Electrification of the automobile brings with it some significant tax implications.
For one thing since costs of early models will be high, there is a government $7500 tax credit that buyers of the Volt will be eligible for.
However, some auto executives think even that isn’t enough. Proposed is a gas tax.
The idea is nothing new but the problem is at gas prices below $4 per gallon, electric cars are a hard sell to the mass population.
“Unless gas is $3.50 or $4 a gallon, consumers are not going to want to buy those cars,” said former GM board member Jerry York.
Currently, gas prices are around $2.66 per gallon nationally.
I can also attest that the traffic to GM-Volt.com nearly tripled during the gas price peak in Summer of 2008 when prices were greater than $4 per gallon.
“The U.S. allows the price of gasoline to go back and forth across this line where the consumers don’t care about fuel efficiency and where consumers do care about fuel efficiency,” said Mike Jackson, CEO of AutoNation Inc.
Jackson proposed a gradual increase of gas tax until an average price of $4 to $5 per gallon in reached.
Of course this idea isn’t popular, every politician sells hem or herself by pledging to lower and not raise taxes.
“In the United States, we’re afraid to touch the fuel price,” said Tim Leuliette, CEO of parts supplier Dura Automotive. “We’ve got to continue to raise taxes in the United States so that, by the end of the next decade, gas is about $8 a gallon in today’s terms.”
“Energy independence in this country ultimately means that fuel has to be more expensive,” Leuliette said.
Early adopters like us will buy the car for many reasons even if gas prices isnt one of them, but do you believe gas taxes should be raised to promote electric car adoption?
Source (Reuters)
This entry was posted on Tuesday, November 10th, 2009 at 11:50 am and is filed under Financial. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
Nov 10th, 2009 (11:53 am)I know that there are others who feel just as strongly as I do, but in the other direction, but “no”. With this economy, it would be lethal.
JMO
Be well,
Tagamet
Let’s Just Get The Volts’ Wheels On The Road!!**********NPNS
+17
Nov 10th, 2009 (12:02 pm)The answer is “Yes” but it’s 20 years too late.
+1
Nov 10th, 2009 (12:02 pm)Instead of the govt. trying to influence personal choice and decisions when it comes to making a purchase, lets just let the free market decide. Gas prices will increase over time on their own regardless of a tax.
Nov 10th, 2009 (12:03 pm)I agree with Tagamet and Zhackwyatt. This is not the time to be raising taxes. I’m also a big believer in the free market system. If automakers can make a better mousetrap, it’ll sell.
LJGTVWOTR…
+3
Nov 10th, 2009 (12:10 pm)I’m not one for a “percentage at the pump” tax but I could see an argument for a “floor price on oil” tax to induce price stability which would promote long term investment on alternative fuels and remote location drilling.
+5
Nov 10th, 2009 (12:12 pm)I agree completely. Only I would do the math 2009 – 1973 to get 36 years too late.
+8
Nov 10th, 2009 (12:15 pm)Having a new gas tax will again hit the lower income people who can’t afford a volt anyways.
+13
Nov 10th, 2009 (12:16 pm)(I didn’t vote because it was the wrong question)
Obama pointed out recently that the US still spends $Billions$ in subsidies to oil and coal production. I firmly believe that we should stop all subsidies to the highest emitters of CO2, with coal at the top of the list.
I also believe that the price of imported oil should reflect the many, many Billions of $$ spent in the Middle East conflicts. Domestic New Energy is worth *so* much more that is reflected in the price of gas and electricity.
Moving the government subsidies away from fossil fuels such as coal and gas and towards New Energy such as Wind and Electric Cars would be much more positive than trying to add on another tax.
+23
Nov 10th, 2009 (12:17 pm)I am a big proponent of the free market system in theory, but we do not exist in in a free market system. In reality, a true free market is as elusive as a true democracy. One of the problems with the free market system is that in it’s current form it does not account for externalities. The free market is very good at efficiently allocating resources, but not effects. Someone pays the price for global pollution, local pollution and adverse health, war, and so on, but it is not the manufacturer, nor the direct consumer. The cost of one person’s actions are displaced onto another. We do not have true competition, and prices are not complete guages of all the costs of delivering a product.
This is where legislation and taxes can help to even out the imbalance in the system.
+6
Nov 10th, 2009 (12:19 pm)Sure. Raise taxes.
Heck, we don’t pay enough in taxes now.
The economy is sailing along.
People aren’t struggling.
Obamacare hasn’t hit our wallets yet.
So, WTF. Go ahead and raise gas taxes. That would be fun.
-5
Nov 10th, 2009 (12:22 pm)Yes, but only if there is an allowance free of tax given to each licensed driver which would allow them to use ‘x’ number of gallons in a one year span, beyond which the price of gas would be taxed at $2 or more a gallon.
Gas pumps would be required to be activated by inserting one’s driver’s license into the pump as credit cards are currently done. The pump would read the license and access a data base which would have the number of gallons purchase by that licensed driver starting at a particular date.
Let’s say each driver gets 300 tax free gallons per year. From gallon 301 on up, the pump price would adjust upwards accounting for the tax.
One who drives 12,000 miles a year in a car that averages 30 mpg would use 400 gallons;; 300 would be tax-free; 100 would be taxed.
Obviously people who insist upon driving gas guzzling SUV’s would be paying the taxed amount for much of the year. So – unlike plans that have a flat tax, this plan would essentially provide an incentive for people to drive less wastefully, as well as to drive (and buy) more economical vehicles.
Oh – and one side benefit is that unlicensed drivers would have a difficult time buying gas.
+19
Nov 10th, 2009 (12:22 pm)Yes. Definately. For so many reasons I don’t even know where to start. A higher price at the pump will cut down on oil consumption. Oil is a non-renewable resource that we’re going to run out of eventually. Oil has multiple uses, and we need to conserve it for future generations.
Oil shocks are bad for the economy. People need certainty and price stability in order to make proper investment decisions. So do corporations. It’s bad for the auto companies that are going to be forced to make expensive cars that many Americans don’t want when gas prices are low. And then they’re caught by surprise when gas prices go up again.
Burning gasoline is bad for our air quality even aside from carbon. Speaking of carbon, whether or not you believe in global warming, the rest of the world does. Continuing as the world’s largest emitter, by capita, is bad for our reputation internationally.
Additionally, oil profits increase instability in the middle east. It funds terrorists. It increases our trade deficit. I could go on…
+3
Nov 10th, 2009 (12:23 pm)EclecticDan: The answer is “Yes” but it’s 20 years too late.
nuclearboy: I agree completely. Only I would do the math 2009 – 1973 to get 36 years too late.
Thanks nuclearboy, you said it for me.
Nov 10th, 2009 (12:25 pm)No.
+1
Nov 10th, 2009 (12:25 pm)Rashiid. AMEN. +10
+8
Nov 10th, 2009 (12:27 pm)I have what I consider a compromise on the subject. At $2.66 a gallon we’re already more than double where we were 10 years ago. I think the fed should put a floor on Oil. Oil is about $80 a barrel now and people seem used to it. It seems normal. If oil goes down to 50 then the floor would mean that a $30 tax per barrel of oil is imposed. This doesn’t actually raise the cost of gas today and takes a lot of the volatility out of the oil market (at least downside potential for a potential E-REV owner). I hate taxes and think they should be lowered across the board but in this case I think %100 of the proceeds if oil does get below $80 should be pumped directly overseas to pay off our debts. Personally I think it’s the potential that gas could go down to a dollar again (it’s done it before when people said we hit peak oil so why can’t it happen again) that will keep a lot of people from buying an E-REV/EV. If oil goes up on it’s own to $100 or some such number than we move up the floor to half the distance to the new high ($90).
This is just my 2 cents and to whoever made that graphic that was awesome!
+6
Nov 10th, 2009 (12:28 pm)So first, we issue a govt identification card to every American and then we give the govt the keys to the gas pumps……
HUH?
Be well,
Tagamet
Let’s Just Get The Volts’ Wheels On The Road!!**********NPNS
+7
Nov 10th, 2009 (12:30 pm)I think they should but not for the stated reason. It woudl be a side benefit. The reason they should raise the price is so we are paying for the true cost. Currently hundreds of billions of dollars a year get spent on military to protect mid east oil. That cost should be felt at the pumps. That would do two things: 1) Encourage alternate fuel tech that does nto come from middle East 2) Stabilize prices so Tech can get investment dollars to develope. Hard to do R&D without money with a volatile market. We are currently piling debt onto the backs of our grand children to pay for cheap gas today that is child abuse & the lowest form of greed! The down side is Congress is just as greedy & would just take the money & spend it continuing the child abuse. They have little thought for the next generation or the National debt and figure by the time the house of cards collapses & our country goes under they will be long gone. Got to love those Statesmen like qualities. Cap spending in conjunction with a variable tax & this would help insure the money was not spend on pork. Should be a fluctuating rate based on market cost of oil so as not to make fuel unaffordable but to cover true costs of protecting & importing it.
+2
Nov 10th, 2009 (12:33 pm)We need a fuel tax increase for commuter cars, but i think semi-trucks/etc should be able to opt out. I dont want inflation to creep up due to hauling costs.
Gasoline is artificially low right now, and its price doesn’t reflect the taxpayers true cost. Wether you know it your not, you’re paying a lot more for gasoline than the price at the pump. If we raise the price of gas to what it should be, this would help push people towards other energy sources, or at the very least, conserve more. This will help make our country energy independent, and also allow us to save in a lot of other tax-payer expenditures . I wont even bring up the environment, or C02, since the pocket book seems to be the hot-button on this post.
Another option is to raise gas taxes and lower income taxes to make it somewhat tax-neutral.
+1
Nov 10th, 2009 (12:33 pm)“at gas prices below $4 per gallon, electric cars are a hard sell to the mass population.”
Let’s see how hard a sell electric cars are to the general population before slapping on yet another tax to bring gas prices above $4 a gallon.
Don’t forget that Volt, Leaf (etc) and plug-in hybrids all lay in the future, and that the issue of how hard a sell they are won’t be demonstrated until they are all sitting in showrooms.
+2
Nov 10th, 2009 (12:35 pm)#2
Damn right. +1
-10
Nov 10th, 2009 (12:37 pm)(click to show comment)
+3
Nov 10th, 2009 (12:37 pm)You would need to take care not to base the tax on type of fuel, otherwise we’ll fall into the same trap as Germany and other European countries, of effectively promoting diesel automobiles as a way to avoid gasoline taxes.
If such a tiered tax is implemented for any reason, it should be based on weight, vehicle class or number of axles, instead.
+2
Nov 10th, 2009 (12:37 pm)YES. Exactly.
And the floor tax wouldn’t have to be very high, at least to begin with.
Specifically, a floor tax of perhaps $2.50/gal or $65/barrel would significantly encourage investments in alternative energy.
To see what I’m talking about, just consider the price of gas over the last 18 months.
http://gasbuddy.com/gb_retail_price_chart.aspx
In July of 2008, gas hit $4.12/gallon, but then by January 2009, gas prices had fallen to $1.61/gallon.
Now let’s say you were considering investing a significant portion of your retirement into alternative transportation. Would you be more willing to invest if you knew the price of gas would never fall below $2.50 a gallon?
The price of gas today is $2.61 a gallon, and if the economy recovers, demand could send that higher. So a floor tax of $2.50/gal may not even collect anything, but it would give investors a lot more confidence, and that would include investors in battery technology and electric drive components.
And, if the economy continues to improve, and fuel prices rise, then we could raise the floor tax.
So the idea is not to collect a lot of taxes, but rather to keep current prices from falling significantly.
+2
Nov 10th, 2009 (12:37 pm)#8
Another great idea. Works for me.
+6
Nov 10th, 2009 (12:39 pm)#9
Amen!
+1
Nov 10th, 2009 (12:41 pm)Amen! I, for one, think that the demand will far outstrip supply for the near term.
Be well,
Tagamet
Let’s Just Get The Volts’ Wheels On The Road!!**********NPNS
+6
Nov 10th, 2009 (12:42 pm)Not when people aren’t paying the full price of gasoline at the pump it won’t.
-1
Nov 10th, 2009 (12:44 pm)And your alternative is?
Thanks.
Be well,
Tagamet
Let’s Just Get The Volts’ Wheels On The Road!!**********NPNS
-5
Nov 10th, 2009 (12:48 pm)I said, ‘driver’s license’. – you have one, don’t you?
Flat taxes give no incentive – they punish everybody equally, hitting lower income people the worst. My idea punishes drivers with bad driving habits who drive gas guzzlers – not those who drive efficiently in fuel efficient cars.
+5
Nov 10th, 2009 (12:51 pm)Umm… Tax Gas to pay for the war?
+3
Nov 10th, 2009 (12:52 pm)But if you expect GM (or any other manufacturer) to invest in enough capacity to bring the price down, you have to convince them that the car will sell. And it will sell at a profit. And not just to early adopters.
It’s not just about electric cars, by the way. It’s about reducing unecessary driving. Encouraging people to move closer to their work. Telecommuting. Using the school bus. And other forms of public transportation. Not buying SUVs when they don’t need them. Taking the small car rather than the truck when you have the choice. Etc.
+1
Nov 10th, 2009 (12:53 pm)Oh, and make sure that every person in the country knows full well that, every time we send our men and women overseas to die for oil, that’s why your gas tax just went up.
Nov 10th, 2009 (12:57 pm)I put down maybe. IF those revenues are used effectively, we could very quickly / easily shift to an alternative fuel / propulsion system based transportation system economy.
Unfortunately, that is a mighty big IF.
Right now, there is more than enough venture capital and government grants / loans pouring in. I don’t know how much more could be gained by throwing more money at the situation, unless it is used to directly lower the price of the vehicles for consumers, like the $7,500 rebate they use for the Volt. If the money went directly to increase that amount, then it would help.
+2
Nov 10th, 2009 (12:59 pm)But they’re the simplest and easiest to administer. The transaction costs of issuing rationing stickers are astronomical. Besides, what’s to stop people like me, who has a driving liscence, from getting a sticker and selling it to someone else. Or buying my friend’s extra gasoline.
As far as impacting the lowest income drivers–they frequently (although not always) live the furthest away. So limiting the amount isn’t the best way to reduce the impact on them. Using it to reduce the payroll tax is. Or, possibly, using it to produce better public transportation…
+11
Nov 10th, 2009 (1:00 pm)Gas prices in the US are the lowest of all industrial countries. That’s
how you got into this mess. When the economy improves raise gas
taxes so you can subsidize alternatives and break your addiction.
Stop living on your knee’s. Your are hostages to all the USA haters.
Do the smart thing once and for all.
+4
Nov 10th, 2009 (1:02 pm)A gasoline tax. I agree that based on the numbers GM is expecting to produce, they will sell out quickly. But if they set up the type of capacity needed to bring the price down? Say 200,000 a year? At 40,000 each? With the tax credit running out after the first year? Not when gas is under $3.00 a gallon.
+1
Nov 10th, 2009 (1:04 pm)In Canada… there is at gas tax already… it was to go to municipalities for road maintenance, repairs, and upgrades….
Unfortunately… the bulk of this tax goes in the Federal Government “general revenue” fund.
Now the Canaidian government is coming out with all this “infostructure money” to help the economy for rebuilding our roads, bridge construction etc…
But it is just finally using the Gas tax money it has been collecting all these years and making itself look good…
I, for one, am not impressed with taxes that could help everyone and it is immeadiately deverted somewhere else..
If it is a tax for electifing the auto industry…. let’s make sure that this where the funds will go…not into general revenue..
+1
Nov 10th, 2009 (1:18 pm)Amen! We can call it the Patriot Tax.
Also, please get it through your heads that there is no free market in oil. Govenments own most of the oil in the world, and largely only allow national oil companies to extract. The days of the supermajors like Exxon/Mobil and Shell are past, they are increasingly locked out of new finds. The oil exporting nations are increasing their own usage, and the price of gas in. Caracas and Riyadh will continue to be $0.20 a gallon whether oil is $2.00 a barrel or $200.00. What they don’t need themselves they’ll deign to sell to us, through their nationalized oil company, of course. Can your company compete against competitors with $0.20/gal energy?
And when they’re consuming all their output, they won’t sell us anything. See also the UK, and soon Mexico.
+1
Nov 10th, 2009 (1:19 pm)I’m not for an increase in taxes but I would trade a gas tax in exchange for a reduction in income taxes structured in a way that would benefit all equally (as possible)….which would probably mean an increase in the earned income tax credit for low income folks.
For corporations, I’d see if you could balance the increase in gas tax for a decrease in payroll taxes to lower the cost of hiring more people.
Gas does need higher taxes to incorporate the externalities of defending shipping lanes, etc. but we don’t need higher taxes in total.
Nov 10th, 2009 (1:22 pm)The tax may not all go directly to war oil. But a large portion will be channeled to areas which negatively impact the American middle class.
With all that has happened since 09/10/01 do you really expect us to trust you Uncle Sam?
=D~
-4
Nov 10th, 2009 (1:22 pm)I agree with kdawg. Raise the gas tax to about $4.00 per gallon as a floor price. Then index that to inflation. Offset the higher gas tax with lower income taxes for wage earners and regular tax refunds to retirees. Make it revenue neutral to the government and you still can change what people drive to higher fuel efficient cars. Of course, this makes so much sense that it will never be implemented.
It has to be about more than making electric cars price competitive.
-6
Nov 10th, 2009 (1:25 pm)There’s no ‘rationing stickers’ with my plan. Everything is taken care of at the pump when you insert your driver’s license into the slot. It’s virtually the same as putting a Visa card or Master Card into the pump, only with a different database that is being accessed. Simple and easy to implement.
