, and diesel fuel, including all such fuel used for "commercial" purposes, are taxed by the same amount, with perhaps at most a 10-year phase-in for agriculture but no long phase-in for anyone else.

After all, while it's fashionable to dump on Hummer drivers, frivolous consumption via jets and commercial vehicles is also so huge as to be incomprehensible. One of my "favorite" stories - JHK would love this - about the tremendous waste in the business community came from serving on a dorm council at university (a while ago...) At one time they bought most of their produce and baked goods from local, or at least quasi-local, suppliers. Then they changed it so that much of the stuff was essentially trucked 150 miles to Chicago, and 150 miles back again. Why? So the dormitory authority officer in charge of food supplies could get to the golf course earlier in the day. You see, he had made his life "simpler" - if the stuff was trucked to Chicago and back, he had to deal with only one wholesaler, instead of, IIRC, the insupportable burden of three!

Businesses and public authorities are still just as loaded to the gunwales with lazy, wasteful, underworked (and often massively overpaid) executives. So tax them too. And they could cut down on their ego trips: let's see some "convention centers" and airlines go out of business for good. We obviously have too many airlines anyhow, independent of fuel considerations. And if we're going to make life tough for pizza delivery drivers by taxing gasoline more, then let's also make it tough for unimaginative parents who can't think of anything to do for vacation but fly the kids to Disney World every year. Tax them too.

This is nonsense. Some here are saying $2.00,$3.00 and even $5.00!!!

Can you even begin to imagine the uptick , huge huge uptick in the cost of EVERYTHING that is connected in any way to the cost of fuel????

Please think this through.

How many business's would NOT pass the cost on.

Your corn flakes go up to $40 / box.
Cost what to fill your tank? $320.00?

Oh but you will have to wait for the 'tax credits' to get your money back. You mean a whole year?

C'mon.

By hook or by crook, it will happen. Everything oil dependent is going to double or worse in price.

You will pay in tax and / or will pay in oil price effects. Almost all aspects of prices will be effected.

The nonsense is expecting gas prices to stay near $2.50, they will hit above $10 in the next 5 years, even if US gas tax is reduced to zero. Best you learn to grow and make your own corn flakes ;)

"By hook or by crook, it will happen. Everything oil dependent is going to double or worse in price.

You will pay in tax and / or will pay in oil price effects. Almost all aspects of prices will be effected.

The nonsense is expecting gas prices to stay near $2.50, they will hit above $10 in the next 5 years, even if US gas tax is reduced to zero. Best you learn to grow and make your own corn flakes ;) "

Let it happen then. But you will just hasten the inevitable by doing so.

Corn flakes? I eat grits. Take some whole dried kernel corn, place in a lye solution til swollen, drain and dry, grind into grits. Better than any corn flakes and I have some already ground up from last years corn crop.

We are harvesting corn right now and I am placing 5 gal buckets in my storage area. Plus I have many bushels of it on the ear and mostly open pollen as well.

You will be the one without. Not I.

The gas tax is DOA. Won't happen for the results would be obvious.

Baaaaaaa!!

$5.00/gal, if properly spent, BEGINS to accurately balance the total costs of gasoline consumption.  When costs are properly accounted for, free-market mechanisms can actually work to properly allocate capital, etc. Sure, it impacts near-term price and growth by making them accurate representations of current conditions--we have the ability (by maintaining the status quo) to continue to pass these costs on to our grandchildren.  That isn't what I want, but I recognize that there are two problems:  1) lack of understanding of the economics principles behind cost accounting and market allocation mechanisms, and 2) the fundamentally selfish desire to take care of ourselves at the expense of the future.

So if you oppose a hefty gas tax, ask yourself:  what mix of the above two factors explain your opposition.

Some of us have thought it through, several times in fact. $7 gasoline isn't really a whole hell of a lot different from $3 gasoline. It certainly isn't going to make corn-flakes cost $40.

Most people, I'm guessing fill-up with about 10 gallons. The rest is below the reserve line. That's $70. The part of the country that is driving F150's and Yukons is already paying that at the pump.

We're talking about eliminating other taxes or refunding individuals 12,000 miles per year worth of gas-tax in dollars.

12,000 miles at 50 mpg is 240 gallons times 5 dollars tax per gallon is $1200. If you match this with other revenue neutral schemes involving taxes indexed to the efficiency of the vehicle you are buying, poor people and the elderly who drive sensible vehicles, or don't drive at all can actually make money. Where does this money come from? Families that own an SUV for each member and insist on driving back and forth to the mall 11 times a day.

We are also talking about phasing this in over a number of years, so everyone can acclimate.

The reasoning is that it gives people an incentive to transition and puts the cost to society of using petroleum on the shoulders of those who waste the most.

At the minimum wage($5.15 currently?) a man works two whole days just to fill his gas tank.

With a gas tax of $5.00 then he has to work two maybe three days.

What do you expect him to live on?

Oh..wait...the politicians and IRS is going to give him something back, someday, sometime but he has to wait for how long?

Forget it. He is already dead.

Do the math. Tell me I am wrong.

The guys I see at work make a bit more. Maybe $7.00 / hr.
Still its just 'death on a stick'.

Tell me I am wrong. Do the math on both wages.

$7 x 8 = $56  
$56 minus withholding = maybe $40(net per days work)

Gas at $8($5 tax) x 20 gal tank = $160

What is the result? 4 days of work to pay for a tank of gas.

Reduce the tax to $4.00...the results dont' get much better.

Yet its ok for the taxman holds his credits for him and we  know we can all trust the government with a huge windfall in revenue via a bright and shiny new tax.  

Why even get up and go to work then? Why not just put the 12 ga to your head and trigger it off rather than wait for the 'interlopers' to come with the bank prez and kick you out of you shack? Or blow their asses off instead , maybe justice served there.

