Are Gas Prices High Enough?
by Jeff McIntire-Strasburg, St. Louis, MO on 05.15.06
Gas prices work themselves into nearly every conversation occurring in the US right now, and politicians from both parties are tripping over one another to propose a range of ill-conceived “solutions,” ranging from a $100 tax rebate to a tax “holiday” on gas taxes for two months of the summer driving season. The political commentators have been weighing in on these proposed solutions, and while most of them demonstrate the same lack of imagination as the political class, a few pundits caught our eyes (and our imaginations) last week with more genuine, and even radical, proposals for addressing gasoline prices. Both Time’s Joe Klein and the San Francisco Chronicle’s Mark Morford take the position that perhaps the prices for gasoline aren’t yet high enough.
While Klein is definitely the more low-key and moderate of the two columnists, he doesn’t hold back in noting that 1) the American publics’ BS meters have been amazingly well-tuned on this issue (the rebate proposal, for instance, met with little but derision), and 2) perhaps its time we start thinking of gas taxes as “sin taxes” that punish or reward behavior based on its societal and environmental impact. Klein goes so far as to propose a revenue-neutral carbon tax, something that economist ranging from Paul Krugman to N. Gregory Mankiw have suggested for years, and which noted green business expert Paul Hawken proposed in the early 1990s in The Ecology of Commerce. Perhaps we Americans are ready for major tax changes that address our “oil addiction.”
Morford, on the other hand, is more radical in his approach just as he’s more aggressive in his writing style (if you don’t read Morford’s “Notes and Errata” column regularly, start!). That aggressive style, though, never masks the writer’s optimistic view of human nature, and in this column, Morford argues that the pain of much higher gas prices could actually bring out our better selves:
Here's what we could do: Give gas discounts to cab drivers (at least initially) and metro transit systems and low-income folks, those who have to drive their busted-up '78 Honda Civics to their jobs scrubbing restaurant toilets and flipping burgers and vacuuming the residual cocaine from the seat cushions of numb SUV owners. Everyone else, 10 bucks a gallon, across the board. Eleven for premium.It would take some finessing. Maybe also give a price break to some truckers and trucking companies (so vital to the overall economy), but not so much to global delivery companies (FedEx, DSL et al.), because not doing so would force them to raise shipping rates and force you (and me) to reconsider buying everything online and hence will encourage you to shop locally once again, thus reviving a stagnant local economy.
Voilá -- gas crisis, oil crisis, warmongering agenda, pollution issues, road rage, traffic congestion, urban decay, oil profiteering -- all completely almost totally somewhat solved. Or at the very least, dramatically, gloriously shifted toward ... I don't know what. Something better. Something more humane, less greedy, more sustainable. Could it work? How outraged and indignant would you be to have to pay that much for gas? How long would that feeling last?
That something better, Morford argues, is what we saw after 9/11 and Hurricanes Katrina and Rita:
Shocking change brings people together. Brings out the best in humans. Or at least, makes you rethink what's truly important in your life. …This is the unappreciated, under-reported magic of the human animal. We are infinitely adaptable. We can accommodate far more than politicians and pundits and the morally knotted Christian right would ever have you believe.
Lots of food for thought here as we Americans have to look in the mirror and see our conspicuously-consuming, gas-guzzling selves looking back. I don’t know if higher gas prices will bring out our better natures, but they’re definitely something to consider as we recognize the party fueled by cheap energy can’t go on forever. We were once a country that prided ourselves on our capacity for innovation, and could certainly use a little of that spirit now. :: Joe Klein, Time magazine and Mark Morford, The San Francisco Chronicle
We already have our British gas prices at 99p/litre ($1.88/litre). Tax is equivalent to 4-5x of the fuel cost (about 72p in each £1 of fuel is tax). I dont believe it is having much effect on car use here, why would it elsewhere?
Matt,
Well, I don't know. Cars certainly seem to be smaller, more fuel efficient in the UK. I'm also pretty sure that the number of miles driven per year is much lower, and the use of public transportation is higher. Gas price is not the only factor for that, but it certainly is a big one.
So first...
I've noticed a trend lately to push more local commerce. While I can certainly see the benifits with regards to perishable goods that are not substantially different than what might be available otherwise, I cannot seem to apply that same reasoning to manufactured goods.
First, the real underpinning of our economy is the use of specialization. This, while getting a bad wrap lately, is the very property that propelled us as a species into higher level thinking. It is also a major requirement of a national market economy. Brand recognition only works if you can assure access to your brand (and control of it's manufacture) across the entire range of your target audience. In a mobile society, it makes sense that this happens on a national scale.