As far as using a friend’s license, if you can find someone who’ll give you their driver’s license, then more power to you. I sure wouldn’t give mine to anyone. But in the event that you do find someone, then when you get caught, both you and your friend lose your annual allowance and would have to pay full tax from gallon one to infinity. In the end, it would be too much trouble to cheat for cheating to become a significant problem IMO. And if it did, tighten the security such as requiring pin numbers to be typed in with the scan.
It sure would help reduce unlicensed drivers from taking the road. Such as alcoholics who’ve lost their licenses…
+5
Nov 10th, 2009 (1:35 pm)In order to do that, you’d have to a)change everyone’s driver’s liscence, b)Install reading equipment at the pump, and c)and maintain a database. All three of those cost a lot of money.
Why do you think we don’t have pin numbers with our credit cards the way they do in Europe? It cuts down substantially on credit card fraud. But our banks don’t want to spend the money required to replace the machines. And if you want to add enforcement mechanisms on top of it? That costs even more money.
And, yes, I would lend my liscence to one of my friends. I might not even charge him or her. Or I would just let them use it if I was in the car with them. And that kind of thing would be impossible to administer.
-1
Nov 10th, 2009 (1:41 pm)I voted no!!!
I do not like anything that punishes the working poor.
In my opinion the answer is right in front of us. Make the tax credit instant and paid to the builder or dealer at time of sale. Next RAISE the tax credit enough to make the cost of E-REV or BEV much more competitive while adding a tax to non electric cars.
By the way, when I say electric I mean electric with NO mechanical link between the motor and the wheels. The car only moves as a result of electric power.
+4
Nov 10th, 2009 (1:42 pm)The problem with a price floor is that the oil producing countries would simply raise the price of oil to capture the difference. Personally, I’d rather see the money go to our government than Saudi Arabia.
We need the money. The gas tax was originally supposed to pay for our roads. But it hasn’t kept up with inflation. As a result, our roads and bridges and tunnels are in poor condition even though the states keep on spending more and more of their budgets on it. We also need to do something about our water pipes. New York is far from the only place that has leaking water mains. And our levees. Unless we want another disaster like Katrinia. I could go on….
-3
Nov 10th, 2009 (1:44 pm)So – you’d choose to pay a hefty tax for every gallon you buy? Or, would you choose to have the ability to buy untaxed gas for as long as you can manage to do so?
Pretty easy answer for me. (I ride my bike a lot and don’t drive a SUV)
+1
Nov 10th, 2009 (1:46 pm)To encourage electric cars? No.
To discourage use of oil? YES. That would tend to encourage the development of electric cars but it would also have many other effects. Favoring electric cars is a bad policy but there’s nothing wrong with letting them compete.
As EclecticDan points out, this would be 20 years too late, anyway, and it’s still not gonna happen.
+6
Nov 10th, 2009 (1:49 pm)Some studies have suggested that having a gas tax could actually lower gas prices for everyone over the long term by improving the U.S. fleet efficiency and reducing overall consumption. (Especially if the proceeds were used to improve fleet efficiency). I particularly like the idea of raising the gas tax then sending everyone a check for $XX per month to cover the cost. This would allow people to buy energy efficient cars and use the money from the GAS REBATE for other items. We could also get rid of CAFE standards which misdirect resources in the market place.
+2
Nov 10th, 2009 (1:51 pm)Exactly,
I like the gas tax too. It is simple and requires no extra overhead.
And while your at it, eliminate CAFE standards and eliminate some of the saftey rules. Airbags, rollover protection, side impact protection, etc, all make cars very heavy and/or more expensive. Free the carmakers to make what people want. The governement can rank them and show how some cars are unsafe and then the people can decide. Some people will put saftey first and buy a safe car with 8 airbags and heavy steel, others will opt for a cheaper car that weighs less than 2000 Lbs, is easier to maintain, and gets much higher gas mileage.
I am still puzzled by the paradox that I can buy a 100CC motorbike with 2 inch wide wheels and drive it with no helmet on the DC beltway, but if I want 4 wheels and weather protection, then it has to also pass a bunch of Govt saftey tests etc. etc.
+4
Nov 10th, 2009 (1:52 pm)In fairy tale world where the goverment has eliminated poverty (johnson admin), curred cancer (nixon admin), whipped inflation now (ford admin), removed corruption from government (carter admin), won the cold war (reagan admin), won? the gulf war 1(bush admin), balanced the budget (clinton admin), brought country music back to the white house (bush2 admin) and now given everyone FREE health care (obama admin), only in that fairy tale world does the government knows what is best for you.
In the real world, I know what is best for me. Don’t take my money in the form of taxes and tell me it is for my own good!
-6
Nov 10th, 2009 (1:55 pm)We are already paying hidden gas taxes via huge military and expensive wars. So unless we decimate Pentagon budget and stop fighting in every middle east conflict I am strongly against another gas tax.
+4
Nov 10th, 2009 (1:57 pm)Big oil has been subsidized for to long. The real cost of gas can’t be measured, you have to include the lives lost to defend it. I say we need to start paying the real cost. A tax will force all of us to seek more efficient means of transport.
+3
Nov 10th, 2009 (1:59 pm)I’d go with the tax for every gallon. But it should kick in gradually. 50cents the first year. $1.00 the next. Etc.
I take the subway to work. So I wouldn’t have to pay the gas tax directly very often either But both of us would have to pay for it in the form of higher prices for nearly everything. I think it would be worth it though to have a stronger economy. Cleaner air. And ultimately lower federal tax as a result of reduced expenditures in the middle east. It would also be nice if people who drive paid for the road upkeep….
+3
Nov 10th, 2009 (1:59 pm)Unfortuately, at this point you aren’t paying that hidden tax. Your grandchildren are. If you want to pay it yourself, like a responsible parent, then I suggest you start lobbying for increased income taxes, gas taxes, go by government bonds, and whatever else neesd to be done to eliminate the oil war deficit.
+6
Nov 10th, 2009 (2:02 pm)#12
That pretty much sums it up for me. Well said.
It kind of reminds me of the old Fram oil fitlter commercial where the dirty old grease monkey said “You can pay me now, or pay me later.”
We can either pay what it costs to get ready now, or pay it in the next oil shock, which will come as sure as the sun goes down tonight. We can either use the money to protect our security, economy, and environment, or we can donate it to Saudi princelings to fuel their 747s to flit back and forth to the Riviera. And to donate to the likes of Osama Bin Laden to fund ‘The Endless War”.
I fear that we will make the wrong choice, as we have so many times in the past. Our children will pay the price.
+9
Nov 10th, 2009 (2:03 pm)With the Feds continuing to devalue the dollar by releasing more dollars to back the additional Federal loans, we’ll have so much inflation in two to three years that gas will be at $4-6 a gallon with out taxes.
+1
Nov 10th, 2009 (2:06 pm)Reducing safety equipment in a society as litigious as the U.S. would be corporate suicide.
The difference with bikes is that riders are a small percentage of the population, are generally enthousiasts, and a motorcycle is obviously less safe than a car. The level of safety of a car cannot be seen on the surface by the average consumer.
+6
Nov 10th, 2009 (2:09 pm)Well reasoned and well said as always.
It never fails to amaze me that the people here can feel passionately about a whole range of issues and still maintain civility.
Be well,
Tagamet
Let’s Just Get The Volts’ Wheels On The Road!!**********NPNS
-2
Nov 10th, 2009 (2:10 pm)Taxing fuel to to raise prices to the point that people pay attention to efficiency can certainly improve the adoption of electric vehicles. There is a dark side though. Many industries are very sensitive to fuel prices and cannot easily tolerate the high prices. Since a gas tax will put many companies at risk, it makes it hard to justify, especially with the current economy.
Another possibility is to introduce a feebate for purchasing a new car. In this system, fees are imposed on the purchase of gas guzzlers and that cash is used as a rebate for an efficent vehicle. That way, the tax pressure to buy efficiency is applied at the time the vehicle is purchased.
This is more effective than a gas tax becasue gas price has almost no effect on miles driven. Most people have to commute the same ammount regardless of gas price. When gas prices go up they simply pay more and grumble about “getting a better car later”. The feebate system directly affects a car buyer’s decision at the time they are buying the car.
For further reading:
http://en.wikipedia.org/wiki/Feebate
I also highly recommend checking out Winning the Oil Endgame
http://www.oilendgame.com
Rock on Volt!
Nov 10th, 2009 (2:11 pm)That’s what the government hopes in any case, inflation is the only way one can imagine paying down the massive amount of federal debt on a reasonable amount of time, without cutting spending or raising taxes to the moon.
Unfortunately, there is also a massive consumer deleveraging trend in the works, which is heavily deflationary.
Which will win? The market (deflationary), or the gubmint (inflationary)? Time will tell, but it’s guaranteed to be interesting.
+4
Nov 10th, 2009 (2:17 pm)The problem I see is that a gas tax produces income for the government, which is desperately need at the moment to pay down deficit and debt related to the war for oil (among other things, but let’s keep it focused). Your plan, generous as it is, would increase spending from a government that is already colossally in the whole.
You plan has all kinds of good feelings attached to it, I would even say that I like it on the surface, assuming the government could afford it. Unfortunately, warm fuzzies don’t pay the bills when you’re underwater.
+3
Nov 10th, 2009 (2:22 pm)I agree. One of the defining aspects of a civilized society is the ability of people to hold a mutually educational, informative, and productive debate of opposing viewpoints without breaking into insults and fisticuffs.
This seems to be a rather civilized lot, which I also appreciate.
Nov 10th, 2009 (2:32 pm)How ’bout set it at $4.00 5 years from now and gradually go to that, by taxing?
+1
Nov 10th, 2009 (2:35 pm)If the government monetizes the debt (as in they print enough money to pay for everything), there will be not just inflation, but hyperinflation. It will kill the dollar for good.
Right now, they’re printing just enough to make overseas investors nervous. It’s a balancing act. Print too little and we stay in the deflationary spiral. Print too much and the rest of the world loses faith in the dollar. And, unfortunately, the amount they need to print in order to keep us out of a deflationary spiral might cost the dollar it’s reserve status. Which would result in hyperinflation.
Meanwhile, we do have inflation. But it’s not accross the board inflation. And it impacts some groups more than others. Healthcare, for example, has gone up.
Nov 10th, 2009 (2:41 pm)my guesstimate is if we cut Pentagon budget in half and stop the wars right now, USA will be debt free in 2012.
Nov 10th, 2009 (2:42 pm)NO! Absolute not and under any circumstances. Energy in general and Gas in particular are already outrageously taxed as it is. Taxes add to the cost of doing business and business is struggling already and adding extra tax burden is bordering on insanity. We have a greater than 10% unemployment rate and people are talking about tax increases? If not 10% high enough? How about 15% or 20% would that be good enough for the idiots who advocate higher taxes?
EREV will and should suceed on it’s own. The price of oil will climb and that’s assured. We don’t need to jack it up any higher than what it already is. That’s madness. This is the same type of idiocy that got us into so many messes before- Government intervening into the markets.
+2
Nov 10th, 2009 (2:50 pm)Actually, IMHO, it’s my generation that’s going to have to pay it in some shape or form. Our entire governmental structure is based on stealing from the next generation. Or at least, prioritizing the right now, over the future. But at some point the bill comes due.
Our infrastructure, roads, bridges, tunnels, levees, etc., are breaking down due to lack of adequate maintenance. We’re running out of oil, and fresh water, and other non-renewable resources that we didn’t conserve. Taxes are going up, and services are going to have to be cut because the states and municipalities have to pay for expensive pensions for retired workers. Pensions that people just entering the work force can only dream about. Social security is going to run out of money before anyone currently younger than 40 can realistically expect to see a dime. And then there’s the national debt. I could go on…
Nov 10th, 2009 (2:52 pm)I agree, it’s a bit of a knife edge they’re dancing on at the moment. The question in my mind is how long can/will the government hold onto its inflationary agenda? Will they force hyperinflation or eventually back off and let deflation take its course? The dollar is already taking a beating, and neither option seems like it will end overly well for the US economy.
I expect to see inflation in the near future, though I wouldn’t be surprised by a heavily deflationary period at some point farther out. The market, like nature, is a force far greater than us lowly humans. The government can feed money around to adjust and fiddle with minor trends, blowing and popping its little bubbles, but eventually the economy and the market will put its foot down. I doubt that even the coffers of the government of the USofA (or China’s coffers by proxy) can’t afford to stop that tide.
Nov 10th, 2009 (2:56 pm)In Vancouver, I pay 1.07 per ltr and its already 23% taxed, and some percentage carbon tax. I dont want more tax.
EVs should be adapted because of the price and advantages not because alternative is made expensive. My mobile phone most days goes out of charge if i leave in my car or some times inside home in fall itself. So i am not sure on EV batteries do. Let them prove.Brings costs down on batteries etc. Prove reliability.Early adapters can go for it None stops.
The car companies wont share profit when they make and why i have to pay more for them to make a business case ?
Let them do in prius way – nobody wanted it till they gas prices went up and by that time they proved the reliability also. Let these guys sell for some time and make reliable than trying to suck every penny from my pocket.
+3
Nov 10th, 2009 (3:00 pm)Hell NO !
On second thought find a way to raise the tax on those who voted yes and leave the rest of us alone.
I assume those who voted yes have plenty of money so let them spend it on more taxes.
Nov 10th, 2009 (3:05 pm)Again, I think that we agree in principle, it’s just a question of who’s in what generation. Even though I’m in my 30’s, I still feel as though most of the people currently running the country are old enough to be my grandparents. That could be more perception than fact. The more general point however, as you pointed out, is that the next generation will be forced to pay for the decadence of current one. I am certain that my generation will do much of the heavy lifting, though the way things are going there will likely be lost left over for the next generation as well. Looking around you at all the things you’re going to have to clean up after your elders are done is enough to drive one to drink. Only they get the party, and we get the hangover.
A nice shiny Volt in the driveway would be a step in the right direction (so as to not digress too much…).
Nov 10th, 2009 (3:08 pm)Any flat tax is hard on lower income people, who can’t afford a Volt. Also, a gradual flat tax most likely wouldn’t provide an incentive to consumers to buy a Volt (per the title of this thread). As prices of gasoline have gone up over the past years, consumers have tended to psychologically accept the higher prices as the healthy sales of SUV’s and big trucks have indicated.
The psychological factor is very important. When pain is shared equally, it is easier to accept. Your gradual flat tax would have everybody sharing the pain equally, it would be unhappily accepted, but it would not necessarily bring about the type of change that would cause the kind of market shift we would hope to happen. It would be slow and gradual – and not very effective in reducing our dependency upon oil.
Your flat tax, to have an effect, would have to be immediately harsh. It would have to force consumers past the point of inattention and procrastination to making changes. The big downside to this would be to low income people and, as we saw when gas went upwards of $4/gallon, domestic automobile manufacturers who were heavily into traditional American desires for cars and trucks.
My plan has a different psychology. It gives consumers a choice – to economize or to not. People with choices can be given incentives that can lead to change. Saving money is a big incentive to change. People seeking to save money will therefore seriously consider buying a Volt which is going to be soon understood as the clearest path to that goal.
+1
Nov 10th, 2009 (3:19 pm)Taxes should only be used to raise money to run the government.
Taxes should never be used to bring about change.
I know they are used that way now, IT IS WRONG!!!!.
We neet to get back to what this great country was founded on.
On the cost of energy we need lower cost energy not higher. If we raise the price of gas by taxing it. We will lock in higher prices for other energy and we will never see a lower price for the Volt.
+1
Nov 10th, 2009 (3:22 pm)I agree. And at this point, I don’t think the government has any good choices.
You can’t avoid the business cycle forever, at least not if you’re not willing to contain the booms as well as the busts. We’ve had low interest rates for the past 20+ years. How could that not lead to bad loans? And crazy speculation? When borrowing is cheap, people borrow. Keynsian theory presupposes goverments will be willing to cut spending, raise taxes, and interest rates in the good times. And, the US goverment clearly isn’t. At least IMHO.
But at this point, we’re in too deep. We have to wean the economy off cheap credit gradually. But that means a long protracted weak “recovery.” But if it were up to me, we’d at least devote that cheap credit to investments. So we’d at least have something to show for all that debt.
+1
Nov 10th, 2009 (3:28 pm)Tax the engine displacement, above 4 cyl 2.0L. for personal usage, for example. Commercial applications should use different scale.
-2
Nov 10th, 2009 (3:30 pm)You have some kind of proof that thousands of scientists would risk their reputations by lying about their research? If they are lying, what’s the payoff and who’s paying them? Give dates, amounts and names of both payee and payer.
In science, if you lie, you die. That’s the lesson that South Korean researcher who faked the cloning experiment learned.
So, if it’s a scam, there’s quite a few people with a lot to lose going along with the scam and there must be money to pay them. Tell us about it.
+1
Nov 10th, 2009 (3:31 pm)Consumers accepted the higher price of gasoline because it wasn’t yet 4.00 a gallon. And they believed the prices could go back down. This way, they’d know gasoline prices are only going in one direction–up.
It’s not a flat tax, by the way. As you pointed out, higher income users usually have more gas guzzlers. So they buy more gas. Also, an increase in gas prices results in an increase in the price of practically everything else. And wealthier people buy more of everything. Food. Clothing. Bottled water. Etc.
My major problem with your scenario is that it would cost a fortune to put into place. The US government is flat broke right now. If it were a corporation, it would be bankrupt. It can’t afford the extra transaction costs.
-1
Nov 10th, 2009 (3:33 pm)#66
Works for me.