You folks got a huge problem. You want to foist it off on the ones who don't inhabit your world. The ones with dirt on their hands that you don't have to look at. The ones who make the corn flakes for you.

If my calculations are incorrect I will apologize, go back about my work day and start reloading my .223 ammo instead of flogging this website and watching the countdown to dieoff.  No more corn flakes for me anyway. I make my own breakfast cereal, thank you.

I am seriously considering this as well. Already have some fabrication done.

http://running_on_alcohol.tripod.com/id36.html

I don't think you're math is necessarily wrong. I just don't think you are speaking to my points. The idea is to eliminate killing the person who is making minimum wage not to facilitate such an outcome.

If you are making minimum wage and driving a vehicle that has a 20 gallon gas-tank, it is most likely an inefficient pickup-truck. There is something inherently wrong there. I believe most compact cars have tanks that are sub-14 gallons.

You are completely avoiding the issue of a phased-in tax.

And remember, if peak oil and the market push the price up that high anyway, the people you talk about are TOTALLY screwed. With no warning. No preparation.

"Phased in"??
Then where is the 'shock and awe'?
At whoat point does the frog jump out of the slowly heating water?  Never is the answer. The pain just slowly starts to build.

Let say we go with a $3 / gal tax instead of a $5/gal.

Then gas prices escalate , say up to $5.00. Then we have a price of $8.00 and right back where my math is and its results.

If a guy clears $6.00 per hour after taxes/withholding (usually less) and gas is (lets lower it even more) $6.00/gal....then he is earning the equivalent of one gal of gas for each hour worked.

His "PICKUP" then has a 20 gal tank then he has to work 20 hours to fill it(takes a tank full to get to work,shop for groc,kids to doctor,etc.

This means half his work pay is spent on his fuel.
Even if he drives a car instead of a truck its the same.

You see the guy can't afford a Prius and most working stiffs have to drive older cars.

He has to spend half his paycheck on fuel.

What is the problem with this then? LIke I said earlier , those who live in the country have to drive to work. No bicycle paths, no trains, no busses. Just working folk doing their job and trying to make a living.

So I hate to keep pushing this but thats the way it wrings out.

BTW I stopped at a Steak and Shake last week(riding my HD mind you) and asked the waitress what she earned. $3.50 and hour she said. Tips made the rest  up perhaps.

How can she do it? Beats me but there they are working. She then would have to work maybe all week just to have a tank of gas.

What doesn't compute? Adding tax to raise the price higher and gouging the shit out of people. Sending the money to the US Government. Thats hilarious.

Excuse me whilst I go barf. This is getting weird.

Then gas prices escalate , say up to $5.00. Then we have a price of $8.00 and right back where my math is and its results.

So I am still curious as to how your math, Post-Peak, allows anyone who is making a low income to survive. If you think it is going to hit them hard now, when the price increase is planned, just wait until it hits them and it isn't AND they aren't going to get any kind of tax credit to ease the transition.

To be blunt, your kind of thinking is going to put millions into deep poverty Post-Peak. Kids will starve to death because of thinking like yours.  

Robert,

Google "children starvingj"...you might see that the problems are already here its just not happening in the US of A.

You refutation seems to be...'well it will happen if we don't do something and so we need to do something' .........while my opinion is the same....it will happen...SO WHY FORCE IT.

You automatically start forcing the children to starve but the working bees to as well.

I do just use numbers (for this is a numbers oriented website) but I look at what is happening on the ground.

Yesterday I was told that one of my co-workers hadn't eaten in three days. He wanted his kids to eat and his wife so he went without. I see the guy almost daily. He has five small children. His wife was down at the shop yesterday with her head hung down and looking not too well.

You say "what will happen to them later?"....Hey I thought you guys had some plans..going to make sure the word got out....expected a soft landing(many seem to)...

...so I say..let the future go and don't mess with taxes, and put us into the apocalypse any sooner than necessary.

Kids starving? Happening already. Happening in this country as well.

Sorry but I am just making my case that huge increases in the gas tax are not well advised as a solution.  

You automatically start forcing the children to starve but the working bees to as well.

That's where you are wrong, and what you don't seem to understand. By changing the tax structure, what I want to do is basically shift revenue from taxing income to taxing energy. Children won't starve any more than they are starving now, because they will have as much money coming in as they do now. In fact, they have the opportunity to have more if they embrace conservation.

...so I say..let the future go and don't mess with taxes, and put us into the apocalypse any sooner than necessary.

The whole point here is to delay or avoid the apocalypse. It is to force people to confront the future now, while giving then the resources to adjust. In the future, they won't be given any resources.

With a gas tax of $5.00 then he has to work two maybe three days.

What do you expect him to live on?

What's he going to live on when gas prices go to $5.00 on their own accord, and he isn't prepared? That's really the point that you are missing. Gas prices will go there on their own. And to that, you say "Bring it on!" But when it is suggested that we force the price to that level to give people time to adjust, you say "We can't live like that!" Think about what you are saying.

You folks got a huge problem. You want to foist it off on the ones who don't inhabit your world. The ones with dirt on their hands that you don't have to look at. The ones who make the corn flakes for you.

Do you know where the highest per capita gas usage in the country is? I will give you a hint. It is a very rural area. So, in a very rural area, heavily dependent on gasoline, how is it that it's the "other folks" who have a problem. We all have a problem. We all live in this world. We must all be prepared to sacrifice, or plan for full on class warfare.

I think you have this romantic view of what life will be like in rural areas post-peak. The farmers will be just fine, you think. I grew up on a farm. My family still farms. They may survive post-peak, but it will be a miserable life with much higher energy prices. On the other hand, we could do some preparations now, and delay that day of reckoning while transitioning to a more sustainable way of life. But it takes long-term thinking - not short-term thinking that can't see beyond the next tank of gas.