This brings me to my problem. Why don't we want Fedex, UPS, USPS, et al to deliver packages locally? From a packaging persective I would think that the total waste is likely similar to packaging the pallets for local retail and then carting local retail home vs shipping from a distribution center dirrectly. From a gas usuage perspective, both Fedex and the trucking service the distribution company uses benefit from economy of scale. The package is never being carried alone in a vehicle. In fact, the only time it would be concievable that a vehicle would be driving for the sole purpose of transporting a single device, would be in traveling to and from your local store to purchase the device.
So where is the enviormental gain? And how does that gain stack up against he ability to reduce redundant retail space? Also, doesn't switching to a end user demand distribution model ensure greater efficiency in transporting goods?
With regards to gas prices, the US economy is much less insulated from jumps in gas prices compared to the EU. While the EU enjoys a comprehensive rail system and a greater percentage of ports (along with shorter distance to a port) the US must instead rely primarily on Trucking for our product distribution. Thus changes in gas prices are quickly incorperated into product prices. Any drastic changes in Oil prices would necessarily account for a similar change in inflation and a lowered standard of living. I'm not sure Americans will be agreeing to this.
Further, prices have not peaked. Having some friends in the Oil business, I'm told that 60+ dollars a barrel is not a temporary high, but rather a necessairly level due to increased demand. The cost of Oil is really established by the cost of the last barrels produced, not the first. When our demand increases beyond supply, that additional supply is picked up by more costly extraction methods (Old wells or Shale mining for instance). These methods naturally cost more to perform and thus are not able to be sold at substaintially lower prices. While in the past the US and EU could bully Oil rich countries into artifically lowering the ceiling of their gas prices, that will no longer be possible. China, the EU, and the US are all strugling against each other to ensure supply. This means that no one power is strong enough to enforce sanctions or miliatary force on an Oil Rich country.
Oil is a commodity and our demand is out pacing our supply at this time. Expect a balance to be reached soon as gas prices continue to rise and market forces drive consumers towards rationed usage.
I think high-priced gas is a great start, if only it gets people to reconsider their commuting habits and disposable lifestyles, consumer identities and short-term thinking.
Peak oil and climate change are two sides of the same coin; and whether we like it or not, the age of oil is coming to an abrupt halt. Sacrificing convenience and comfort and "living standards" are necessary if we wish to leave the next generation a habitable planet.
The cost of Oil is really established by the cost of the last barrels produced, not the first.
The price of oil, especially now, has nothing to do with production costs.
It's idiotic to propose taxing fuel more to encourage conservation or mass transit. What are politicians going to do with that money? Build more Republican bridges (Alaska) and trains (Mississippi) to nowhere? Fund more wars in order to get oil?
States should take the lead with this and consider revamping their yearly registration fees with regard to fuel economy. If you have a Prius or Yaris or Golf TDI, you pay $25 a year. If you have a Suburban, Excursion, Dodge Hemi Quad Cab, H2, or some other gas guzzling vanity/penis-extending thing then you should pay $3000 a year or more. Make it kind of a sliding scale.
Who says that's what is going to be done with that money? How about universal healthcare? Rebates on fuel efficient vehicles? Creating light rail and other mass transit infrastructure? Investments in renewables..
I know it's easy to be cynical and think that no US government is going to do that, but that's why it's called "change".. Soon, we just won't have a choice - by definition, what is unsustainable can't last...
It's idiotic to propose taxing fuel more to encourage conservation or mass transit. What are politicians going to do with that money?
States should take the lead with this and consider revamping their yearly registration fees with regard to fuel economy.
How is increasing registration fees any different than increasing gas taxes? The US goverment would still be getting the money. I think any increase would be pretty pointless if none of the money went towards alternative fuel R&D. Not to mention I can only imagine the kind of flack the goverment would get if it spent the money on idiotic things given the ginormous debt it's aquired.
10 bucks a gallon? That'll get things going!
No discount for truckers. That'll get the railroads going again.
No discount for Fedx. Local merchants, manufacturers, farmers, workers, will be viable again. Good bye globalization and the slavery that powers it.
I can see the rush for electric bicycles, pedal bicycles, 200mpg mopeds, 100mpg motor scooters, electric scooters, electric cars.
I've read that electricity costs one tenth of petroleum.
At 10 bucks a gallon it will cost one thirty third.