Nov 10th, 2009 (3:40 pm)Substantially increasing the tax on gasoline just to promote some type of alternative design power train doesn’t seem to make a whole lot of since to me. Yes we have low gas taxes compared to Western Europe. But North America is not Western Europe. We have a much thinner population density. That makes automobiles the only reasonable form of transportation. The United States will never have a public transportation system like Europe no matter how much money the government prints.
For example, proposals to create a high speed rail line between Chicago (thats in Illinois), and St. Louis (thats in Missouri) have been stonewalled by various groups for at least 10 years. Many of the grade crossings between Springfield(IL) and Chicago were upgraded several years ago with double action crossing gates that block both lanes on both sides of the tracks. I assume this is to prevent some dim-wit from trying to round the gate and beat the train (and getting creamed if he mis-calculates.)
Lately everybody is serious about putting in this system. It would raise the speed of the trains from the current 80 mph to a whopping 110 mph. For this vastly improved speed (being a smart ass here) the federal government is going to spend literally billions of your tax dollars. Currently this train service runs on private railroad right-of-ways and shares the tracks with freight. The upgrades to the tracks, include putting in extra rail lines along at least some of the route, are needed to make the passenger line possible. The rail roads that currently operate this line will benefit by freeing up the tracks for their freight service. They plan to more than double the freight trains though town with the new capacity.
None of this (high speed rail) will ever happen because, just in my town alone (Springfield), lawyers are lining up and ready to pounce for a variety of reasons. They are fighting whether the line should be on the 11th street tracks (though the worst ghetto you ever saw), or the 3rd street tracks (more of a commercial area but right next to the state capitol where it would inconvenience the people who work for the government and the politicians themselves. They are also fighting because of the much heavier freight traffic it would create.
Now this is just MY town. I have no idea what is going on up and down the line, but my guess is this one single line will never make it to service. Now multiply that by 1000 and you see why a high speed rail network cannot be built in the U.S., not while lawyers run the show. We need cars, we need gas to make them go. Tax gas at $4.00 (or $8.00 as was suggested in current dollars) and you have a DOA economy for the next 20 years. No politician will vote themselves out of a cushy job by committing political suicide.
+3
Nov 10th, 2009 (3:46 pm)Unfortunately, that won’t even cover the deficit. The Pentagon’s budget in 2009 was $515.4 billion.
http://www.nytimes.com/2008/02/03/washington/03cnd-military.html
The deficit was 1.8 trillion. And it’s not supposed to go down significantly next year either. .
http://www.nytimes.com/2009/05/12/business/economy/12budget.html
-2
Nov 10th, 2009 (3:53 pm)Again, I agree. Keynesian economics looses its effectiveness when you come out of a debt driven bubble and try to deficit spend your way out of the resulting post-pop recession. Go figure.
Nevertheless, given the corner the US is backed into currently, if it were me I’d be investing cheap credit into infrastructure, innovation and technology, entrepreneurs, education, and the like, and slowly turning off the credit taps in the process. That would at least put the money out into the economy and produce durable long term growth, as opposed to shoveling it into the coffers of the big banks to shore up their bottom lines, never to be seen again.
Of course, that would require the government to take its lumps now and look to the future, which we’ve already agreed isn’t likely.
+1
Nov 10th, 2009 (4:01 pm)Your point about population density is well taken; however, the fact that cars are more integral to North American mobility than in Europe does not justify our addiction to oil in the face of alternatives.
The idea is not to tax gasoline as a malevolent act, designed to maliciously target regular people to the glee of bikers and environmentalists everywhere. The idea is to incentivise a shift to alternate forms of energy to power the cars we all need to move about. The cars stay, our mobility is unaffected (aside from perhaps a mildly uncomfortable transition period), only the energy source we use to get from here to there changes. There are many good reasons to shift energy sources, which have been discussed ad nauseum on this site, so I don’t think I need to rehash them here.
The problem is, gas is so heavily entrenched that some sort of incentive is currently required to promote the shift. A catalyst if you will. What better catalyst than peoples’ pocketbooks?
-1
Nov 10th, 2009 (4:04 pm)Read this…
http://www.middlebury.net/op-ed/global-warming-01.html
And this…
http://www.heartland.org/policybot/results/21207/Associate_State_
and this…
http://www.middlebury.net/op-ed/pangburn.html
-1
Nov 10th, 2009 (4:05 pm)If putting a .$50 cent tax per gallon is not a flat tax, then what is it? BTW, I don’t believe I said higher income people have more gas guzzlers – I did say lower income people would be hit hardest by gas taxes, no matter what they drive. As far as inflation, I would not tax diesel as I would gasoline, due to it being primarily a commercial fuel.
I disagree with your opinion as to my plan costing a fortune to implement. Technology exist for it now – pumps with card slots are all over the country now, accepting credit cards and debit cards…. my driver’s license (CA) is a plastic card with a magnetic strip on the back, all it needs is a database to connect with. And that wouldn’t break the bank or take forever to create and put into service.
Fact is, cost of implementing such a system would be so insignificant when compared to the tax receipts it would bring in. Not to mention the added societal benefits it would bring such as reducing the number of unlicensed drivers bringing danger to our roads.
Therefore, we’ll just have to agree to disagree.
And then there’s the idea of paying for auto insurance at the pump… hmmm….. why not? This is how it’d be done….
-1
Nov 10th, 2009 (4:25 pm)I voted no because of the question. I wouldn’t want new taxes to merely cause electric cars to be relatively less expensive to operate.
I believe that a gasoline tax (not alcohol E85) would incent people to use less. Which is the goal. That said, adding new taxes in a recession is a bad idea.
The problem is the volitility of gasoline (and other oil-based energy) pricing. People need a solid idea of what their business (and personal) expenses will be. If gasoline pricing keeps yo-yo-ing, nobody has a clue what to do next quarter, year, etc.
There needs to be some way to level out the price of oil so that it doesn’t spike and dip so violently. I think the US government alone can not do this because of the global nature of the oil markets. You cannot do it on the demand side, obviously. The price of oil currently has little to do with the price of the end products.
The only thing we can do is stop using oil for everything and start using renewable alternatives. As I said before, I can reliably predict the price of electricity since I have a contract. I cannot predict the price of other energy.
The government can affect the problems with the oil economy by continuing to support alternatives. If you don’t use any foreign oil, you don’t care what the price is
-1
Nov 10th, 2009 (4:25 pm)What about the poor guy who doesn’t drive, but needs some gas for his lawnmover?
-1
Nov 10th, 2009 (4:32 pm)I said “no” to more gas taxes. All that would do is to temporarily lower demand, the public adjusts and the suppliers lower THIER prices a bit.
Instead,
Dump coal subsidies,
Pump Volt subsidies.
Dump the Pump subsidies.
+1
Nov 10th, 2009 (4:40 pm)Although I don’t disagree with shifting subsidies, I do disagree with your assesment of demand. During the last two gas spikes, there was measurable shift in interest towards more fuel efficient vehicles. If gas prices were to be consistently higher, then you would have both a decrease in demand, and a shift towards more fuel efficiend and alternatively powered vehicles, all of which are positive outcomes.
-1
Nov 10th, 2009 (4:41 pm)Then you’ll incent production of 2.0l turbo engines that still only get 22MPG. Some of us still want horsepower. To make horsepower, takes energy.
However, make it only 1.4l, run on celulose-based alcohol and you will use zero foreign oil. Add a battery and electric motor and you….
Have a Volt!
+1
Nov 10th, 2009 (4:50 pm)Ha … tell him to get an electric mower….
-1
Nov 10th, 2009 (4:51 pm)#62 Kgurnsey
My idea included a tax on non electric cars which would pay for the tax credits on electric cars.
Before any of you jump on me regarding the working poor and the extra tax on non-electric cars. The working poor do not buy new cars. I know as that is the class I started life in but with hard work, education, and a bit of luck I was able to get ahead in the world. But I will allways remember what it was like to dream about some day owning a car that was only 5-8 years old.
+3
Nov 10th, 2009 (4:54 pm)Forget adding more taxes to gasoline.
Instead give State and Federal Tax Deductions for your electricity bill if you buy one so the NET cost of “filling it up” is ZERO to the consumer willing to pony up $40+ Large.
-1
Nov 10th, 2009 (5:03 pm)Freeman Dyson, Bjorn Lomborg, Myron Ebell, Ivar Giaever, etc.
I can name more. The world is full of reasonable, brilliant, respected
scientists’ that don’t buy the notion of manmade global warming.
I’ll play the game in reverse. Why would brilliant scientists’ like the people I mentioned risk their reputations?
Nov 10th, 2009 (5:04 pm)Probably, phased in gas hikes would help a bit. In Canada, gas prices are much higher than in the US (solely because of taxes) and that hasn’t resulted in any shift.
People really enjoy their cars and will drive no matter what.
At todays prices gas is a bargain. Back in the sixties gas was about 30 cents a gallon but a nice car could be purchased for $2,500 and a good house for $25,000. Now houses, cars and gas are up 10 times and so are wages.
Nov 10th, 2009 (5:15 pm)Let’s see, the national unemployment rate is above 15% and the majority of posters want to increase fuel costs. Nuff said.
There are two kinds of people, those that respect others, and those who advocate compulsion to get their way.
-1
Nov 10th, 2009 (5:17 pm)One problem with no gas tax is just as many of the opponents of the tax point out. Gas prices will go higher. The issue is when and by how much. We can pay now or pay later. Pay now and have a reasonably controlled transition away from oil or pay later and transition in chaos. Even a gas tax won’t insure chaos doesn’t occur but it is action to minimize the risk. What wil insure a supply crunch or war won’t occur at a worse time than now and even if the timing is better to start the magnitude of price change may be far worse.
That said. Just any old tax won’t do. It has to be planned carefully and stepped in to minimize the impact to the economy. It also should have termination provisions. The funds should NOT be allocated to fund any ongoing programs.
-$0.10 per quarter step in tax on gasoline and deisel fuel(capped at $2.00)
-Tax credit for commercial delivery use
-Funds to pay down federal deficit
-Tax can be repealed whole or partially via executive order at any time
-1
Nov 10th, 2009 (5:18 pm)Real life testimony of what happens when everyone shares the pain equally — nothing shifts. There’s simply no incentive to make a shift.
+1
Nov 10th, 2009 (5:20 pm)50 cents probably won’t break someone buying one gallon of gas.
Battery-electric lawn mowers are getting pretty good. I’m going to try one next spring. I already have a 36v battery-electric weed wacker. It is every bit as powerful as a gas engine (instant torque at zero rpm). Only downside is to ‘gas up’ takes 4 hours, thus, I have two batteries. No fumes, no oil, no mixing, push-button to run. Sweet!
+2
Nov 10th, 2009 (5:29 pm)Not following. Who is disrespected by a gas tax? How is $4.00/gal via natural market causes (including any commodity manipulation or gaming) different or better than $4.00 as a result of a gas tax, other that than the oil companies and countries that would certainly see a difference?
Nov 10th, 2009 (5:43 pm)#81
Well, you’ve gotta start somewhere. Plus, if it means a few less dead people, and a few less people around the world hating us, that’s a nice little fringe benefit too.
+1
Nov 10th, 2009 (5:49 pm)Americans don’t plan ahead like Europeans. A gas-tax to guide the development of vehicles to prepare the country for Peak Oil is never going to happen. Only the actual decline in oil production that will cause prices to skyrocket will get American’s attention.
it’s the difference between getting in shape because it’s good for you, and doing doctor-recommended exercise after your third heart attack.
Americans are not yet ready to fully embrace fuel efficient cars, before it is forced upon them:
Nov 10th, 2009 (5:53 pm)Gas taxes are more easily justified than taxes on cigarettes. With cigarettes the taxes are justified (or not) on the basis of health externalities. Fossil fuels create the same negative health externalities (more people die from air pollution sitting in traffic jams than in traffic accidents) as well as the negative externalities related to the economy, national defense, and climate change.
Timing is a separate issue, and, in any event, gas taxes would be offset by cuts in payroll taxes, creating at worst a mild stimulative effect.
+1
Nov 10th, 2009 (5:55 pm)#75
Your comment brings back a lot of memories. I took Economics 101 in 1962. At that point the Kennedy administration was cutting taxes and increasing spending, to try to get out of a recession. The professor, in trying to explain Keynsian theory to us poor engineers, said that doing the above to get out of a recession was the politically easy part. He said that the politically hard part was doing the opposite as inflation began to ramp up. He said that it would take some really tough minded politicians to do that, and that he didn’t really expect to see it any time soon. I have never forgotten that.
The more things change, the more they remain the same.
LJGTVWOTR!!, for Heaven’s sake.
+1
Nov 10th, 2009 (6:00 pm)Hell no. I would love to drive a tech cool car like VOLT, but I don’t expect my neighbor to pay for it. Cheap energy and big cars is what made America great. I say drill, drill, drill, build nuke and clean coal power plants to reduce foreign oil and develop alt energy, which we know honestly will happen, but in the distant future. If there’s a tax increase involved the VOLT will fail.
Nov 10th, 2009 (6:07 pm)Sliding-scale special tax, call it “get us off of oil for auto fuel” tax, on new vehicles. At one end of the scale is the BEV, with a zero special tax amount. At the other end is the non hybrid with the maximum special tax amount. All special tax collected goes towards research on batteries, rebates, etc.. This would eventually have to find it’s way to all vehicles on the road, new and used, or new car sales would suffer.
If you need a laugh today-youtube—turbo encabulator.
+1
Nov 10th, 2009 (6:17 pm)I would say yes, except you can bet that the money collected won’t be used for it’s intended purpose and/or will be largely wasted in the bowels of the beaurocracy.
Nov 10th, 2009 (6:26 pm)I would be ok if that, IF we were paying the true price at the pump, but we do not. There are so many externalities (costs of subsidies given to oil producers, cost of military expenses to protect tankers, cost of pollution etc) that are not currently included in the price of gasoline that people do not realize the true costs.
Nov 10th, 2009 (6:28 pm)Subsidies are placed by the various agencies where policy directives reflect the will and needs of the citizens. Too many powerful “citizens” (corporate ones esp.) lobby to consolidate and restrict those policies only toward their objectives and away form any new directions which remotely disagree with theirs.
But if you had direct subsidies for Volt, you would sell more of them, thus reducing gasoline demand, and, have more direct positive outcomes for more jobs, more industry, less pollution, and on and on. Pumping oil out of the ground does not employ hardly anyone after the hole is punched.
An entirely new EREV based auto industry is where it’s at, and, we will really ruin a golden opportunity to not quickly realize that direct Voltec subsidies (not tax credits) would go far to more quickly advance American auto leadership again.
(The Japanese launched Synergy Drive by directly helping buyers of it. I doubt it would have gone that well and as quickly without all the direct help from the Japanese government.)
We had better not lose out on this chance to create a new American Auto Industry. We would be technically foolhardy to let this slip by without the right direct incentives at the right timing of them at time of, say, at purchase as a direct credit toward the bottom line when signing the purchase order.
Nov 10th, 2009 (6:35 pm)I put down maybe.
Why? Because it’s a good idea, but what about high school / college kids who can already barely afford gas and insurance? Because they can’t exactly afford a brand new electric car to slide by a gas tax either… I would support a gas tax if there were exceptions for low income families, students, etc.
Nov 10th, 2009 (6:35 pm)
Nov 10th, 2009 (6:38 pm)Good points about safety, I think rather than mandate a certain level of safety, we should mandate all vehicles go through standard crash tests and have that information be transparently available.
So we would still require the testing, but no prohibition on what can be sold, so long as you transparently provide how safe/unsafe your vehicle is to the public.
Nov 10th, 2009 (6:47 pm)Plus, hanging around for gas prices to stabilize or go up, or do anything predictable is an unacceptable and ridiculous gamble.
Subsidies directed to a given technology are proven to work and, are a direct confidence that an industry can count on.
The price of gas can easily be net back down to below the $40 a barrel, and, if we have not yet learned that lesson, then we deserve to fail for the foolishness of relying upon cost of gas to ever be stable.
Leave gasoline in the past where it belongs. Abandon it as any sort of mechanism counted upon to produce or “mature” a market for Volt. This is because there will be no such thing as a price you can count on for gasoline. Gasoline is a really bad part of this set of considerations, and, I wish that it be banned from the economics, as hard as a psychological thing that it is for many to do.
Nov 10th, 2009 (7:01 pm)Could well be wrong here, but I think the law that includes the tax can also dictate that the funds are only used for a particular purpose. This could be for only only reducing the debt. Naturally, that doesn’t preclude them from taking on new debt but it stands out in the form of a deficit and the tax revenue will ebb in time either way.
As far as pork barrelling goes, there is no doubt they feasted on the bank bailouts. But you can’t through the baby out with the bathwater. I also see the roads, bridges, dams, airports, and other goodies that have come from the public trust. Neither situation should predispose one’s opinion.
+1
Nov 10th, 2009 (7:11 pm)I do agree that the average person won’t buy EVs unless gas prices are increased. Consequently, IMHO there should be an additional 25 cent tax increase on each gallon of gas, increasing by 25 cents per gallon every year. Since the tax increase is gradual, it shouldn’t be too painful. The entire revenue received should be used to pay for BEV and EREV rebates. The revenue would be huge (do the math) and would easily pay for the rebates. Yes, it is a regressive tax. Perhaps something could be done to alleviate the pain of the poor.
Nov 10th, 2009 (7:12 pm)I’ve had a cordless electric lawn mower for the past 5 years. Love it! No gas, no oil, no yanking ropes. Just push a button and it starts humming.
I sure wish my neighbor had an electric instead of the loud gas mower he cranks up every Sunday afternoon. I bet he can’t even hear mine when it runs
Nov 10th, 2009 (7:33 pm)What I meant was it’s not a traditional flat tax. (Which is one of the far right’s proposals to replace the income tax.) And I believe higher income people will wind up paying the bulk of the tax. But, you’re right, in the absence of actual figures, I think we have to agree to disagree on this one .