>We are also talking about phasing this in over a number of years, so everyone can acclimate.

Great. In which case wages and prices adjust causing massive inflation while doing nothing to curb consumption. In times of high inflation consumption can increase as no body bothers to save because savings are inflated away into pocket change.

If you really are serious about cutting consumption, the only way is to increase interest rates. It promotes people to spend less and save more. Consumers will only buy what they really need and stop gratification spending.

>The reasoning is that it gives people an incentive to transition and puts the cost to society of using petroleum on the shoulders of those who waste the most.

Gas tax does zip to curb waste. Wasteful spending is
caused by cheap money and easy credit. Stupid taxes can increase wasteful spending, as politicians used the increase tax revenue to fund stupid and wasteful projects that help them get them re-elected. aka, the Alaskian bridge to no where.

I think you are missing the point. And I think you haven't paid any attention to what myself and others have argued.

I'm not talking about wasteful spending. I'm talking about wasting gas on unnecessary vehicles and unnecessary trips to the mall.

Not "gratification spending" - "Gasoline," that's what we are talking about.

I understand your concerns about how politicians spend money and that is a hurdle, no doubt. But it is no reason to throw your hands up in the air and it by no means proves the ineffectiveness of a gasoline tax.

It works in Europe, it can work here. The UK, France, Japan and others have minimized the correlation between petroleum use and GDP growth by intelligent government applied regulation, including taxes.

>I think you are missing the point.

No I haven't, let me explain:

>I'm not talking about wasteful spending. I'm talking about wasting gas on unnecessary vehicles and unnecessary trips to the mall.

Wasteful spending causes unnecessary waste of energy resources. Is going to the mall every weekend to buy throwaway crap (made with oil, transported with oil, packaged in oil, etc). How much gasoline and other fossil resources goes into the manufacture and transportation of frivolous goods?

Another example of wasteful energy use is the construction of 3000+ sq ft. McMansions that are inadquitely insulated. How did people afford to get these homes? Answer: Cheap and easy credit. Do you think millions of consumers would have upsized thier homes if the mortgage rates were at 8%? Do they really need to upsize or buy a vacation home? Need I go on?

>Not "gratification spending" - "Gasoline," that's what we are talking about.

By cutting out "gratification spending" it would save gasoline and fossil fuel use in general. ie less trips to the mall, less used to transport all that crap half way around the world. How much oil is wasted in making, transporting and packaging it when its likely going to end up in a land fill in a couple of years?

>understand your concerns about how politicians spend money and that is a hurdle, no doubt. But it is no reason to throw your hands up in the air and it by no means proves the ineffectiveness of a gasoline tax.

It sure does. If all you plan to do is slowly raise the gas tax, business and consumers will adjust, by demanding higher wages and raise prices on goods. What you will end up doing is just causing inflation and it will not cause a change in consumption habits. As I tried to explain early, its likely to increase consumption as people simply spend everything they have instead of losing there money to inflation.

>It works in Europe, it can work here... intelligent government applied regulation, including taxes

For one, Europe uses about 16% (21% including Russia) of global oil production, which isn't a heck of a lot less than the USs 25%. Second it isn't just a gas tax that keeps consumption in check in Europe. For most of the European nations have much more banking regulation and has tigher interest rates that has prevented inflation. Land is also in short supply so it has also limited European suburbia from ever getting out of hand.

For one, Europe uses about 16% (21% including Russia) of global oil production, which isn't a heck of a lot less than the USs 25%. Second it isn't just a gas tax that keeps consumption in check in Europe. For most of the European nations have much more banking regulation and has tigher interest rates that has prevented inflation. Land is also in short supply so it has also limited European suburbia from ever getting out of hand.

I'm trying to figure out how you can refute my point with, well...my point!

???

"It isn't just a gas tax that keeps consumption in check in Europe." That's what I said, and you even quoted me - "intelligent government applied regulation, including taxes."

21% including Russia. Check the populations versus US. It's a heckuva lot less. Do a GDP comparison. It works. And you know it.

>>I'm trying to figure out how you can refute my point with, well...my point!

This discussion started off, "All we need to do is raise the gas tax to fix it and we all set". Your earlier statement which I initially responded to suggests that higher taxes on gasoline is all we need to do here. That is simple dead wrong. You changed your arguement to include "by intelligent government applied regulation". But European regulation and high taxes did nothing to curve consumption outside of Europe. To the best of my knowledge EU policies did not prevent global consumption (US, Asia, Middle East, Latin America)

As I've stated on many occaptions, using taxes to decreasing US consumption, does nothing to curb consumption in Asia. Consumption in China and India would have past US consumption in less than a decade if there were no Oil supply contraints. What ever decreased consuption in the US will be lapped up by growing Asian Economies. A High US tax rate will only shift the consumption of Oil to somewhere else. What you want is a policy that curbs consumption globally to husband remaining reserves.

>21% including Russia. Check the populations versus US. It's a heckuva lot less. Do a GDP comparison. It works. And you know it.

Your missing my point and you aren't seeing the big picture. Consumption per capita is irrevelent, what matters is reducing total global consumption and global oil production. If Country A reduces consumption by 5 mbb/d but Countries B and C increase consumption by a combined 10 mbb/d what have you gained? Nothing, demand is still up by 5 mmb/d. Any conservation policy put forward must reduce consumption globally, otherwise its pointless.

 Hopefully you now understand my point. Raising US interest rates would effectively impose a global tax on all fossil fuel use that would reduce total global consumption. If you need me to elaborate further on using interest rates just ask.

I'm not sure what you are trying to do here. I've never changed my argument. I've been pushing a gas tax since practically the first time I started posting on this site. I have a clear idea about a workable plan. And it hasn't changed in a year.

Is this about your points or my points?