But we have to tax diesel. Because if we don’t? People will just shift into diesel cars the way they have in Europe. And as a practical matter, I don’t want to hand the US domestic market over to Volkswagen.
Besides, why shouldn’t more energy intensive products be taxed more? They need to reflect their real price too. There are other ways to conserve oil than just through automobiles.
Nov 10th, 2009 (7:37 pm)It might actually be that the only things left suppressing a much larger production commitment are managerial spans of control, and, market uncertainties due to the “average” thinking mechanism of what a few quarters’ worth of higher or lower gasoline cost means to everyone, or “might” possibly do.
The gasoline mind game that keeps on playing in our heads each time we pass by one of those giant gasoline price-per- gallon signs at least a hundred times a day is subliminal and it can be destructive if we allow the game to be played in such a manner than it relates to Voltec.
Don’t play with gasoline costs (fear/smear) as a factor to ramp up or caution an impaired production for Voltec.
(Volt customers are certainly not “average” from the very gifted and “in-depth” technical and other conversations found here on this site, if one wishes to measure ).
Discussing the influence of the cost of gasoline gives an “in” for gasoline to do some rather unpredictable (too many thumbs in the plum pie) and volatile disruptions, public perception-wise. We should not even consider discussing it as some sort of reason or excuse to fail, by including gasoline in subject matter, for whatever one might think a strong point.
Lyle’s sign up at the top really hits home regarding all this.
(Very creative Lyle!!).
Nov 10th, 2009 (7:45 pm)In one years time we’ll be able to drive right past the Mobils, Arcos, and Chevrons. Anyone else had it with the wallet full of 20′s being donated to the Continuation of OPEC and Related Friendly Associates Program each month?
=D~
-1
Nov 10th, 2009 (7:53 pm)So, now the $7,500 subsidy is not enough. We should also subsidize the Volt, by ALL paying more for gas.
So, now the guy who cannot afford an EV, has to now pay more for gas.
Nope.
More taxes will not solve this problem.
Good engineering and a product worthy of the price will be the right answer. If the product cannot live on its own, then it should die it rightful death.
Nov 10th, 2009 (7:56 pm)That will be one fine day!! The entire world will be watching for Volt. (I’d even bet every single one of those oil execs secretly want one.)
Nov 10th, 2009 (8:06 pm)Oh, I definitely agree with ending the war. Yesterday if possible. The whole situation is a disaster. And the sooner we cut our losses the better.
I just don’t think it would be a budgetary panacea. We have cut spending at some point. And it can’t just be the military. The numbers don’t add up. It’s a great place to start, but we have to cut a lot more than that.
+3
Nov 10th, 2009 (8:13 pm)Lower income people may well consume less, but when you look at the percent increase, relative to his/her income, you see how this can very be substantial to someone in the lower income bracket.
For example: Say Mr. Poorboy makes $18,000/yr, and drives a vehicle that gets 25 mpg. assuming they drive 15,000 mi/yr, that would equate to 600 gal.
Now, you have Mr. Richie, who makes $125,000/yr, and drives his Mercedes C-class, and gets 16 mpg. assuming he makes a few x-country trips to the ski hills, lets say he drives 20,000 mi/yr, that would equate to 1,250 gal.
Now at $2.75/gal:
Poorboy: 600 * 2.75 = $1,650
Percent income: 1,650/18,000 * 100 = 9.1%
Richie: 1250 * 2.75 = $3,438
Percent income: 3,438/125000 * 100 = 2.75%
Now, lets put that “flat tax” in place, and keep gas at $4.00/gal (Oh, the wonderful things the govt could find to spend this kind of money on….well lets save that discussion for another thread).
So now:
Poorboy: 600 * 4.00 = $2,400
Percent income: 2,400/18,000 * 100 = 13.33%
Richie: 1250 * 4.00 = $5,000
Percent income: 5,000/125000 * 100 = 4.00%
So, I guess that “flat tax” might be good for the wealthy, but Mr. Poorboy may need to sell his car for a bike (Hey, that’s just what the govt’ would want, so what a great thing!).
BTW: More likely Mr. Poorboy has an old clunker (cause he could not afford to off load his during the other brilliant “cash for clunkers”, cause he cannot afford a new car), and probably puts on as many or more miles traveling to his job. If you transpose the mpg and miles, you see a MUCH larger impact.
Enough said.
+3
Nov 10th, 2009 (8:48 pm)OK, I’ll wade into this mosh pit
If we add all the hidden costs of oil, we’re actually paying over $8/gallon right now.
http://www.setamericafree.org/saf_hiddencostofoil010507.pdf
So what’s really happening is that we are using income taxes to subsidize gasoline, making it artificially cheap to encourage more gas consumption.
Now look at Europe, where gas prices are around $8/gallon.
If you take a step back and look at it objectively, it seems a little foolish not to raise fuel taxes.
Nov 10th, 2009 (8:49 pm)Ironically, in the 60s, the Fed Chairman was William McChesney Martin. And he really did what you’re supposed to do. With interest rates anyway.
He said that the role of the fed was to “to take away the punch bowl just as the party gets going.” And he stuck to that.
Nov 10th, 2009 (8:51 pm)China has overtaken the US as the #1 emitter of CO2.
http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions
And Australia has the highest CO2 per capita.
http://www.bloomberg.com/apps/news?pid=20601130&sid=aN60ck4Sz4iE
Nov 10th, 2009 (9:02 pm)Pretty good statement, Laura M also has some good things to say.
Yup, Ultra Large Crude Carriers ply the oceans bringing us our oil. During the last election cycle someone paid to have ten percent of them drive in circles in the ocean. The resulting economic havoc was probably more than expected???
My 2 cents? How about a gas tax of 2 cents? Per month…
Jan 2010 new tax of 2 cents..
Feb 2010 tax of 4 cents.
Jan 2011 tax of 26 cents.
Jan 2020 tax of $2.40…
Send the money straight to China! We owe them.
(Campaign Promise) With my plan gas will be cheaper in ten years with inflation adjusted dollars….
/agreed, we should have done this 40 years ago.
Nov 10th, 2009 (9:08 pm)I own a Neuton electric lawn mover. One day I got fed up paying for the high price of gas for it (over $4.00 per gallon), saw the ad for the Neuton and ordered it. Since then, I have purchased a second battery so that I can finish mowing the whole lawn. The use of one battery allows me to do about 1/4 of the empty lot next to where the house is built. Quiet, no gasoline smell, and a lot easier to push than the old model!
Happy trails to you ’til we meet again.
+1
Nov 10th, 2009 (9:08 pm)Of course, lower income people will feel the impact of the tax more. They feel the impact of every rise in the cost of living more. But if we don’t transition the economy to electricity from oil, they’ll also feel the impact of peak oil more.
The way to get around that is to reduce the payroll tax. And build more public transportation.
What I meant by the absence of figures was the costs of implementing Stuart’s rationing system. I doubt it would raise nearly as much money once you exempt the first 300 gallons per year. And the cost of implementation for that kind of program would be enormous.
The closest figure I have is the 5.5 billion it would cost to change our credit cards over to the European chip system.
http://www.nytimes.com/2009/10/04/travel/04pracchip.html?scp=5&sq=us%20credit%20cards%20europe&st=cse
I’m pretty sure this would cost more to install and maintain. It’s more complicated. And they’d need to hire people to take care of the implementation, and maintain the database. (The credit card companies already have people who do that kind of thing.) But I don’t have any figures to back that up.
Nov 10th, 2009 (9:12 pm)IF we lived in a perfect world, and IF the taxation process was done correctly, I would agree to fuel taxes.
As dictator, I would implement a gas tax hike that was gradual, perhaps $0.25 to $0.50 per year increase. NONE of this money would be available to the politicians!! It must be put into a trust fund to be used solely for the purpose of solving the country’s energy problems, and administered by a separate organization completely exempt from government control.
A master plan to achieve complete energy independence would be put in place, and those technologies and projects that did so in an environmentally acceptable manner would get funds.
This would include nuclear, alternate fuels, renewables, and energy efficiency. Rebates for electric vehicles manufactured in the USA could also be included.
Note that we consume about 9 million BARRELS of gasoline each day, 4 million BARRELS of diesel, and jet fuel. So at ~15 million barrels, 42 gallons per barrel, for every $1 in tax per gallon, this equates to $230 billion each year. This will fund (partial funding, loan guarantees, etc.) a great deal of projects that might otherwise be marginal.
Within 10 to 15 years the US could be energy independent, and with drastically reduced emissions.
Now for the hard part – keep the politicians from trying to grab the money!
Nov 10th, 2009 (9:15 pm)I hadn’t heard that. Thank you for the information. It’s good not to be number 1 anymore. Although, I think that’s probably due the fact that they recovered much faster than we did from our current economic situation.
Regardless, Australia’s the driest continent in the world, so they have more to lose from global warming than we do…
+2
Nov 10th, 2009 (9:16 pm)Don’t even waste your time. Peak oil will drive the price of gasoline high enough to reduce its use. Mother Nature will take care of everything.
+1
Nov 10th, 2009 (9:20 pm)The government has no place in telling me which car I should be driving which is what they would do with a gas tax with such goals. Let the market decide this, i’m buying this car with or without this proposed tax (and the tax credit) and don’t think I have a right to force others into the same decision although I think it is best. Keep the government out of it, they already have their noses in too many personal issues already and should butt out.
+3
Nov 10th, 2009 (9:25 pm)I don’t think coming here and insulting Americans is very productive. Every country in the world creates their own problems. Everyone (or at least every democracy) has difficulty dealing with long term trends. And corruption? Is everywhere.
If you tell me which country you’re from, believe me, I can come up with some ways your countrymen messed up too. Some of them a lot worse than ours.
And, by the way, this American still works out to stay in shape even though she a)has never had a heart attack, and b)doesn’t have a family history of heart disease.
Nov 10th, 2009 (9:35 pm)Ditto on that LauraM.
Geronimo,
Give me your long/lat and lets see how you fair.
Nov 10th, 2009 (9:46 pm)I agree again. Unfortunately, in order to invest effectively in some areas, they’d need to make some politically unpopular changes. Reducing the tax deduction for “cadillac health care plans” comes to mind. Paying more attention to the intermountain hospital procedures that save money and improve outcomes at the same time. Allowing principals to fire bad teachers. Or at least the outrageously bad ones who literally show up drunk to work. Adding a month to the school year. And an hour to the school day. (Like they have in every other developed country.) And who wants to waste money on boring projects like repairing leaky pipes, when it could be used to bribe more retirees to vote for you?
Nov 10th, 2009 (9:53 pm)Australia is the driest inhabited continent.
Antarctica is the driest of all the continents.
This is because in Antarctica it is too cold for the sun to heat up the oceans or melt the ice, so it will not evaporate.
Antarctica is the coldest, driest, and windiest place on Earth. The lowest temperature ever recorded was -89.6 degrees Celsius. Wind speeds during gales can reach 320km per hour. The average wind speed is over 70km per hour. These conditions can be a difficulty because of the cold, windy weather.
Just saying….
+1
Nov 10th, 2009 (9:59 pm)Why does Mr. Poorboy drive so much? It currently costs roughly $0.40/mile for a car. That’s 1/3 of Poorboy’s salary. He is living a lifestyle he cannot afford, gas tax or no gas tax. Carpool, bus, bike, move, combine trips, change $18k jobs, drive more efficiently, trade cars, trains, etc. Mr. Headed for Bankruptcy Poorboy better find a way to drive less regardless. Most recommendations are to gradually step in a gas tax. $0.10/qtr equates to $0.25/gal on average for the year. Even for the unrealistic example of $18k Mr. Poorboy driving 15K miles/yr, this would cost him an additional $150/yr each year if he does absolutely nothing to reduce his unsustainable consumption. Absolutely, we should never consider government action to reduce our dependence on foreign oil, to reduce our trade deficit from the $300-$500B spent each year for foreign oil, to further incentivize more efficient transportation, to reduce polution, to reduce CO2 emissions, to lessen the need to protect oil sources, to lessen the risk of economic oil price shocks. Yes, it is ludicrous to even consider a gas tax when so many good hearted citizens are so genuinely concerned for Mr. Poorboy.
I just don’t buy this as a “feed the rich tax the poor” argument or maybe it is just being sung offkey.
Nov 10th, 2009 (10:02 pm)Did the government raise tax on VHS recorders when DVD players were introduced into the market. NO! DVD players were bought because it was better technology. No rewinding and better picture quality. Don’t underestimate the power of Volt attraction. If you must tax something, increase tax on vehicles that are not Hybrids, BEV, or EREV.
NPNS!
Nov 10th, 2009 (10:04 pm)We need to do two things
- Tax so that gas doesn’t fall below $4 a gallon
- This limit should slowly raise to about $10 a gallon as the electrification of our transport fleet progresses
Only problem is – economists tell us we get into a recession anytime the gas price is so high !
+1
Nov 10th, 2009 (10:05 pm)Yes, at some point it surely will and won’t that be a pure free market hoot.
Nov 10th, 2009 (10:10 pm)Spirited debate indeed.
As a former military member, retired, I suggest for every oil dollar prevented from export is established as a subsidy for those vehicles making this a reality. Let’s get the _________ off Middle-East turmoil oil and God willing, let’s stop subsidizing world viewpoints representing the antithesis to our American way of life.
Aboslutely, tax imported oil.
Nov 10th, 2009 (10:18 pm)Ok..
Nov 10th, 2009 (10:39 pm)Mr. Poorboy is VERY unhappy with you!
Do you not want to give up some of your hard earned money to support Mr. Poorboy?
Exactly. Just like I am not willing to give good ole Uncle Sam more of my money. He gets his unfair share already!
Do you actually believe that raising the price of gas is really going to save the US? Is it really that simple? Will we be able to rid our selves of those pesky Arabs? Will this solve global warming. Will our oceans rebound and become bountiful and clean, once again? Will Al Gore, rise up and declare victory?
Do not get caught up in the “Let the govt’ take care of everything” ideal. ”
Raising gas taxes is not a solution.
If you really believe what you espouse, than I suggest you rid yourself of your automobile, and buy a bike. Is this a sacrifice your willing to make to save Americans from death in foreign countries?
Nov 10th, 2009 (10:47 pm)BTW: Sometimes I do like to stir the pot, and see what comes out.
It just keeps things interesting, and entertaining.
I do enjoy reading all these opinions, and I truly believe it makes my better appreciate all the differing arguments.
Nov 10th, 2009 (10:57 pm)Like all good intentions, greed clouds the issue.
So if you tax gas to promote electric cars, the car companies get the funds? A tax credit when purchasing a electric vehicle? Either way it goes to the car companies. So what drive do they have to make the costs come down? They don’t. Since the books aren’t reveiled and profits are their drive, they will always cry that they don’t make enough money even when they do. There are car companies that are making things happen now like Ford and Toyota with hybird technology without taxes or other external incentives. Sure, a tax may be a quick answer today, but hardly a long term answer. A slow wheening off foreign oil will see your gas prices rise (supply & demand). Then the normal business case takes hold and people make that decision while still putting pressure to lower costs and make a better product.
Nov 10th, 2009 (11:08 pm)Yeah, I love the logic. Only a small (probably around 1%) portion of the population can afford a Volt, but we’ll punish them for being too poor to buy one. I agree with those who said it’s 20 years too late. I would say even if they had started 10 years ago, we would be light years ahead of where we are. At this point, it’s too late. Gas prices are going up no matter what now with peak oil coming.
Nov 10th, 2009 (11:30 pm)Of course a gas tax won’t fix anything all by itself but I believe it will help. Doing nothing certainly won’t help. The question shouldn’t be is their corruption in government, is a government action perfectly equitable for all parties at all times. is government capable of mistakes, or any other preconceived gripe about any government action. The real question is can a gas tax be fashioned that does more good than harm? I think can and It doesn’t even seem close.
GM’s car sales in China grew by more than 50% in the first ten months this year to more than 1.5 million vehicles. At what point does free market dynamics factor this in? How does the fact that as a nation, we spend hundreds of billions of dollars each year factor into an individuals decision to purchase one vehicle over another or that individual’s use of gas? How about any of the larger than immediate cost issues?
Aside philosophical issues, what are the tangible negative issues with a gas tax?
Nov 10th, 2009 (11:36 pm)Nothing wrong with questioning things. It often has the beneficial side effect of better understanding.
Nov 10th, 2009 (11:53 pm)I have
I’m not one to get “caught up” in anything. I came to my own conclusion long ago and before I saw it proposed by anybodybthat this was important and potentially beneficial step.
How about moving within 1 mile of work, driving slower than I otherwise would, driving a smaller and more fuel efficient car, combining rides, etc? I walk the walk and it isn’t a big deal. All it takes is a recognition of the “soft” costs. That is all a reasonable gas tax does. It’s not an iron curtain rationing or ellimination. The world is analog not digital. We use our perception to best analyze the curves and shapes and use our judgment to make informed decisions. If it were digital, we could disband government and let computers make the decisions.
You can dispise goverment and taxes and still find reason to support a gas tax.
Nov 11th, 2009 (12:32 am)Perhaps you should address the points I bring up, and not wave the Flag as a counter-argument.
I’m American, although I’ve lived in some other countries over the years. So go ahead, come up with some ways my countrymen messed up too. And I didn’t mention corruption.
Admit that gas taxes will never be raised to promote electric car adoption in the U.S. (if you know anything about politics in this country) and then move on to the important issues of Peak Oil and what happens when fuel efficiency is forced on Americans. They will be happy to discover that early adopters funded an amazing car like the Chevy Volt, while they were oblivious to the whole project.