Because if it's about your points, I'm not biting. Once again, you are obfuscating. I'm not talking about India and China. I'm talking about the US. When I brought up the cases of other countries(Europe and Japan), it was to use them as an example, not to try to change their consumption.

It is you who is talking about raising US interest rates to curb global consumption. And whether or not I agree with it, doesn't change the fact that I have always understood it, am not talking about it, and really feel you should start your own thread advocating this - feel free. It's just not what we are talking about here.

And I don't understand why you started off your last response quoting me, but then never addressed the quote.

Then you quoted me a second time where I was responding to figures you gave, and again, never really addressed the quote. Saying I don't get the point is stupid. I was responding directly to numbers you threw out. Yeah, I didn't get the point, because your numbers didn't make any sense.

Corn flakes don't cost $40/box in Europe.  Then again, corn flakes traveling more than a few dozen miles are probably put on a train that is 100x more efficient than a truck.  They might not have as much cardboard packaging either.

Cost what to fill your tank? $320.00?
With $5 tax, gas prices would be about $7.  So you are buying 45 gallons at a time?  I suppose this vehicle with 45 gallon tank gets 12 MPG and so costs $2.75  * 15,000/12 = $3437 assuming 15,000 miles per year.

Most people are proposing a gradual (10+ years) phase-in of the tax, so suppose people could substitute a 40 MPG vehicle 50% of the time and upgrade the 12 MPG vehicle to a 14 MPG vehicle for the other 50%.  Suppose that within 10+ years you could adjust your job/house/lifestyle to drop to 10,000 miles per year driving.  Hmmm... (5000/14 + 5000/40) * $7 = $3375 per year.

The above power-down could be achieved for "personal" driving as well as for many "business" purposes.  Some businesses are energy-hungry, but this new tax will cause consumers to try to substitue lower-energy products/services.  Do Californians really need Florida-grown oranges that travel 3000 miles?  Do I really need 2-day airmail for a book that went out of print 10 years ago?

Oh but you will have to wait for the 'tax credits' to get your money back. You mean a whole year?
As many have proposed, the extra fossil fuel tax money could be used to reduce income taxes.  Lower income tax means that less is withheld from my check and I see the effect every other Friday.

Corn flakes don't cost $40/box in Europe.

LOL! I just said EXACTLY the same thing to my wife, as I was telling her bits about this thread. Then, 10 seconds later I scrolled down to your post.

Anyone forecasting doom and gloom has to look no further than Europe: High standard of living, fuel efficient vehicles, a fraction of our energy consumption. People needn't tell me it won't work, because I have seen the results in Europe. They are much less susceptible to price shocks that we are in the U.S., because they adjusted to high-priced fuel long ago.


Diesel fuel, which transports most cargo, is taxed much less in Europe than gasoline.

Also commercial users of fuel pay significantly less tax too.

depends on what you regard as "much less" .. :-) In fact it's not so much less. Right now Diesel here in Germany costs 1.07 Euros/litre and gas around 1.18.

It's true that commercial users pay no tax; Cargo ships are tax-exempt; otherwise that business would die soon. AFAIR they pay only 50-60 Euro-Cents/litre.

Correction: Some commercial users don't pay.. , not all ..
Not a fraction of your energy consumption.

Adjusted for GDP per capita, not far off US levels.  And we don't need air conditioning as much as you do (because with the exception of a few places, the summers are not hot and humid-- there is nowhere like New York, let alone Atlanta, in a European summer).  Although air conditioning is proliferating in the likes of Italy, and after this last summer, here in the UK.

And distances are less.  But we tend to drive faster (putting a speed limit on the German Autobahn nearly caused a government to fall; UK average motorway speed is probably c. 90mph).

Most food in Europe moves by truck.  As Matt Simmons pointed out, we make better use of our railways *for commuting but it leaves less room for movement of goods.   The US is actually quite an efficient user of long distance railway transport. And you still have to get the goods from the railhead to the Hypermarket, and from the Hypermarche to the home.  (or from Waitrose online depot to the householder: online groceries is much bigger here than in the US).

Places in Europe that are well adapted to a Global Warming/ Peak Oil scenario are Netherlands and Denmark.  Neither has outrageous gas prices (the UK has the highest petrol prices in Europe) but both have made huge strides towards bicycles over cars (90% of journeys are short enough that bicycles are feasible).  And of course Denmark has embraced Combined Heat Power and Wind Power, for a target of about half their electrical energy needs.

* what is known in the Systems Dynamics jargon as a 'positive feedback loop'.  The world gets hotter, we buy more air conditioners, more CO2 is released, the world gets hotter.

You are in violation of a TOD commandment: Europe good, U.S. bad.

The facts are just confusing the issue.

Can you even begin to imagine the uptick , huge huge uptick in the cost of EVERYTHING that is connected in any way to the cost of fuel????

Are you anticipating that Peak Oil is going to be a picnic? What are people going to do when prices go to $5 and more and there is no tax credit to ease the transition? I think you are being extremely short-sighted in your thinking, but I am interested in trying to get through to you. If we can't convince most people that this is the right thing to do, we won't have a chance at getting change implemented. And I am absolutely, 100% convinced that this is the course of action we need to take.

Oh but you will have to wait for the 'tax credits' to get your money back. You mean a whole year?

First of all, I don't advocate a steep tax all at once. I advocate a phased-in tax. You adjusted to $3/gal gasoline this year, didn't you? But guess what? No tax credit for you in April. I think we could adjust to something like increasing the tax by $0.50/year for several years. Each year, demand would drop a little as people adapt, so you might not pay a full $0.50/gal. We should see demand destruction, which should somewhat mitigate the increased tax. Then, in April, you are going to get a tax credit back (even if you don't earn enough to pay taxes).