Gas prices too high? Try Europe.
http://www.csmonitor.com/2005/0826/p01s03-woeu.html
Indeed, while Europeans have learned to cope with expensive fuel (mostly due to taxes), there’s scant evidence yet that US drivers are adopting their conservation tactics.
Chief among them, say experts, is the habit of driving smaller and more fuel-efficient cars.
“The single most effective measure” that has brought down motorists’ fuel use in Europe, however, is taxation, says Dings.
The US authorities, however, “are unwilling to use resource price as part of their strategy” to conserve oil, says Lee Schipper, head of transportation research at the Washington-based World Resources Institute, an environmental think tank.
“The biggest hole in our policy today is fuel taxation,” he adds. “Tax increases are something Americans should do but don’t know how to do, and I wonder if they will ever be able to.
“Consumers want muscle cars, manufacturers say they make what the consumer wants, and the government panders to both constituencies,” Mr. Schipper continues. “It’s a vicious cycle.”
European Union regulations are forcing vehicle manufacturers to make their products even more efficient than they already are.
Though their primary motivation is to reduce CO2 emissions, in line with targets set by the Kyoto Protocol,
———-
Sounds like Europe is dealing with long term trends by increasing taxes on gasoline. And Americans are not.
It’s not “insulting” to point out that squirrels busily get ready for winter and housecats sit on the couch.
Perhaps I should have used that example, instead of the heart attack one.
Although, in 2008, only one state in the USA had an obesity rate below 20% (Colorado).
Six states (Alabama, Mississippi, Oklahoma, South Carolina, Tennessee, and West Virginia ) had a prevalence of obesity equal to or greater than 30%.
Oh sorry, is the CDC insulting your country ? http://www.cdc.gov/obesity/data/trends.html
Does your working out change the statistics for the nation ? Not much.
Will you and I buying a Volt make America better at dealing with long term trends ? Not much.
But it’s a start.
Nov 11th, 2009 (1:01 am)WHY tax gas to force an artificial number of early adopters? The Volt is already 99% sure (although nobody has a crystal ball) to be cheaper to own, maintain, and have a higher value at SALE after 5 or 10 years of ownership simply due to its simple electric nature.
Why not just release the Volt and watch the positive word of mouth spread about the total overall costs being low and let consumer reports and long term Volt owners convince the rest of the public all by themselves. Volts will sell themselves and establish a very strong case in the total overall costs department.
I can’t speak for BEVs cost effectiveness (yet), but i believe the gas tax thing will become a non-issue as time goes on and the Volt racks up 5 or so years in consumers hands. THEN people won’t care if gas is $2 a gallon.
Let the market do it’s thing and F govt intervention!
Nov 11th, 2009 (1:06 am)I am a great believer in user pays, so HELL NO. I VOTED NO. On the other hand, I don’t see why EV owners should pay to keep TWO CARRIER GROUPS on station in the Gulf, so its only reasonable a $1.00 gas tax is given to the Navy to ‘keep station’.
I saw a picture of one carrier group once. I counted 34 ships, including six subs. It can’t be cheap keeping all that metal floating about! And what about a further increase to cover the war in Iraq?
Hospital costs due to respiratory disease caused by ICE engines?
Make the system user pays and EV’S win HANDS DOWN. PERIOD
/sorry about the rant but I really believe in fairness.
LJGTVWOTR
Has Plug? Have Sale. (HPHS)
+1
Nov 11th, 2009 (1:14 am)Texas, you da man. Agree $100%
Nov 11th, 2009 (1:42 am)Here is a picture of the Abraham Lincoln battle group
Only four subs in it though, and 21 ships in all. Still you get the idea.
/Can’t edit the original post anymore.
+1
Nov 11th, 2009 (2:19 am)Maybe a tax is not needed. Looks like we are running out of oil!!
http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency
Nov 11th, 2009 (3:01 am)NO. we are not running out of oil. What we are running out of is easily accessible cheap oil.
At $1000 / barrel we can live as now for decades.
Peak Oil, is the ability to pump, or in Canada’s case dig, the stuff out of the ground.
PS: Our entire modern food supply is oil based, so will we let others starve or drive EV’s.
Check out http://www.theoildrum.com/tag/overview
/Bit grumpy today, have to be off work for a week, sick!
Nov 11th, 2009 (3:37 am)I’m completely pissed off when I see all these stupids who don’t realize the problems we are facing with the worlds climate.
Why don’t all US people think like LauraM ?
Here in Germany we pay 1.30€ per liter and nobody died from that.
We consume (average) half the oil like US people. It’s not your natural right to waste our oil and other resources, they belong to all the people in the whole world.
-4
Nov 11th, 2009 (4:31 am)Raise it to da moon, I says. Spends it on me cause I be needy. Dats what I says. Man, when the man don’t lets us needy have some of what you rich folk has, we gits to stirrin sometin fierce. Lookout man, if Barack don’t get you money one way, we gonna git it a nudder. So why not raise that ther gas tax and makes it mo fair, you know, da system, mo fair for all of us folk? I mean, aint like we ever gonna buy one of dem forty thousand dolla lectric cars anyway. So you should pay more so I gets more and den we coo.
Nov 11th, 2009 (6:08 am)Yes well a whistleblower in the oil industry has just let the cat out of the bag. We ARE in peak oil now.
Someone raisein it to the moon now , sos we won’t gets more for long. ( sorry, not as good as you!)ha ha ha
As others have said, cheap oil just passes the real cost to others by hiding structural inefficiencies and the accumulation of unwanted by products which are not taken into account in the price ie pollution and wars
-1
Nov 11th, 2009 (8:21 am)Its about individual freedoms, not more government controls. -10
Nov 11th, 2009 (8:23 am)In Québec (canada), we already have gaz taxes. The results are really interesting : people have smaller cars, take more public transit and spend their available money in the local economy. The result is that we resist better to the recession and the government have more money to spend on public transit infrastructure.
So I think that if we want to achieve the Kyoto target and grow our energy independance in North america, we need to raise the gaz taxes. Anyway, all those debts will need to be refunded at some point. And rising income taxes is certainly not the good solution.
+1
Nov 11th, 2009 (8:23 am)Here’s a simple and inexpensive solution to spur the electrification of the automobile industry. Ban the sale, manufacture and use of gasoline only cars in the United States. Of course anyone currently driving a gas only car will be allowed to for the next 10 years.
This is simple supply economics. If they can’t make it we can’t buy it. The public can only buy what’s made and allowed to drive on the roads. Taxing GAS is what every politician wants because after electrification of the auto industry happens, the GAS TAX will continue and will fill their pockets.
NPNS!
Nov 11th, 2009 (8:28 am)I totally missed this thread yesterday and one of my favorite topics.
Yes of course the gas tax is way too low and has not been raised as it should over the years for political reasons. The certain best course of action is to pass a gradudal increase in the gas tax for the next 10 years. Add 5 cents a year starting now for 2009 and the next 5 cents in 2010.
Starting slow will have minimal impact on todays drivers but folks looking into the future can see that price of oil and taxes will be going up and they will look to EREVs/BEVs for their next purchase and that will drive the price of these cars down for everyone.
Also the $7500 rebate needs to be cash at purchase and extended to the first one or two million EREVs/BEVs.
Thats all that is needed and I’m confident that by 2015 (gas tax 30 cents higher than now and rising, Oil probably over $150/barrel there won’t be much demand for anything other than EREVs/BEVs).
We also need subsidies to convert our 18 wheeler friends to Natural Gas, and we need to really move into wind/solar/geothermal/hyro whereever posible to save our natural gas for truckers and homes.
If we use Natural Gas for too many purposes then the prices for that will go up and hurt folks.
Nov 11th, 2009 (8:30 am)I’d love to know how the poll turned out!
Be well,
Tagamet
Let’s Just Get The Volts’ Wheels On The Road!!**********NPNS
Nov 11th, 2009 (8:31 am)Volt enthusiats are with you Joerg. One of the main reasons to own a Volt is having the freedom to buy (or to not buy) gasoline. Full time use of E85 produced from watse organic products is another option.
Having lived through gasoline booms and busts I can honestly tell you that American’s ARE moving to much smaller vehicle ownership. My family owns three vehicles and they average over 30 mpg.
Early adopters must purchase all available EV and EREV including Leaf, Tesla, Volt and EV kit cars which are growing in popularity.
It will not take long for a 100 mile battery to price at $5000. And a 300 mile battery to price at $10,000. This is when the mainstream shift to EV and EREV will follow a strong and predictable growth trend.
=D~
Nov 11th, 2009 (8:37 am)Yes but Dave G, you can do everything in a more measured, controlled, fair, and immediate and “just in time” manner at the Volt Sale closing/signing with a direct subsidy credit.
That way, you are not taking away anything or adding Point Of Sale taxes to hurt the consumer weeks, months, or even a year too soon. This is a good idea because you only subtract a small and tiny proportion of subsidies from other carbon-hostile energy sources as needed, and, only very very slowly and gradually at point of sale closure for Volt/EREV.
This is a good idea because no new agencies are needed to handle taking an otherwise additional small amount of money or proportionately-large amount of money out of people’s pockets when it is time to get gas.
As Dave G said, subsidies keep consumer costs down. The redirection of, say, a tiny portion of coal subsidies, a tiny portion of natural gas subsidies, and a tiny portion of gasoline subsidies for a very short time in order to get our American Electrified Auto Industry started would be a good idea, and, because as the low initial production release numbers (due to few numbers of assembly lines are a well established fact as we all know), there would be little or no impact to all those billions proportionately in subsidies noticed.
This is the correct mechanism for GM and other OEM’s to have sufficient financial confidence for their legal financial responsibilities. We can’t just keep saying “lets just get the Volt on the road” if there are not enough factories with which to “get enough Volts on the road”.
Issue warrants or some financial tool that GM and the other OEM’s need for a “just in time” subsidy for Volt/EREV’s at time of retail sale closure. This may also greatly help stock prices of GM for when they are to become available soon.
All the lessons learned from “Cash for Clunkers” would be carried forward to accelerate the building of the American Electrified Auto Industry.
Dump the coal subsidies.
Dump the Pump subsidies.
Pump the Volt subsidies.
Nov 11th, 2009 (8:39 am)This is the worst idea ever.
#1: If actual gas price is $2 and there is an automatic tax to raise it to $4, the gas companies will want to just charge $4 (because consumers won’t care). The government will never stand for this so they’ll have to regulate it. Government will basically be setting the prices. Look at rent controls in New York to see how that turned out.
#2: Assuming we get over problem #1, if the price is fixed then consumers will not change their behavior when actual costs increase. This will throw supply and demand economics out the window. Anyone who has taken econ 101 can see what a train wreck that would be.
This is just wrong, wrong wrong. Any new technology must be better/cheaper/faster to succeed. If it is not, government can’t make it so.
+2
Nov 11th, 2009 (8:40 am)Three questions:
1. How will hurting people’s pocketbooks in a bad economy accelerate the adoption of a new technology? People who think this would happen need to seriously reconsider their premises?
2. What gives anyone on this board (or anywhere else, for that matter), to reach into someone else’s pocketbook and help themselves to someone else’s money?
3. Who would be most severely impacted by a hike in gasoline taxes? People who can afford a $40,000 Volt, or people who cannot? Again, how will this improve adoption of an expensive technology, and what gives anyone the right to do this?
Respectfully,
Dr. Ibringdoh
Nov 11th, 2009 (8:43 am)I thought more folks read this website?
Yes 50% (296 votes)
No 41% (240 votes)
Maybe 9% (52 votes)
Total Votes: 588
Nov 11th, 2009 (8:46 am)Just removing the subsidies from fossil fuel based sources would increase the cost of gasoline to its real world prices. That would encourage rapid adoption of electric vehicles alone.
I would also slowly raise the gas taxes and put the money towards alternative, renewable sources. I don’t want to pay more for gas but that is also why I am buying a Volt.
Nov 11th, 2009 (8:49 am)DR I.
I know this is asking too much of government, but an increase in the gas tax if it were large could be offset by lowering other taxes.
However if you read my view in #164, I only suggest a 5 cents per year and every year increase in gas tax. It will take 10 years to get the tax to what it should be at a minimum anyways.
It is not an unfair tax if the tax is to cover the cost of road maintenance and the cost of the military protecting the oil lanes. And if people don’t want to pay for the cost of bringing that oil from the middle east here then they soon will have the ability to plug in there cars. The best thing we can do to help people with lower incomes is to help bring EREV/BEVs to mainstream.
In 6-8 years maybe not everyone can afford a EREV, maybe a family will have to sacrifice and buy a BEV with only 100 mile range for $20,000 and pay $1 for overnight charging to drive 100 miles. Yes that is really socking it to the middle class.
Nov 11th, 2009 (8:51 am)Far more people read this site. Not everyone votes (even here).
Be well,
Tagamet
Let’s Just Get The Volts’ Wheels On The Road!!**********NPNS
-2
Nov 11th, 2009 (8:55 am)Well probably half of the No Votes are from GM upper management hoping to sell more SUVs
Nov 11th, 2009 (9:00 am)EESTOR has the answer to all the problems with electric car technology and costs. As soon as they come out with their energy storage system oil and lithium batteries will be made obsolete. Yep…..Uh Huh (Can’t a guy dream? ;>)
Nov 11th, 2009 (9:03 am)You might really like my idea at post #167, then.
Warrants for time of purchase subsidy, “just in time”, and, very gradually administered with current administrations already in place. An entire industry can’t get started with “well-meaning text” (even as much as I write too).
There are ways to EXACTLY time things so that there is minimal or no impact at all to the consumer whatsoever!!!
This is the job of administrations of all kinds, financial, technical, AND, administrative/governmental. There just has to be the wisdom in place at the top to know well the different technical timings of things. This is why I like technically-perceptive Legislators of all kinds that work hard to not serve carbon interests only. We haven’t had the opportunity to get technical assistance to change over to electric motoring because oil interests ten years ago got the reigns of power and BLOCKED US FROM HAVING ELECTRIFIED AUTOS sooner with deliberate misdirection of funds toward things like hydrogen, which they knew would not pan out soon enough advancement-wise.
Please read my post at number 167, and see if you think that “just in time” subsidies at time of purchase to accelerate industrial growth of electrification has the lowest adverse impact of all for all parties involved.
(Thanks for reading my long posts today. (Off to work/late at 8:00.) But this is the most important topic in a very long time, we must all think about this a lot more and come to a set of agreements that will work to get more Voltec factories up and running).
Nov 11th, 2009 (9:04 am)Touche, sir.
Nov 11th, 2009 (9:28 am)No to raised taxes.
RIP American Dream……
+1
Nov 11th, 2009 (9:28 am)The Government does this everyday in case you did not notice. And at the point of a gun no less. Don’t pay taxes and ignore the Govt. letters telling you to pay and a sherrif with a gun will eventually show up at your door to persuade you to come to court. Resist, and the gun may be drawn on you to encourage you to spend some time in a steel cage near the court house.
What I am saying is this. The Government already reaches in to our pockets and taxes almost anything they can. Why not tax oil and gas more for the same reason we tax cigarets. Taxes can affect behavior.
Oil causes wars, Oil enriches terrorists. Oilenriches Venuzeulan dictators (Not to mention rusian mobsters). For these reasons alone, it would be in our national interest to curb the use of oil. Tax policy, which is already a burden, could be directed at this problem.
Nov 11th, 2009 (9:44 am)Thank you for the response, nuclearboy, but I’m afraid you err in confusing the descriptive with the descriptive. I asked what gives someone the right to reach into someone’s pocketbook and help themselves to someone’s money. You answered that the government does this all the time, and that this can change people’s behavior.
However, the fact that government does something does not give government the right to do it. In the 1700s, for example, the British government used the Stamp Act as legal justification for entering people’s houses and performing search and seizure without warrant. Was the British government correct in doing this, and if so, did the fact that they did something cause this action to be right?
If you will recall, this is one of the actions that led directly the the American Revolution.
Secondly, you make an interesting point about the ability of taxation to affect behavior. However, your point ignores the question of who will be most affected by the tax: people who can afford an electric car, or people who cannot? And if people cannot afford an electric car, how would you expect a gasoline tax — further reducing their income — to alter their behavior in the direction that you seem to desire? Perhaps instead of adopting electric technology (since they can’t afford it), people will continue to own older, less fuel efficient vehicles — and end up consuming more imported oil as a result of the tax that you constructed to reduce imported oil. Thus, instead of reducing dependence on foreign oil, the gasoline tax could concievably increase it.
Have you considered this possibility?
Respectfully,
Dr. Ibringdoh
Nov 11th, 2009 (9:44 am)I favor a “fair” tax increase to help support our infrastructure. There is no doubt that we need to rebuild many parts of it. I would also agree that part of the tax should go to improve and expand our rail facilities and methods of commuting and traveling by rail. Strict controls should be placed on the use of the money or our current and future congresses will just waste the money in more “buying vote” programs.
I don’t look forward to solutions like this, but it should be considered as a last resort. One other solution is for the automobile manufacturers to simply produce less and less of 100% petroleum powered vehicles until the market is changed by force of what is available to purchase.
+1
Nov 11th, 2009 (10:08 am)I considered it now and find it to be a red herring.
A gas tax would lead to people demanding smaller cars and smaller engines. Eventually, all of the old cheap cars would be more efficient and the poor would drive more efficient cars. The concern of keeping an old car may have merit for a few years but in general, the gas tax would drive up the demand for small efficient cars. We already saw this shift when the Middle eastern wars drove up the cost of gas through speculation. The wars enriched terrorists and dictators, a gas tax would help our country pay its bills and eventually take money from terrorists and dictators.