Tell me, what is the alternative? That is the problem I see here. The alternative to failing to curb our consumption may be massive starvation, resource wars, and terrible hardship for everyone. We can do better than this. We are intelligent enough to think through these things, have a dialogue, and do the right thing.

"Tell me, what is the alternative?"

While I agree with your position and proposal, I fear that the "alternative" for a great many people is simply hoping/believing that the future that we expect to unfold does not occur due to some technological miracle. Since we cannot prove with absolute certainty that peak oil will occur in the short term, a lot of people would prefer to keep their lifestyle and rely on hope rather than suffer any short term pain and/or the puncturing of their version of the American dream.

In addition, I believe that the forces that would be unleashed in the US to counteract a gas-tax proposal would be colossal - as mentioned by others, it really is tantamount to an assault on the fundamental culture of the country.

While I agree with your position and proposal, I fear that the "alternative" for a great many people is simply hoping/believing that the future that we expect to unfold does not occur due to some technological miracle.

That's why you have to emphasize the multiple advantages: Peak Oil mitigation, global warming mitigation, energy security, reduced dependence on Middle Eastern oil, etc. While some people may completely dismiss the Peak Oil angle, they may have trouble dismissing the fact that soldiers are dying overseas to ensure their energy security.

That's why you have to emphasize the multiple advantages: Peak Oil mitigation, global warming mitigation, energy security, reduced dependence on Middle Eastern oil, etc.

To the et cetera you might add: more sidewalks, bicycle lanes, more kids learning how to move safely in a street, less exhaust fumes and noise. And less sprawling waistlines, perhaps.

Seems to me that this scenario is more or less just declaring economic war on the working class and those who have to just get by plus the farmers and their workers and families.

You declare war so that possibly the 'elitist' and middle class can have a nice cushy soft landing when they are the very ones who have bought this crisis upon us with their consumption lifestyles.

Filling a gas tank. Most pickups of serious nature(not boom box carriers) have dual tanks as well as all diesel pickups. Two 20gal tanks = 40 gals. $7 x 40 = $280. At $8 (a $5 tax that some said we needed) thats $320.  

The semi truck I drive to help my buddy farmer hold much 55 gal each. Thats 110 gals of diesel.

Corn flakes. Seen them going for about $5.00. How much of that is the cost of the real product? Exceeding small. In the cents range I would believe based on spot corn currently at $2.45 as we speak. I pushed the envelope with my $40 figure but based on the huge runup in prices for food and essentially all consumer products I used it as a symbol of the runaway costs that are current today.

Adding fuel to the picture just makes it far far more extreme and means that those of the lower rungs of the ladder don't get to eat too well and get stretched even further.

If there will be class warfare,yuppies consumers in the burbs vs poor working folk in the outback? Let the yuppies be the first to feel the pangs. They have the political clout. Let them turn this nation around. Yep , sure , bet your bippy, they really care don't they?

Let them eat gas.

The above answers several responses and is my position on the tax debate. The federal tax is a huge ugly piece of work brought about by lobbyists, assorted asskissers and suckups. Its massive and hard to deal with. For that reason alone I don't like to see more added to it. The government , if passed, would suck up all this revenue in a heartbeat and we would see little coming back. Same as with social security.

Alternatives:

1. government standards on fleet fuel economy.  By adopting diesels and hybrids, the US could double its new car fleet economy without changing the car/SUV/light truck mix.  It could do more, if it changes that mix.

Given that the income effect for gasoline (incomes go up, driving and consumption goes up) offsets the price effect (the price of gasoline goes up, demand falls) in the long run, gasoline taxes in and of themselves will not do the job.

  1. government standards on energy efficiency generally (appliances, housing, air conditioning).  These are not a direct substitute for oil mostly (since 2/3rds oil consumption is transportation) but 1. they do address the problem of global warming and 2. we are not far from using electricity as part of our transportation solution, either by electrified railways or plug in cars, or eventually via hydrogen.

  2. carbon taxation, not just taxation of road fuel

On resource wars:

I think resource wars are inevitable.  The invasion of Iraq really only makes strategic sense if you observe that the world's largest oil producer, Saudi Arabia, has half its population under 21 and is governed by a corrupt and unstable regime.  Iran's experience in 1979 tells you that Saudi Arabia could be in a pre-revolutionary state.  At which point, having the world's potential second largest oil reserves under the completely hostile regime of Saddam Hussein was too big a strategic risk.

Looking further back in history the First Gulf War was about reclaiming a major oil producer into Western hands.  The Saudis and the Japanese even paid the US for the cost of doing it (in olden times, they would have been called 'mercenaries').

Go back further than that and reread 'The Prize'.  Once the Royal Navy switched from coal fired propulsion to oil (at the beginning of WWI), the British needed access to oil reserves-- hence the overthrow of the Mossadeq government in Iran in 1952, and the general involvement in the Middle East before that (the control of the Suez Canal as the fast route to India was also a critical Imperial goal)).

The Carter Doctrine holds.  The US will intervene in the Middle East to protect its oil supplies.  (see Michael Klare 'Blood and Oil', Robert Pape 'Dying to Win: the strategic logic of suicide terror' and Kevin Phillips 'American Theocracy').

I wanted to add a few comments related to many of the posts above.

The tax should cover all fossil fuels that cause net carbon liberation and it should apply equally to all uses by all people.  This would simplify the bookkeeping and allow taxation at the production location instead of by each consumer, as there would be no need to worry about how or by whom the fuel would be used since all use is taxed the same.  The current fuel taxes in the US have loopholes (example: filling your car with home heating oil, which has lower tax);  by taxing all fossil fuels equally, there would be fewer loopholes.

I've heard some people complain that energy-intsensive businesses would be hurt more than others.  That's the whole point!  Those businesses would either figure out how to operate more efficiently or consumers demanding those goods/services would reduce consumption in favor of goods/services requiring less energy.  Cost-of-living adjustments, income taxes, earned tax credit, etc could all be ajusted to the extent that some goods/services are bare life necessities and will cost more.