Nov 11th, 2009 (10:09 am)Yes to a floor tax on a barrel of oil equal to $80/barrel, what it’s selling at today. That is, if a barrel of oil sales at $50/barrel, there is a $30 tax to keep the cost per barrel at a minimum, won’t ever go below price. If the price of a barrel of oil is more than $80/barrel, there is no tax. Conversely, Alternative fuels such as cellulosic ethanol, gasoline from Algae, electricity, etc. would not be taxed to keep their price on the market below the price of gasoline from petroleum.
The goal should be policy to create consumer demand for alternatives to petroleum to encourage investment in these technologies. Investment requires a positive return on capital, which will on happen if the cost of oil remains above $70-$80/barrel. The majority of consumers will always buy the least expensive fuel that meets their needs.
+1
Nov 11th, 2009 (10:22 am)Everyone in this blog assumes that once TAXES are taken directly from your pocket they must stay with the government. Why not tax fossil fuels and distribute all of the associated TAX REVENUES equally to every “US taxpayer” in the form of an annual credit? This would provide the most benefit to the people who use the least energy, ie. small users (the poor) and people who are consciously conserving energy. To me a “revenue neutral carbon tax” makes good sense: 1) it enhances US energy security, 2) exports less US $ to terrorist nations, 3) encourages conservation, 4) favors renewables, 5) keeps the money in the hands of the people. There is no doubt that as fossil fuel become depleted we will need to develop renewables. This will help put us on the right track and hopefully give us a competitive edge on the growing energy economic sector.
Nov 11th, 2009 (10:23 am)I believe our objective should be to decrease our dependances on foreign oil and to lower global warming emissions. Electric cars can help us do that but selling more of them is not the ultimate goal — it is a means to help us get there.
Technology and CAFE standards alone will not get us to the goal. Higher gasoline prices are essential to reducing consumption of gasoline. In fact higher gas prices are the only essential enabler to achieving the objective. Technology, behavior, consumer demand, and better alternatives will all follow once gas prices motivate consumer interest. Without higher gas prices we are all just following a niche product that won’t reach the ultimate objective.
Nov 11th, 2009 (10:26 am)We should set a policy that will raise the gas tax by 20 cents each year for the next 5-8 years. By doing this, the consumer isn’t immediately hit with the full weight of the tax, yet as their vehicles age out, they know where gas prices are going and can buy their next vehicle accordingly.
I’ve been saying this model needs to be put in place for years now.
-1
Nov 11th, 2009 (10:30 am)Fascinating answer, Nuclearboy. So you consider the possibility of a gasoline tax indirectly increasing a foreign oil consumption a “red herring?” Out of curiosity, what definition of “red herring” are you using, and how does your definition apply to the question of what a gasoline tax may or may not accomplish?
Without further substantiation, your claim that wars increased gasoline prices through speculation is itself a speculatory argument, as are your claims that these wars increased demand for fuel efficient vehicles while also enriching dictators. Without getting into the specifics of these speculatory strings, is it also your argument, therefore, that a gasoline tax would also enrich dictators while promoting fuel efficient vehicles? Also, do you have substantive evidence for your claim that a gasoline tax would further increase demand for fuel efficient vehicles — or would it simply reduce the demand for ALL new vehicles while reducing demand for fuel efficient vehicles at a somewhat lower rate — precisely as we have seen over the course of the past 24 months?
Respectfully,
Dr. Ibringdoh
Nov 11th, 2009 (10:40 am)Nice argument Nuclearboy.
But it is flawed. Higher taxes used as a means of social control creates an underground economy. Like Russia as you’ve referred to. Name one tax that isn’t being evaded.
http://www.newyorkcriminallawyerblog.com/2009/09/untaxed_cigarette_sting_leads.html
Nov 11th, 2009 (10:41 am)The manufacturers cannot create a revolution if the demand isn’t there. In order to stay in business–any business, you have to deliver what customers want. If gasoline is cheap, IMHO, the mainstream customers are going to stick with ICE cars. And manufacturers will have a bunch fo expensive hybrids on their hands that won’t sell–at least not at a profit.
Yes. Gasoline will get more expensive on its own. But I’d rather we switched sooner rather than later. It will make the transition much mroe painless.
Nov 11th, 2009 (10:43 am)Tim Leuliette, CEO of parts supplier Dura Automotive: “We’ve got to continue to raise taxes in the United States so that, by the end of the next decade, gas is about $8 a gallon in today’s terms.”
As unpopular and as politically-suicidal as this idea is in the US, it’s really the ONLY way to accelerate the adoption of EREV/Voltec cars, as well as BEV cars, in the US. Unfortunately, I seriously doubt enough members of the US Congress have the courage to make it happen.
Nov 11th, 2009 (10:46 am)To me, it’s about my freedom from air pollution, and foreign oil. It means freedom from paying for wars in the Middle East. It means not paying for gasoline subsidies anymore. Freedom doesn’t mean freedom to steal or impose your costs on other people.
+1
Nov 11th, 2009 (10:52 am)Information to ponder on Vetrans Day:
In 2007 the United States gross imported an average of 13,468,375 barrels of oil/day at an average cost $66.52/barrel. For the year, Americans spent $327 Billion on imported oil.
However, the real economic cost is likely much greater than the $327 Billion sent overseas in terms of lost potential Gross Domestic Product and tax revenue. In Keynesian economics, the multiplier effect theory refers to the idea that an initial spending rise can lead to an even greater increase in national income. Multipliers are measures of the degree to which various businesses and households in an economy are interrelated. They measure the impact of a given external change, such as a new investment, export expansion, or start up of a new businesses on total economic activity in a given community (or nation) through the respending of new dollars within that economy.
The multiplier effect begins when a dollar enters the economy that would have otherwise been spent overseas. For every additional dollar spent in a nation’s economy, a percentage will leak out via imports and world trade, but the remaining amount will make its way back into the economy via domestic businesses and households. If one assumes this leakage relationship holds for the economy as a whole, then it becomes possible to determine a multiplier effect to national GDP. For example, in the case of 40% leakage, $1 dollar spent in the domestic economy generates $2.48 of GDP after 10 iterations. The theoretical limit of the multiplier effect is given by the equation 1/leakage rate, which in the above example is 2.5 (1/0.4 = 2.5).
Another opportunity cost associated with spending dollars on imported oil is lost potential tax revenue. As an example, suppose that the $327 Billion spent on imported oil in 2007 was instead spent on $327 Billion of domestically produced alternative energy. Also assume the leakage rate in the US alternative energy economic market is 40 percent. If the above assumptions were true, then the $327 Billion would have generated $817 Billion in new GDP. In 2006, US tax revenue as a percent of GDP was 18.4%. If this percent relationship also held for 2007, then the $327 Billion would have yielded and additional $150 Billion in tax revenue from the $817 Billion increase in GDP. While the exact magnitude of these lost economic opportunity costs are certainly debatable, the point of the above discussion is to simply make the argument that they exist and are likely significant. Wouldn’t it be nice to get some of that money back into the economy to pay for health care or rebates on electric cars?
Nov 11th, 2009 (10:58 am)Drop the gas tax…just figure out the cost of war /# of taxpayers, and add it to their tax bill…
Nov 11th, 2009 (11:02 am)Yes, this looks like a reasonable idea. For example such an allowance may be in a form of a tax credit that is enough to compensate gasoline tax for the first ‘x’ number of gallons. And I would apply such a a credit on per person basis so bigger families get bigger credit. It is also possible to have a slightly better limits for low income families.
Yes, this does not make out taxation system simpler, but it does not make it any more complex anyway, just because it is not humanly possible…
Nov 11th, 2009 (11:10 am)Freedom doesn’t mean freedom to steal or impose your costs on anyone else — unless, of course, this “freedom” comes in the form of gasoline tax imposed via the government.
One of the reasons there are thieves in our prisons is that our government detests competition.
Respectfully,
Dr. Ibringdoh
Nov 11th, 2009 (11:13 am)More information to ponder:
As we all know, General Motor is developing the Chevy Volt range extended electric vehicle for the masses. The Volt is scheduled to begin production in late 2010, and is being designed to travel the first 40 miles on 8 KWh of electric power. After the first 40 miles, a gas powered generator is used to maintain the vehicles’ battery at approximately a 30% state of charge indefinitely until the vehicle is plugged in again and recharged to full capacity using a standard 110 AC outlet. When operating in generator assisted charge sustaining mode, the Volt is estimated to be capable of averaging 50 miles per gallon using regular gasoline. The above performance parameters merit attention because according to a Bureau of Transportation Statistics (BTS) Omnibus Household Survey, 78% of US commuters drive 40 miles or less each day. Thus, Plug in Hybrid Electric Vehicles (PHEVs) like the Chevy Volt have the potential to significantly impact demand for petroleum as they penetrate the market over the next decade.
For example, in 2003 U.S. passenger cars consumed 74,590,137,000 Billion gallons of gasoline which roughly equates to 3,825,135,200 Billion barrels of oil. In 2003, the US imported 4,101,870,000 Billion barrels of oil. If every passenger car in the United States had been a PHEV with a 40 mile electric range, then 78% of the demand for passenger car gasoline would be eliminated according to the BTS survey. That equals 2,983,605,000 Billion barrels of oil, or 72.7% of all net imported oil for the year.
Furthermore, an additional 12% of daily commuters in the BTS survey drive between 40 and 60 miles per day. If they too drove a PHEV with performance like the Volt, their equivalent gas mileage would have been 150 MPG or greater. That is nearly 7 times the 2003 average passenger car fuel consumption of 22.3 MPG. Thus the next 12% of American drivers who consumed approximately 459,016,220 Million barrels of oil in 2003 would have consumed less than 68,523,316 Million barrels of oil. That is equal to another 10% net reduction in imported oil. Ignoring the remaining 10% of American drivers who drive more than 60 miles per day, the first 90% have the potential to eliminate more than 82% of net imported oil by simply driving a PHEV like the Volt.
The point of the above example is to underscore that future PHEVs in combination with alternative fuels have significant potential to drastically impact US demand for petroleum. In 2008, Americans drove 5.6% less than in 2007 due to the economic downturn according to the U.S. Department of Energy. Consequently, oil dropped from an average weekly high of $133.60/barrel on 4 July 2008 to $62.82 on 24 Oct 2008. That’s a 47% reduction in price in only 3 months from a 5.6% reduction in US demand for petroleum. So what will be the effect on the price of a barrel of oil once PHEV’s like the Volt successfully penetrate the market?
Nov 11th, 2009 (11:19 am)Out of curiosity, what “information” did you provide, and what did any of it have to do with Veteran’s Day?
One of the problems of Keynesian macroeconomics is that it assumes government involvement to have a beneficial impact on economic growth. If one starts with an assumption that government involvement contributes to economic growth, then of course, our equations and multipliers based on that assumption will logically lead to the conclusion that government and not overseas spending is beneficial to the economy.
What this does not account for is the economic principle of first causes, e.g.: (A) the fact that people purchase energy from foreign sources BECAUSE it is less expensive than energy from domestic sources; (B) the fact that one of the contributing costs of domestic energy is taxation; (C) the fact that one of the contributing costs of domestic energy is governmental regulation, such as by not allowing oil drilling in ANWR or off the coast of Florida.
The economic principle of first causes would suggest that the simplest and most effective route to energy independence is to reduce the cost of domestic energy production — not increase it by imposing additional taxes. Naturally, no Keynesian equation will ever reflect this, because Keynesian macroeconomics does not take this principle into account.
Respectfully,
Dr. Ibringdoh
Nov 11th, 2009 (11:22 am)Question, rooster:
Where, in a depressed economy, are you going to find 12% of all commuters to spend $40,000 on a new car such as the Volt?
Respectfully,
Dr. Ibringdoh
Nov 11th, 2009 (11:39 am)You are not asking for facts to be checked, you are asking for certainty. When we will be dead certain there is a global warming – which I think there is, in my mind there are too many signs, hurricanes, glaciers melting, higher average temperatures everywhere and so forth – we will be exactly that : dead or at least it will be too late to change course.
I think you missed a few scientific fact gatherings these last years.
Nov 11th, 2009 (11:45 am)The closer one looks at the idea of tiered taxation based upon usage, the better it will look. Lots of flexibility in how it would be set up – two price levels; three, four, etc. — how much tax to collect at each level, and how many gallons of gas separate each level.
And Laura: your 5.5 billion dollar guess to implement this way of taxation is so overblown, I’m surprised you brought it up. That figure is an estimate which deals with the entire credit card system in this country — ATM machines, stores, shops, etc. etc — of which gasoline pumps are but a small fraction of the whole shehbang.
As I said earlier, whatever the implementation costs will be insignificant relative to the tax receipts that would be pulled in. Which in other words means implementation costs are not reason to pooh-poo this idea. Tax receipts would cover its cost very quickly.
Over 142 billion gallons of gasoline are used in America in one year (from Wikianswers). Just a dime of tax per gallon would be triple the cost misestimation of 5.5 billion dollars. And we’re talking much more than a dime a gallon here.
+2
Nov 11th, 2009 (11:52 am)I personally counter with this: if we always wait for lower income people to afford things, we’ll always we waiting and we’ll never progress anywhere.
We should raise gas taxes. Even though it might hurt for a bit, in the longer run, we are going to be better off.
Nov 11th, 2009 (11:53 am)It’s not what you said. It’s how you said it. I didn’t respond to your “points” because you didn’t make any other than to insult Americans as a group. Why bring up obesity other than to bring up the worst stereotypes possible? My point about my working out is that Americans aren’t all the same. And stereotypes are insulting.
Yes. America has the second highest obesity rate in the world. After Mexico. And, yes, a 20% obesity rate is a problem. But a) that’s hardly a majority, and b)obesity rates are increasing everywhere. And, personally, I blame certain bad government policies for our higher obesity rates as much as any supposed cultural defects.
Yes. We need a gas tax. Yes. It’s politically difficult. But saying it will never happen, won’t get us anywhere. You have a choice. You can sit back and assume that nothing will ever change. Or you can follow politicans and vote accordingly. And you can write your representatives about the changes you want. Personally, I favor the latter approach. Defeatism never accomplished anything.
I won’t go into the European comparson other than to say they have their own problems.
Nov 11th, 2009 (11:57 am)Global warming caused the end of the last ice age. I think the theory of man made global warming is dubious at best. I think there are are more real problems to ponder.
Nov 11th, 2009 (12:01 pm)1) Today, 11 Nov, is Vetrans Day and I have the day off, thus it’s relelvancy to today’s discussion
2) The information provided was the EIA oil import data (in barrels) for 2007 and the average price paid.
Nov 11th, 2009 (12:04 pm)Right now the government subsidizes gasoline. Heavily. And they maintain the roads and bridges. (Although not nearly enough.) All of this comes from the income tax. The gas tax will just be recuperating some of those costs. “Freedom” does not entitle you to a subsidy from everone else. It does not give you the right to pollute the air that everyone else breathes. I could go on….
+2
Nov 11th, 2009 (12:14 pm)Well said.
Nov 11th, 2009 (12:23 pm)How about increasing taxes only on the premium gas varieties?
+20% tax on 91 octane gas.
+10% tax on 89 octane gas.
no additional tax on 87 octane gas.
that will take care of the complaints that poor folks will be affected by the gas tax.
Nov 11th, 2009 (12:24 pm)FIrst of all, you’re exempting the first 300 gallons per user per year. Americans, on average, use roughly 450 gallons a year. So, at a 50 cent a gallon tax, you’re talking roughly 25 billion. But you’re assuming gasoline consumption wouldn’t go down due to the tax…And that people won’t find ways around it…And I’m sure that, if this were put into place, that the government would find ways of exempting state employees. (They do on the subways.) And maybe even seniors. (They get reduced fares on the subway.) And they might exempt people under a certain income completely. By the time you’re finished, I don’t know how much revenue you’d get from the program.
Your new machines would have to access a whole new database that would have to be created. And that database would have to be maintained. The credit card companies already have that information in place. They wouldn’t need to replace the whole system. You’d have to add these “new” liscence readers to every gas tank in the country. And, since it’s the government doing it, it’s almost bound to cost more. Maybe a lot more.
And then what do you do about tourists? Do they have to get a liscence to buy gas in this country?
Nov 11th, 2009 (12:25 pm)Easy,
We need a strategy that has no effect if the price of oil stays high, but has a profound effect should the price of oil crash. That is the definition of a floor, and it is the perfect strategy to protect a fledgling domestic alternative fuel industry. Should the price for oil remain high, as predicted by peak oil theorists, a floor tax would have no impact other than a psychological one akin to insurance. However, should the price of oil plummet, a floor tax would keep the price of oil imported into the US at a minimum dollar amount, and would protect alternative fuel start-ups. In addition, the floor would have the added benefit of increased tax revenue. The potential burden to consumers from an oil price floor is an artificial price above the “market equilibrium price” . This artificially high price serves to reduce demand, and can create a surplus that would further depress the equilibrium market price. I don’t think a surplus of oil would be a bad thing, it would mean more floor tax revenue.
Ideally, a target floor price would be just enough to ensure alternative fuel producers stay viable, yet not enough to place an undue burden on consumers. One could study the problem for years, but the real test for an effective floor is whether or not investors are willing to risk their capital on alternative fuels. Fortunately, we already have a target of $70-$80 a barrel according the Biotechnology Industry Organization. Thus a simple solution is for Congress to set the floor at the low end of this estimate, $70/barrel, and monitor investment in alternative energy. If investment in alternative fuel projects is still minimal after a year, up the floor another $10 a barrel.