Some argue that the government would just waste the extra money or that the plan is just a wealth re-distribution plan.  Well, the current income tax system has EXACTLY that same set of problems.  Taxes are just a punishment system;  why not punish people for polluting instead of punishing them for working and earning a living.  Anyway, anything involving the IRS is a whole book in and of itself.  So, let's just say that a fossil fuel tax could be offset by corresponding reductions in income taxes and the earned income tax credit.

Some people argue that US fossil fuel tax would reduce oil prices and thus allow people in other countries to consume more, offsetting any worldwide benefits.  That doesn't really matter, because US taxes could offer several other benefits that will ease the problems of PO and the subsequent power down.  Higher taxes on fossil fuels right now will promote energy conservation and efficiency, spur research and development into alternatives, and offer an economic buffer for oil price fluctuations.  Foreign automobile companies are developing new gasoline and diesel engine designs, better transmissions, and hybrids of all sorts;  US companies are still perfecting the pushrod engine where the "hemi" is promoted as being something desirable.

The tax should cover all fossil fuels that cause net carbon liberation and it should apply equally to all uses by all people.

Exactly. And this is a big problem with Europe, where they dump on the average person by taxing him and her to death, while the upper crust gets off scot-free because their wasteful uses are labelled "commercial" (as I alluded to upthread) and go untaxed.

I just got an e-mail from Charles Komanoff, who has written extensively on carbon taxes. A couple of links from his material:

Fuel Tax Magic

I especially recommend the following PPT, which is a very good primer on this subject. He shows a graph of expected demand reduction as a function of the size of the tax. Check it out:

Carbon Tax Shift Primer

Komanoff did some fantastic work on the nuclear industry in the late 1970s/early 80s, I remember it well.

He basically showed that as the nuclear industry expanded, the increased safety requirements would kill the economics.  Which is more or less what happened.

As I hoped to show you with my example from a country that actually has $7 a gallon gas and 300% - yes, three hundred percent - environmental taxes on new SUVs: If we don't figure out a way to spend that money wisely, it's just a big waste. Personally, I don't believe that we can change the way people live. But we need to promote other energy sources. Like many others in here, I don't believe that the politicians should be the ones to pick the 'energy winners'. Today's 'ethanol hype' scares me. What if the taxes were used to offset the risk of 'green energy' investments? For every private dollar invested, the government contributes another buck (it could be 25-50, whatever). But what would constitute 'green investments' under such an agreement?
Like many others in here, I don't believe that the politicians should be the ones to pick the 'energy winners'. Today's 'ethanol hype' scares me. What if the taxes were used to offset the risk of 'green energy' investments?

I think if we implement a carbon tax, the alternatives can fight it out in the marketplace. Corn ethanol, with its poor energy return, will have a tough go of it unless more producers adopt a closed-cycle process, like that of E3 Biofuels. Who knows what innovation might turn up when there is a large incentive, and gasoline is expensive enough to make alternatives economical?

<Italic>Personally, I don't believe that we can change the way people live</Italic>
Doh I meant to preview not post. Oh well, what I meant to say is below

I disagree with the notion that we can't change the way people live. All around us we have various things that shape the way we live. If the price of gas is raised this does change things. If it is raised much higher it changes things even more.

I also think there are things we can do to ensure that the government is held more accountable. It could be that the money raised is simply given back to the states for Mass transit. I think as long as all the arrangements are transparent we can make progress. In fact I think the government needs to do this so people can have confidence in it. For instance in Seattle where I live for years Sound Transit has been ridiculed but know when you talk to alot of people, while its not perfect, most people believe they are doing a good job. Of course counter examples can be found, but I think regardless of some waste we need to make investments in our communities rather than continue to allow our money to go over seas to pay for oil.

Chris

I don't think we disagree actually. What I meant is that I don't think you can force people to do anything. Oil will not disappear, cars will be around, people will still have a choice, albeit at a higher price tag. I'm actually skeptical that increasing the price will reduce the demand very much if there are no great alternatives. In Norway, research has shown that gas needs to hit $11-14 a gallon before people will change their way of life. I guess that it will have more of an impact in the U.S. since more people are in the low-income bracket and you consume much more than European countries, but I think the key is to make the alternatives so great that people want to change. And as Robert Rapier says, a gas tax will create an incentive for innovation.
Yup i definitely agree with what your saying.
 In Australia, where I live, there's been a permanent excise on petrol (gasolene) since god was a boy. At the moment it's about 23 cents a litre ($1.15 per gallon). There have been calls to reduce the percentage every time there's a hike in price, but the government refuses to castrate this cash-cow. The tax has probably helped to reduce the urge to buy 4-wheel-drives (SUV's) to some extent but my bet is that it will NEVER be introduced in America by any government who didn't want to commit suicide at the polls. So this makes this consideration entirely hypothetical. If Americans payed the same price as Australians do (at this moment around US$4.50 a gallon) there'd be a little more equity but a lot more violence.
 Any sudden increase in cost will adversely affect stock market share and likely help bring on a financial collapse sooner; another reason why a fuel tax won't happen.
I'm not so sure that implementing a gasoline or carbon tax equals political suicide. Unexpected things can happen in politics. Look what happened to the mayor of London after he introduced road tolls for central London. Despite all who had written his political orbituary, he easily got re-elected! I think that Americans are more receptive to change than most people believe is possible.
I disagree with the premise.  I do not think that raising the fuel tax (at least now) will be a good idea.

More likely it will permanently tar those who are honestly trying to wake people up to climate change & peak oil as dangerous threats to most people's lives.    The blowback will be worse than doing nothing at all.

Why?

Simple psychological rationale.   For almost all people, especially those of limited means, the cost of fuel and driving is something that they can't do very much about tomorrow.  If you jack up the gas price, (and it is VERY different when they know the government is intentionally doing it), they can't do anything other than suffer.  Most people have to drive pretty much the same way the same place, adn they can't afford to get a new car tomorrow.

To average people it feels just like punishment.  "they" say 'it's for your own good' but average people cynically think (and often for good reason) the money will just be effectively stolen for waste and pork.  

For the cause of peak oil awareness (i.e. scientific reality acceptor) this is like sticking one's dick into the Cuisinart.  

I propose instead a "feebate" on new vehicle sales. First elimiate CAFE standards as obsolete. Then based on the previous year's EPA mileage estiamtes (done with the new, higher quality and realistic testing methods) and decent estimates of future sales, there will be a tax on gas guzzlers---graduated with increasing inefficiency---and that money will be doled out directly to buyers of new cars with the highest efficiency.  Make it quite substantial in magnitude, e.g. $2-3000 bonus for a regular Civic {more for hybrids}; $6k-$8k penalty for a Suburban, and approximately revenue neutral, not a source of taxation but a replacement for CAFE.  No dispensation for trucks versus cars.   Perhaps on the low end (penalty) the fee could also be partially proportional to MSRP; on the high, efficient end, it ought to be directly correlated only with efficiency.  This way the rebate will lower net prices for economy cars by a very substantial amount and people who aren't so wealthy will be quite encouraged to go for them.

Now, people of modest means may and actually will make better efficiency choices with their vehicles and it will feel less painful.   There's also psychological finance fact that people look at bundled up-front sticker prices with far more care than the dribs and drabs of ongoing costs and fuel consumption.  

Politically, this is much more likely to succeed.  

The point when people can make a major decision about fuel consumption is when they buy a car or a house.  These are infrquent major purchases for people.   Tipping the scale here doesn't seem obviously and patently unfair to the majority, as opposed to an excessively large fuel tax.

Scientifically, it is also more likely to succeed.

It directly gets at what is necessary:  a large scale change to the actual, total, on-the-road fleet efficiency of vehicles.   Numbers matter.

It also directly encourages automakers fundamentally alter future long-range plans, again offering greater supply of high efficiency vehicles.

Pretty soon, there will be a decent supply of efficient vehicles so for those who usually buy used cars, they can find many at a good price.   A sharp rise in the fuel tax, by contrast, would make high efficiency used cars suddenly more expensive; it will feel only like punishment without benefit.

Note that having the feebate be pegged relative to each model's year's efficiency and sales ensures that the standards for getting a bonus will continually increase, pushing technology and efficiency---without additional legislative intervention.   As the sales of low efficiency vehicles go down and efficient ones go up, the breakpoints will move automatically to maintain revenue neutrality.   Pretty soon, large SUVs will be the rarity that they should always have been, tycoons pay extra for their sports cars and luxury yachts, normal people buy normal decently efficient compact cars at regular market price, and there is some subsidy for the best technology new hybrids/etc.

I'm skeptical. Problem is that people don't think that way. They will quickly adjust to the new reality and still buy the cars they actually want. If they can't get a new Mercedes E500, they want a used one. The consequence will be that people hold on to their cars longer; you effectively increase the life of the cars and end up with a lot of old polluters. Real life example: I drive a new SUV in the States, and an old diesel-powered Mercedes back home. Guess where I pollute more. (Not entirely true, as I drive a Prius to and from work, but you get the picture.)
Coupla points I don't think anybody has mentioned so far. If both California and the North East states are going to bring in cap-and-trade then that would double up on any Federal tax. Cap-and-trade has the advantages of a soft start (perhaps too soft in Europe), working out at double rates on coal-to-liquids and it will also apply to coal or NG fired electricity used to charge a PHEV.

The other thing is that fuel prices are going to rise to unaffordable levels with or without extra taxes. $2 a gallon will be peanuts if the base price is $20. Even with a rebate there won't be any poor folks driving. I think stay with cap-and-trade, compulsory mileage standards, city congestion charges and so on.

I agree with Boof on cap-and-trade.

With taxes, you can't really control how much fossil energy will be used. If demand turns out to be completely inelastic, you might end up with the same fossil fuel consumption, but with damage in other areas of the economy - because after all, as far as normal citizens are concerned, money is a zero-sum game.

Only with cap-and-trade you can set absolute limits. And absolute limits is what we need, particularly for Global Warming.

Cheers,

   Davidyson

Hello TODers,

Perhaps some other nightowl can do me a favor and repost this article early in tomorrow's Drumbeat.  I think it would be interesting for Westexas, PluckyUnderdog, Dave Cohen, and other experts to discuss and analyze. Is this desperation exploration?

I am going to bed!!!!

http://www.rigzone.com/news/article.asp?a_id=36156

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

the UK has gasoline taxes of c. $3 US per gallon (prices here are 95p/ litre and £1= $1.80).

One in 12 cars sold here is still an SUV.  And one in 8 in prosperous places like London (which are not noted for their snowdrifts or dirt roads).

Our average mpg is higher, by about 10mpg I think.  We drive less, but we also live in a much smaller country.  And we drive very fast (typically 90mph on the motorway, traffic permitting-- 100mph is not common).  Similarly in other European countries high motorway speeds are common (Germany still has no speed limit on the Autobahn).

My conclusion?  Even a level of gasoline taxation which is punitive in American terms, and has caused civil disobedience here, doesn't solve the problem of CO2 emission/ oil consumption.  So looking to a gasoline tax to solve the US energy problem is essentially a very bad idea.

To put it in economics terms, the price elasticity of demand (a shift away from consuming gasoline) is outweighed by the income elasticity (a general increase in consumption associated with higher incomes).

Gasoline is a highly price inelastic good.