As for the question of the burden imposed on consumers by a $70/barrel crude oil floor, it can be estimated from historic data of the average weekly price of a barrel of oil verses the average weekly price of a gallon of regular gasoline dating back to Jan 6, 1997. A second order polynomial fits the data extremely well (R2 = 0.972), and predicts that $70 barrel oil equates to an average cost of regular gasoline of $2.88/gallon. For $80/barrel floor, you’re going to pay approximately what you paying now. Of course, the actual price at the pump will vary from the average price calculated above because gasoline prices are a function of crude oil costs, distribution costs, marketing costs, refining costs, and local and state taxes
Nov 11th, 2009 (12:29 pm)I have mixed feelings about this one. Airbags were introduced because people were not using their seatbelts in america. With a good four point seatbelt, we could do without the airbags – although they help prevent injuries even when you buckled up.
As for the other regulations, I’m not that sure. Manufacturers don’t improve their design before there is a compelling reason to do so. It costs too much in R&D if it’s only going to be an option in a few cars.
If safety was really a natural major concern for everybody, we would all drive Volvos. I think govt must impose rules for improvement to occur.
Nov 11th, 2009 (12:42 pm)Precisely. I know that if using my car was a lot more expensive than using the subway, I’d use the subway and save. Right now, I’m sticking with my car because it’s not that expensive and it’s more convenient. It’s simple human behavior.
Nov 11th, 2009 (12:43 pm)I didn’t really answer your question, though — sorry about that. The answer is the cost of purchasing an EREV could be offset with revenue from a floor tax based on need.
I believe that as alternative fueled vehicles enter the market (and I’m grouping EREV’s in with alternative fueled vehicles), they will displace petroleum use. If at the same time we can also introduce alternative fuels such as cellulosic alcohol and algae based gasoline, it would serve to further reduce oil use and eventually depress the market price of oil. That in turn, would serve to increase revenue from a $70-80 floor tax.
-1
Nov 11th, 2009 (12:51 pm)Yes taxes should be raised, but not specifically for EVs, as it should be placed on crude oil (and refined import). Rather these reasons:
1. Revenue and fairness
2. Make Oil less attractive energy choice
The first reason is simple, as consumption drops so too tax revenues with devastating effect on government budgets. This also places the tax on users of energy pushing the decision on them. This also places infrastructure costs on users rather thans subsidize with general revenue.
The second reason is strategic. Oil imports are killing the value of the dollar, driving up debt balances, creating dependence upon hostile countries (lose independence), making country less safe. The environmental aspect is something of a nice side effect.
+1
Nov 11th, 2009 (12:53 pm)Are you kidding me? I read that title and thought this was the stupidest thing I have ever read on here. Then I read some comments and I was mistaken …. some people on here have the most irrational thinking I have ever heard.
Fuel allotment?
Get gas to $8 a gallon?
Imports are driving down the dollar? do you know anything about economics (try big gov’t spending faster then the printers can work)
Talk about hurting the people B. Hussein Obama wants to “help”. Just wait until we are all paying $7000 – $15000 a year for “free” health care and see if you want to pay 3x the current price for gas then. (yes, it is in the bill)
Unfreakin’ believable.
+1
Nov 11th, 2009 (12:54 pm)Image if your gasprice were 9 dollars a gallon as here in Denmark ?????
+1
Nov 11th, 2009 (12:55 pm)The free market is a great tool, if it truly were free. There’s many oil subsidies already in place (indirect and direct) that us tax payers pay to keep prices down. Military presence in oil rich nations is a big one.
Nov 11th, 2009 (12:57 pm)By the way, an interesting “what if” drill is to examine the tax revenue that could have been generated had a $70/barrel crude oil floor price in place during October 2008. On 1 October, Brent Crude closed at $95.97/barrel, and by the end of the month it closed at $61.61/barrel. The United States on average consumes 20,680,000 Million Barrels of Oil/day, thus we must purchase 28,920,307 Million barrel/day, Monday – Friday, when the market is open. On 16 October, Brent crude closed below $70/barrel for the first time since Sept 2007. Had a $70/Barrel Floor tax been in place as recommended above, it would have kicked in on 16 Oct and gasoline prices would have been expected to bottom out at an average price of $2.88/gallon for regular gasoline. . In only 15 days, between 16 and 31 October, a $70 floor tax on oil would have generated nearly $1.7 Billion Dollars in floor tax revenue. If EREVs had been around, that $1.7 Billion (which was generated in only 15 days) could have been used to help offset the purchase price.
Nov 11th, 2009 (1:26 pm)First of all, I’m not entrenched at 300 gallons, nor what tax to charge at the next level, nor even whether to have only two levels. My main interest is to sell the idea of a tiered taxation setup, if there is going to be any tax at all. I’d much rather move on to where we’d be going back and forth on how many different levels of taxation to have; how many gallons to not tax; amounts of tax to collect at each level; etc. In short, how best to tailor this plan so that it best addresses all concerns with regard to helping shift market demand away from gas guzzlers while not hammering too hard on people with low income and at the same time protecting the auto industry from market fallout due to volatility in the oil market. Only a smart taxation plan with a high level of flexibility can manage this halfway well. Flat taxation is a ‘one size fits all’ approach which is likely to create more problems than it solves because it doesn’t take into account the broad spectrum of interests that would be affected.
Domestic tourists would be buying gas with their driver’s licenses and therefore would be operating normally as usual. Foreign tourists can pay full tax as far as I’m concerned – they’d still likely be paying less than they do back home.
Nov 11th, 2009 (2:10 pm)I am a libertarian by nature. I think people should be free to do stupid things. It is not really the governements concern if I get hurt (or at least is should not be).
Nov 11th, 2009 (2:14 pm)I would argue that most people would just continue to pay at the pump and pay the tax. Gasoline is taxed now. If the tax was raised, it would continue to be purchased mainly at the pump. Gas is not easy to transfer around in significant quantities like ciggarets.
Some would cheat, sure, but that is no reason to not do it.
Nov 11th, 2009 (2:19 pm)Exactly,
This would make us free as a country to produce what we want and to drive what we want. There would be some really affordable cars on the road.
I have spent time in the netherlands and could not believe the small simple vehicles I saw on the road. These would not be allowed here due to our saftey standards. They also ride scooters all over the place with no helmets (at least on many people).
Nov 11th, 2009 (2:46 pm)#190
Alas, I can only agree.
On the other hand, I firmly believe that gas mileage is going to take over from 0-60 and 1/4 mile times as the most important automotive bragging right within the next few years, if it hasn’t already. So I’m going to buy a Volt for that reason. Plus, if it helps to keep gas at $2.79/gal, so much the better for me personally. The few gallons I ever put in my volt will be that much cheaper, LOL.
Nov 11th, 2009 (2:54 pm)So instead we have a tax code that requires a professional to a tax return. And corporations have to hire entire departments to file their taxes. I don’t buy the complexity for complexity’s sake argument. I’m more of a “keep it simple” type. Basically, the more loopholes, the more transaction costs. And, basically, the entire operation winds up being much more inefficient than it has to be. That’s great for lobbyists and laywers and accountants. It’s not great for the rest of us.
It sounds to me like you’re planning a whole new section to the tax law code. That’s needlessly time consuming, expensive, and political. Once you make one group exempt, you have to make other groups exempt. And by the time you’re finished, you wind up losing sight of why you started the program in the first place. And one of them is that people will be able to better make investment decisions. With your system, most people won’t know what they’re probably going to have to pay at the pump.
As far as foreign tourists, I have no problem with them paying the full tax. I just want them to be able to buy gas. Would they be able to without a US license?
Nov 11th, 2009 (3:15 pm)I am simply saying that a gas tax in the US would reduce the demand for oil (at the margins) and therefore reduce the cost of oil (at the margins). This reduces the flow of money from our country and reduces the flow of money into the oil producers (some of which are our enemies).
A higher gas tax would reduce the demand for cars a little and that might be a good thing. The past 24 months is too short a period to base anything on. Most people still have their cars and simply have hunkered down (financially) to weather this financial storm. Eventually, peoples cars will need to be replaced. At that point, people will decide what to buy. Fuel prices play a role in this.
There were reports of Chevy Geo Metros (about 15 years old) selling for the original purchase price a few years back when gas prices were high. These cars are really peices of crap (even when new) but the high price of fuel drove this demand. This example is simply to highlight my point that higher fuel prices creates a higher demand for more fuel efficient cars.
+1
Nov 11th, 2009 (3:42 pm)The government paid for much of your education and expects to get your tax payments for years. The earnings you create for your employer as well as the decisions you make as a consumer create multiplier effects in the economy.
If you do something unsafe on the road all that ends, and the government will then pay for first responders, an accident investigation, emergency rooms, a medical examiner and an inquest, and a morgue. Government will also be liable for legal expenses if your heirs and assigns sue for bad road conditions or a lack of reasonable vehicle safety standards.
Nov 11th, 2009 (3:55 pm)Raising fuel taxes only destroys the economy. Since everything seems to be connected to fuel in some fashion its like instituting a value-added tax (VAT). I can tell you there will be limited adoption to vehicles like the Volt because of the cost. Here in AZ a large portion of the population makes 17k-30k. You think they are going to spend 40k on a car? Even with tax credits the cost is too high. The only way to get widespread adoption is to cut the cost of the technology. Perhaps grants into battery research would help the cost reduction along.
+1
Nov 11th, 2009 (3:59 pm)http://gregmankiw.blogspot.com/2006/10/pigou-club-manifesto.html
Nov 11th, 2009 (4:50 pm)Thanks for the great link. Is it just me, or is this guy stealing his stuff from GM-Volt.com, LOL? +1
Nov 11th, 2009 (5:36 pm)36 years too late, actually. But like they say about the best time to plant a tree: the second best time is now to start incrementally, periodically raising gas taxes.
If we had started 20 or 36 years ago, we would not have a lot of our current problems. We’ve sold our economic birthright for the vroom of an overpowered, overweight SUV.
Nov 11th, 2009 (5:48 pm)Gas rationing is a fairer system.. but keep it simple. Just issue each registered driver a coupon book.. just hand in a coupon every week to the gas attendant and that entitles you to 10 gallons of tax free gas.. you need more than 10 gallons?, pay the tax..and you should be allowed to sell your unused coupons.
If you drive an electric maybe you will have some extra coupons to sell..
Coupons worked well in WWII in the US and they still work today in Cuba.
Since Obama is the President, his face should be on the coupons.. it only fair.
+1
Nov 11th, 2009 (5:50 pm)It can be like getting an inoculation before the economy killing petroleum shocks come around. Give gas prices a floor so that investments in gas saving alternatives can become good investments and competitive products instead of seeing short term price collapses in oil wipe out all the progress.
When oil prices inevitably rise the tax can automatically roll back on a percentage basis to provide relief and still maintain tax revenue, and the gas saving technologies will become more competitive.
When oil prices fall again the price floors will come back into effect with the automatic adjustment of the tax rate.
Seems better than waiting for lower oil prices to wipe out investments in alternatives to gas, only to see the economy itself destroyed by petroleum price shocks like in 2008, with no viable alternatives to petroleum in sight.
Nov 11th, 2009 (5:52 pm)Better yet, put a tariff on imported oil. That would kill two birds with one stone: reduce demand by increasing the price of gas, and stimulate domestic production by raising the price of competing foreign oil. Maybe exempt Canada and Mexico from the tariff.
Nov 11th, 2009 (5:58 pm)Our free market system has a built in rationing system. It’s called price. Raise it and they will leave. A play on the build it and they will come ethos. LauraM said raise the consumption tax and lower the payroll tax correspondingly, It’s simple, it’s compelling for the consumer. It doesn’t produce organized crime on the scale of illicit drugs from legions of otherwise law abiding folks trying to beat the system
Nov 11th, 2009 (6:44 pm)#231
Yeah, it’s not like we haven’t been through it before. “He who forgets history is doomed to repeat it.”
It kind of puts me in the mind of Bob Dylan singing, “There’s ten thousand whispering and nobody listening.”
+1
Nov 11th, 2009 (6:52 pm)Brillant!
Nov 11th, 2009 (8:06 pm)That’s the point.
Nov 11th, 2009 (9:42 pm)Interesting thread. I think a tax should be optional.
By driving a Honda Civic Hybrid (03), I voted to pay less gasoline tax.
-1
Nov 11th, 2009 (9:48 pm)Yes, there should be a severe tax, I think I’ll adopt the enhanced driver’s license notion already posted and add that I think the tax should apply to only those who can afford it. I think only people who buy $40,000, 4 seat, plug in hybrids manufactured by companies who owe their existence to deficit spending and the abandonment of free market principles should be required to pay the new gas tax.
Just imagine how fast your Volt could pay for its premium if your gas cost $18/gallon. Also, nice to see so many lovers of the free market on here, cheering on the government subsidized Volt, GM, a company owned by the proletariat now and the idea of manipulating the cost of a consumer good in order to tip the market towards ‘car 2.0′. You all inspire me.
Nov 11th, 2009 (10:35 pm)I love the free market, it’s one of mankind’s greatest inventions. Too bad oil production doesn’t follow free market principals, I don’t like cartels that control production. If they can control price, why can we control demand?
Read up on oligopolies and OPEC on Wiki and get back with us. Here’s the link:
http://en.wikipedia.org/wiki/Oligopoly
http://en.wikipedia.org/wiki/OPEC
Nov 11th, 2009 (10:48 pm)Question: What percentage of oil consumption is driven by demand for gasoline?
You are making an implicit assumption that may or may not be true.
Small correction: A higher gas tax would reduce the demand for NEW cars, and probably not a little.
We have already observed the benefits of $4/gallon gasoline upon our economy. Do you really wish to revisit that?
I’m afraid your example doesn’t support your point. What your anecdote demonstrates is how a gasoline tax could significantly inflate the price of fuel efficient vehicles, thereby making less fuel efficient vehicles more economical — exactly as I hypothesized. The proposed attempt at economic manipulation might cause many people to own less fuel efficient vehicles because they cost less — with the result of a potential INCREASE in foreigh oil demand in place of the desired decrease.
I am coming to the conclusion that (a) you have no idea what the consequences of a gasoline tax hike will actually be, and (b) have little or no interest in taking the Law of Unintended Consequences into account in your decision-making. Perhaps you are not even aware that such a law of nature exists?
Respectfully,
Dr. Ibringdoh
Nov 11th, 2009 (10:57 pm)Alternatively, we could stop inflating domestic energy prices by ending the wave of failed attempts to manipulate the economy by force of law.
BTW, have you seen the price of a laptop lately? It has dropped from about $2000 to about $400 in the past decade without the help of a “desktop tax” from the Federal government.
Respectfully,
Dr. Ibringdoh
Nov 11th, 2009 (11:29 pm)Yes. We are running out of oil.
Peak Oil is when the production of oil, globally, peaks. After which, production goes down.
The amount available for use by the world’s economies will go down after Peak. No more growth in oil availability. This is very new territory in history.
Yes, the easily accessible, cheap oil was pumped first. Yes, there are many billions of barrels of crude oil, shale oil, oil sands and Natural Gas Liquids still in the ground. But it takes money, it takes equipment, it takes highly trained manpower to ‘produce’ this increasingly expensive, increasingly difficult to get oil.
Which leads to production rates peaking. Peak Oil. Rates of production will only be marginally affected by raising the price per barrel, after a certain point.
And the easily produced megafields are drying up. Production rates are crashing, at giant fields like Cantarell in Mexico. The new, difficult stuff can’t be produced quickly enough to make up for what we are losing.
In 2008, the average rate of oil production was 81.82 million barrels/day, or 29.864 billion barrels that year.
“At $1000 / barrel we can live as now for decades” is a FANTASY. At $1000/barrel, that would cost $29.864 TRILLION. The GDP of the entire world is only $69.62 trillion https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html
For $1000/barrel, the U.S. could probably guarantee it’s 20.8 million barrel/day (and some growth) for a few years, using bribes and the military, but the world economic system would be over. Global stability would spiral out of control as one by one, poorer countries lost their oil. Many countries are getting away from “oil markets”, signing direct, longterm supply deals (like China). At some point, war breaks out.
Don’t think you can keep throwing money at the problem until the entire world is working on producing expensive, hard to get oil. That’s not how economies work.
Production will go down. There will be consequences.
Peak Oil is about more than just price. There will be shortages. How the world deals with this is very much speculation, at this point.
I’m glad to see you know about http://www.theOildrum.com
Keep checking that site, and http://www.peakOil.net.
Nov 12th, 2009 (6:35 am)That may be illegal and cause a trade war to boot.. so you would have to be discrete about it.. perhaps impose a “testing” fee or “safety” review on each imported barrel.
Nah, I like the coupon rationing system.. its fair to everyone and it has a built-in option to promote conservation by being able to resell the un-used coupons. You would see a lot more people taking the bus and carpooling.
Make the coupons electronic..
Nov 12th, 2009 (7:42 am)The Government paid for nothing (they don’t earn any money). They took our parents money and used it to hire teachers. Our parents actually paid for our education.
The government has the ability to limit its liabiltiy. So lawsuits can be managed.
The point I am trying to make with my saftey standards issue relates to freedom of choice and the logical disconnect between cars and scooters or motorcyles.
Lets say Israel bombs IRAN and then Russia steps in to help IRAN fight Israel. In all of this mayhem, the straight of hormuz is closed. Oil is now $250 per barrell and gasoline is $10 per gallon within 3 months. Many people will want efficient vehicles and will be driven to adopt scooters and motorbikes to get to work (I considered this very seriously a few years back). Riding these vehicles is OK but we cannot have small unsafe cars. This is the logical disconnect.