UK excise tax on gas is $3.35 per US gallon. Prices are now less than 91p/litre, but these include 17.5% VAT (equals another $0.92 per gallon). So total taxes on UK gas are $4.27 per gallon, ie 66% ! No wonder UK prices are less volatile the US prices. As calculated here.
thank you.  I couldn't remember the conversion litres to US gallons in my head.

One possibility is it is the volatility of gas prices which determines fuel economy choices.  People get accustomed to a certain price, if it moves up and down a lot that makes them focus on the price.

This is consistent with some of Daniel Kahneman's work on how people price things ('Anchoring') and for which he won the Nobel Prize in economics.

It looks like we have over 90% Socialists here on TOD. I voted for < $0.184 gal. How many times do we have to go through this - GOVERNMENT IS NOT THE ANSWER. We have the War on Poverty, Drugs, Education, Terror, etc. all with such wonderful results. Now you propose a ridiculous tax so we have a War on Energy?

The free market will always come through for us. The price of gas will continue to climb as the price of crude climbs. If we are at the crest of the world's production, then gas prices will climb up $5+ / gallon. The point is that the free-market will be the one increasing the price, not Big Government. This in turn will increase the bottom line of Big Oil which can then spend more money on R&D projects for alternative energy. As a shareholder of these corporations, I trust myself and the Directors to continue to maximize profits the most efficient way much more than I trust Big Government to do anything.
The free market will always come through for us.

Which is why we have no global warming problem. Right? Oh, but we do have a global warming problem. The market just doesn't add these costs to our price of fuel.

And how well did the market cope with CFCs tearing a hole in the ozone? Right, it didn't. It took government interventation to ban CFCs. Otherwise, the market would still be making them.

If we are at the crest of the world's production, then gas prices will climb up $5+ / gallon.

And if we are not? We may have a few more years of relatively cheap energy, during which we could be making plans for a transition to much more expensive energy, instead of having the vast majority of people trying to acclimate to much higher energy prices while being totally unprepared.

Which is why we have no global warming problem. Right? Oh, but we do have a global warming problem.
As I have posted in the past, there is no scientific evidence of man-made global warming. This is just part of nature's cycles.
We may have a few more years of relatively cheap energy, during which we could be making plans for a transition to much more expensive energy
Who is "we?" The government? The corporations? Us? You can't centrally plan a change in society. Look at the former Soviet Union - centrally planned and totally failed. There is only one thing that drives change - $$$. Let the free-market decide which alternative energy is viable, and which is snake oil. Right now our government is pushing ethanol (great if you're a corn farmer looking for subsidies), which is just as oil-intensive as gasoline. Do you honestly expect our politicial "leaders" to do what is right and not what the lobbists want?

No, the correct solution for Peak Oil is less government, not more.
As I have posted in the past, there is no scientific evidence of man-made global warming. This is just part of nature's cycles.

This is incorrect. While Milankovich cycles are certainly part, and perhaps a large part, of global warming and cooling cycles, there is an overwhelming scientific consensus that we are seeing impacts of man-made global warming. The fact that some dispute this is not remotely the same as "no scientific evidence."

There is only one thing that drives change - $$$.

Exactly. Which is why fossil fuel prices should be much higher: It would drive change.

"The advantages of having a higher gasoline tax, or more appropriately a fossil fuel, or carbon tax, would be many in my opinion. They include:

  • It would obviously lead to conservation, which would help preserve our remaining fossil fuel endowment.

  • It would encourage mass transit.

  • It would make alternative energy sources more competitive with fossil fuels, without favoring a particular option.

  • It would encourage more efficient city planning, and reign in some of the suburban sprawl.

  • It would make the price of fossil fuels more reflective of the negative externalities that are not currently priced in (global warming, military expenditures, etc.).

  • It would penalize alternative energy sources with low EROEI and reward those processes with higher efficiency."

Point 1: Granted and agreed.

Point 2: No, it does not. What it does do is discourage fossil fuel based personal transit. The alternatives are non-fossil fuel personal transit and mass transit.

Point 3: Probably, but it would depend on how and where the tax dollars are respent later. If respent on specific alternatives then they would be subsidized by the gas tax.

Point 4: No, it does not. See my Point 2 above. It might encourage more efficient planning but it might not. If you want higher density planning, then pass the zoning ordinances mandating that.

Point 5: Making the price "More reflective" of the negative externalities doesn't do crap to address the negative externalities. This is just a way for politicians to make feel-good BS claims while doing nothing real about those same negative externalities.

Point 6: No, it does not. The market itself already penalizes low EROEI sources, except when subsidized by ditzy but well-meaning political hacks trying to buy votes. Raising the gas tax doesn't change that either and may actually make the low EROEI source more attractive against gasoline.

In truth, the only thing that a gasoline tax actually can do is discourage gasoline consumption. That is all that it can do. If the discouragement factor is large enough, people may look for alternative or may change lifestyle patterns. Or, if no viable alternative arises, people will simply continue to consume gasoline.

Please don't paint a gasoline tax as some sort of magic silver bullet when it is not. Discouraging gasoline consumption certainly appears to be in our best interests for the long term so let the tax do that and let's see what the rest of society can craft as a response to that discouragement.

Making the price "More reflective" of the negative externalities doesn't do crap to address the negative externalities.

Sure it does. If a negative externality is the war in Iraq, and gasoline is more expensive, and we therefore use less, the war in Iraq becomes much less an issue of energy security. That's just 1 example.

The market itself already penalizes low EROEI sources, except when subsidized by ditzy but well-meaning political hacks trying to buy votes. Raising the gas tax doesn't change that either and may actually make the low EROEI source more attractive against gasoline.

The point is, all of those low EROEI alternatives ARE subsidized. By making them pay more for energy, you make them less competitive. They either become more efficient, or lose to a process that is more efficient.