While in college I drove a motorcylcle around the Washington beltway for years. I still vividly remember the spinning extension ladder that fell of the truck in front of me at 55 mph in very heavy traffic with cars on both sides of me. The DC beltway is an 8 lane death strip that surrounds the district of corruption. I risked my life to save money. it was my choice and it is legal.
Why can’t I take a smaller risk in a so called un-safe car to save money and gas.
Nov 12th, 2009 (7:53 am)I am coming to the conclusion that you like to argue on secondary points and cannot look at the longterm trends.
If gas prices were higher and we new they were not coming down in 4 months, the car makers would produce smaller more efficient cars because people would demand them at the dealerships. SUV sales would decline and SUV production would then be cut.
This is common sense most people I speak with.
You are bringing up short term consequences that in my opinion are of second order significance compared to the 1st order concern of driving up the demand for efficiency. I am thinking longer term. This type of short term concern is what seems to get in the way of our goverment making clear headed long term decisions.
I think Europe is a good example of what will happen if gas prices are high and remain high. It would seem clear that this enviroment eventually leads to more use of bikes, trains, scooters, and smaller cars.
+2
Nov 12th, 2009 (9:32 am)Wow i cannot believe how many people here want the government telling them what to do. LOL you people are crazy wanting to GIVE you money away to the government, and then have to turn around and GIVE it away to car companies for a car just to save SOME money. I believe that if the taxes on gas were raised then you would not save money by buying a volt because you would have to buy the car and then pay a higher price for gas. And for those of us who cannot afford a new car, well I guess it’s up ours with a big long hard stiff one. People amaze me with the level of dependence they have on the government. One day gas costs will reflect the resources available and we all will have to switch. Let it play out that way. I want a volt as well as the next person (bc i want energy indepence too) but I want to do it myself, I don’t want the government telling me I have to or else i am going to be punished with taxes. Sounds like we are back to being colonies.
Nov 12th, 2009 (3:57 pm)http://www.dailyfinance.com/2009/11/12/pumped-up-prices-4-per-gallon-gasoline-may-be-coming-in-2010/
here is an article talking about rising gas prices anyways
Nov 12th, 2009 (9:31 pm)Sorry, but I don’t agree with your analogy — it’s not applicable to petroleum. The laptop market is competitive because there are substitute products made by many different manufactures. A more appropriate analogy to oil would be if Apple was the only laptop you could purchase, and every time someone else tried to market a laptop, Apple could lower their price until they ran competition out of business. How much do you think a laptop would cost if this were the case?
The problem with petroleum is there is no substitute in the market, it’s an oligopoly dominated by a cartel called OPEC. Big Oil doesn’t own the oil, they just refine it. The oil is owned by states, many of which don’t share US interests or market principals.
A structural problem for the alternative fuel industry is that success will displace oil, and as the demand for oil drops, so does the price. For the foreseeable future, we will still have millions vehicles that will need to burn gasoline or gasoline substitutes as the primary or secondary fuel source. When given a choice, consumers will purchase the least expensive fuel that meets their need – that’s just a fact of life. Thus if we truly want to develop domestic alternatives to petroleum to guard against future price shocks and the ensuing economic chaos, risk management principals dictate we must formulate a strategy that protects alternative fuel startups against a crash in the market price of petroleum so they stay viable. Investors in alternative fuels would be foolish to ignore this potential. This actually happened in the 1980s, and there is absolutely nothing to guarantee it won’t happen again. Should the price of oil collapse again, it would mean bankruptcy for any alternative fuel start ups (algae, cellulosic ethanol, maybe even EREVs) unless they are protected. Are investors willing to invest billons in alternative fuel infrastructure given this foreseeable risk?
I’m not for a flat tax on gasoline to just to make it expensive; I’m for consumer choice and substitute products – I’m for competition. What we need is a strategy that has no effect if the price of oil stays high, but has a profound effect should the price of oil crash. That is the definition of a floor, and it is the perfect strategy to protect a fledgling domestic alternative fuel industry. A floor price on oil would help bring about a real competition in liquid fuels by setting the conditions necessary to give investors confidence that alternatives will have a fair chance to be competitive with oil and earn a positive return on capital. A floor tax doesn’t have to be outrageous, a $70-$80/barrel floor would suffice. That’s what we are paying now. Then we could sit back and let the market do what it does best, determine the winners and losers. If investors believe there is money to be made in alternative energy, funding will come. Also, a floor tax doesn’t have to be permanent. It is only needed until alternatives gain economies of scale and recover their capital expenses, and thereby become competitive with petroleum.
I’m not the only one who thinks this way. According to Paul Winters, who is a spokesman for the Biotechnology Industry Organization, investors think an oil price of $70 to $80 per barrel is the threshold at which cellulosic ethanol becomes viable.
Nov 12th, 2009 (11:10 pm)If you can point to anything I have said that leads you to this conclusion, I would be appreciative. Otherwise, it appears to be another unsubstantiated claim that you have made.
Sorry, that may be “common sense” to “most people” you “speak with,” but that does not make your statement logical, nor true. The problem with your statement is that you are constructing a sliding argument, in which you appear to hope that one thing follows from another because it sounds good.
SUV sales did decline (as did many other types of vehicles), but they have not been shut off. What happens when you attempt to manipulate a market is that market undergoes a market correction to maintain the status quo. In the case of high oil prices, it resulted in an economic downturn which caused demand to fall, resulting in a dramatic fall in oil prices to where people were willing to pay for it, and then people went back to buying SUVs — albeit at a lower level than before.
The reason for my questions was that I was curious (a) if you understood this imperative and (b) did you have a work-around to this dilemma. It does not appear at this point that you do.
On the contrary, I raised a hypothesis contrary to the one that you suggested, and asked if you had considered it. I said nothing at all about “short term” or long term. Unfortunately, before one can address the long term, one has to be able to accurately predict or understand the short term.
I would suggest that this manner of long term thinking, without considering the intermediate steps, is exactly what has dug us into this hole.
Have you been to Europe? It’s a nice place to visit, but it sure is nice to be able to go to a hospital without the doctors being on strike — or mow your grass without paying a lawn mower tax.
Another thing to consider is that the population density of Europe is much higher than in most of continental U.S. What works or appears to work for them (especially scooters or mass transit) isn’t easily applied in the U.S.
Respectfully,
Dr. Ibringdoh
Nov 13th, 2009 (12:04 am)I wasn’t trying to make an analogy, but suggest an alternative approach to a dilemma than the usual failed attempt at governmental interference.
One reason laptops are competitive is that the government didn’t step in and start restricting how and where they are made.
If Apple were the only laptop you could buy, it would have to be because the government restricted that and created a defacto monopoly, wouldn’t it? If Apple were an oil producer, they would not be allowed to drill oil in some of the most oil-rich areas of this country, notably Alaska and the Gulf of Mexico.
How much do you think your laptop would cost if the government stepped in and said that they all had to be made in Los Angelos, CA?
There are alternatives to OPEC. The principle reasons we buy from OPEC is that it is less expensive. Two driving factors for this cost difference are (a) cost of production, and (b) the fact that we manipulate our currency in such a manner as not to have it deflated or lose international value from trade deficits. If our currency were tied to an objective standard, then when we ran trade deficits, we’d have less money for foreign products, and domestic sources of goods would become more affordable.
Big government is a double culprit in this matter because they (a) restrict domestic energy production and (b) manipulate the currency by using the credit system to replace currency that migrates overseas.
Before you make a statement like that, I would appreciate it if you defined two terms:
1. Big Oil.
2. Ownership.
Again, I think we could be a lot more clear in this discussion if we started from a working definition of ownership. And when you refer to states, I assume you are referring to foreign countries, not states of the United States. I’d like to make sure we are talking about the same thing here, because there are instances in which state governments (of the United States) have claimed ownership of mineral assets.
Two issues:
First, you are assuming fuel/gasoline to be the driving source of demand for oil. Oil is used for many things not directly related, and in fact, just about anything you have that is made using plastic is made using oil as the base raw material. My point is that just because gasoline demand falls, this does not necessarily indicate that oil demand will fall.
Second, if one is discussing electric cars, at seven cents per kilowatt hour, oil isn’t likely to compete regardless of how far it falls . Another alternative fuel with significant short and medium term potential is natural gas.
I would break this down a bit further: the principle reasons people wil purchase gasoline for the foreseeable future is (a) there are affordable vehicles that use it, and (b) an infrastructure that provides it.
As I mentioned above, electricity and natural gas are low cost alternatives to gasoline — but cars that use them are expensive, and there is little or no infrastructure.
Again, if we would stop manipulating currency via the credit system, the trade deficit itself would cause domestic materials and infrastructure to become more cost effective.
Protectionism, in a sense, is what got us into this mess: We ran massive trade deficits, spent money we did not have, limited domestic resource production, and relied upon the credit system to replace currency that migrated overseas. The result was a gradual devaluation of our currency, which when coupled with growing demand for oil, drove the cost of oil to where a market correction ensued — with many other consequences to the economy.
If you protect alternative fuel start-ups against oil or other competition, you will similarly inflate the value of these fuel starts above what they are worth, and leave them vulnerable to a market correction after businesses have invested hundreds of billions of dollars in the technology. The result, IMHO, is likely to be that you destroy what it is you seek to protect.
And by protecting them, you risk bankruptcy after a much higher degree of investment, with much larger consequences, when the inevitable market correction ensues.
Not to rub salt in anyone’s wounds, but it would be a little bit like if GM were to fold and close its doors tomorrow, having recieved $50 or more billion in tax dollars. The repercussions would only be that much wider and larger.
I think wind energy is a good risk. I think lithium ion is a good risk. I’m not sold on cellulosic ethanol, because the energy required to manufacture it is greater than the energy obtained by it.
I would respectfully disagree with Paul Winters and others who support cellulosic ethanol, for the reasons I have just mentioned. Cellulosic ethanol is chemically and thermodynamically inefficient. We would be better off, IMHO, to take the natural gas that is used to convert cellulosic ethanol, and convert it into a physical form that is amenable for powering vehicles. This is a far more energy and cost-effective approach.
For these and other reasons, I similarly and respectfully disagree with the “floor” strategy, as I believe it will induce its own market correction. Regardless, I appreciate your sharing your thoughts, and hope that you have found my own to be worth considering.
Respectfully,
Dr. ibringdoh
Nov 13th, 2009 (7:33 am)The thing about gas taxes is that if applied, it is a draconian “sledge hammer” method for change.
While instead, the redirection of carbon-based subsidies kills two problems at the same time. Redirecting subsidies is efficient, quick, retractable/more controllable, **seasonally-adjustable” and nimble for “just in time” purchase subsidy needs.
Tree rings tell us that a tree grows faster when conditions warrant. EREV advancement ought to have the same sort of mechanism as I have been writing about here for the last few days.
Taxes on gasoline is a white elephant in the room, which can gradually become inefficient as intended-to-be-applied.
Month to month variable **seasonal even** redirecting of subsidies to force/warrant the development of EREV production facilities and subsidy at point of sale is a flexible method with which to fund (in conjunction with mandate) the more rapid expansion of production as well as sales.
People buy when the economy heats up in the Spring, and, the need for costly heating of the home decreases at the same time. This is one of the many simple reasons redirecting subsidies seasonally (as well as being sensitive to quickly changing market costs to the consumer) makes for more stable carbon energy cost and usage, and, provides an additional yet more efficient method to control carbon energy.
It might also be set up is such a way so as to help stifle speculation. (A win, win, win, win, win set of situations).
Nov 13th, 2009 (8:59 am)Taxes that are difficult to evade:
1.Property Tax
2.Gas Tax
These taxes are very difficult to evade.
You are right that many other taxes are easy to evade. But this is slowly changing. As electronic payments become much more popular, evading income taxes, sales taxes etc will be much harder.
For example, Walmart is the largest retailer in the world, as such they are probably the largest tax collector in the world. When you buy something at Walmart, it is impossible to evade taxes.
Nov 13th, 2009 (9:57 am)True, but that is pretty much a hard and fast rule for major societal changes. They don’t come easy. It won’t be easy reagardless of whether taxes are intentionally employed to intelligently guide the change or we leave it up the whim of supply/demand market economics. The only way to avoid difficult heavy-handed change is for supply to keep up with demand and change is never forced. It is pretty clear that we have supply issues that will only get worse. Most wars tie back to energy resources. Without an orderly transition, the risk of a major war gets a lot greater.
Nov 14th, 2009 (11:00 pm)Dr Ibringdoh,
Good conversation, and I do appreciate and respect your comments – I’m not offended that you disagree.
By “Big Oil”, I was implying the US refiners (Exxon, Texaco, Chevron, etc.), the companies that were getting hammered in the press when their profits were at record highs last year. (BTW, I have no problem with their profits, it was still only about 10% of their operating costs, which was unchanged from prior year percent+ profits– but that’s another discussion). By states, I was referring to countries. The oil, and access to that oil, is controlled by countries…including the U.S.
I’m not assuming, I’m using EIA data. In Aug 2009, finished gasoline, jet fuel and distillate fuel oil account for 75% of the Total Crude Oil and Petroleum Products for the month. Finished motor gasoline alone accounted for half (49.4%). So according to the EIA, gasoline, jet fuel and distillate fuel oil are the driving source of demand for oil, but your are correct, it is not the only source of demand. Nevertheless, I would like to see substitutes developed for gasoline, jet fuel and distillate fuel oil using domestically produced alternatives. BTW, I’m a big fan of Natural Gas, specifically Methane, and I lump that into domestic alternatives to oil. As I’m sure you already know, methane can readily be converted into Fischer Trope liquids that are compatible with today’s motor vehicles. Coal can even be converted into methane using anaerobic digestion without releasing CO2 during the conversion. (Do a search on MicGas if you’re curious).
The problem isn’t a lack of alternative liquid fuel technology; the problem is a lack of capital to commercialize it because investors aren’t convinced petroleum will stay above the break even costs.
What protectionism? Are you referring to environment protectionism and the impact it’s had on oil drilling in the US? A floor tax limits demand, our environment polices have limited supply, thus it’s like comparing apples to oranges in my opinion. That said however, for the most part I agree with you here. Imported oil was and continues to be one of primary drivers of the trade deficit. The fact that we have been prevented from developing domestic sources of oil has only made it worse.
I agree that a floor will inflate the price of oil above the market equilibrium price once alternatives to oil began to displace it in the market, and economics 101 teaches that will likely result in surplus of oil on the market. However, I respectfully disagree with the rest. How exactly is a surplus of oil on the global market a bad thing for a country that currently imports more than 70% of its oil? Especially if at the same time domestically produced alternatives are developed and enter the market? Will that not serve to help lower the trade deficit? Now if a floor tax created a scarcity of oil, then I’d be concerned due to the relative inelastic demand for oil. Of course, that’s the situation we are in now – what’s going to happen to the price of oil when the economy recovers? If oil becomes scarce (for what ever reason), there will be pain and no quick and easy solutions. Where as, if there is an oil surplus, oil exporting nations will just have to cut back production – OPEC has a lot of practice doing just that.
While I disagree with you on the impact a floor tax, I absolutely agree with you on our monetary policy. So when do you think the hyperinflation will begin and the dollar plummets? On the positive, it will solve the mortgage problem (sarcasm).
Nov 15th, 2009 (1:50 pm)$5 gallon gas already caused the worse depression in 50 years in 07 -08 . Oh yeah rise gas to $6 NO make it $12 a gallon , A nice man manmade world emergence (( “Never let a crises go to waste” David AXLEROD chiefofstaff))
Nov 15th, 2009 (6:21 pm)That’s why we need a Floor Tax to encourage investment in alternatives, not a flat tax. What’s going to prevent another price spike in 2010 or 2011? How much investment is being poured into commercializing alternative fuels?
A floor price doesn’t have to be outrageous; it only needs to be around $70-$80/barrel, according to investors. The relationship between the price for a gallon of regular gasoline, and the cost of a barrel of oil is the following:
Y = -1.1669E-04*X^2 + 4.1977E-02*X + 5.1297E-01, where Y = cost of a gallon of regular gasoline, and X = cost of a barrel of oil.
Using this formula, $70 barrel oil equates to an average cost of regular gasoline of $2.88/gallon. Thus a floor would mean that gasoline would never sell for less than $2.88/gallon regardless of the price of oil, but it could go higher. If it did go higher, there would be no tax. Is that to much sacrifice to encourage investment to commercialize alternatives to gasoline? The goal would be if the price went higher, consumers could purchase alternatives to gasoline and thus drive the price back down. We can’t do that now.
Nov 19th, 2009 (2:43 pm)I disagree..
Look how well the “free market” responded to $4/gallon gas last year. It sat there like a deer in the headlights. The technologies needed to transition away from fossil fuels (and the time will come) require investment, incubation, and incentives for development during the years leading up to their need. By implementing a gas tax, the “free market” has a feeling for the direction of the U.S. energy policy and would then, in theory, begin investing in alternative technologies.
Nov 19th, 2009 (10:23 pm)Hmmm…this debate is going nowhere fast…here’s my two cents:
Government should stay out of the way and let markets do their thing, BUT…they won’t do that anyway. We already have gas taxes to pay for infrastructure, etc. Electric cars won’t solve traffic issues, so now you’re looking at taxes on electricity (or, since more ppl will hopefully start generating their own, it will just have to be more FIT). BUT the argument is good that continuing a high use of oil is more costly to our government, and therefore confirms the higher gas tax. BUT WAIT! Higher fuel = higher food. Suck.
Solution: Tax at not a fixed rate, but fixed price, moderately. Like up to 2.75 for now. Then, like stamps, the price for the consumer is predictable and therefore manageable, but the Postal service (or in this case, US Gov’t) gives and takes from a pot of where that tax spends to. DONE