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The Price of Gas – Not High Enough Yet

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You’ve probably noticed that gas prices here in the United States have been at “historic” high levels for quite a while now. What that means is that they’re super-high compared to what we’ve gotten used to, but not quite as high as they were under Jimmy Carter when prices are adjusted for inflation. Everyone’s moaning and whining about how much they’re paying. Right now it’s an average of an extra $500 per vehicle per year compared with a couple of years ago, and that’s a shock. It’s counteracted some of the benefits of the Bush tax rebates, it’s breaking the back of the working man, it’s going to lead to runaway inflation, and so on – or so they tell us again and again.

Here’s the truth. Gas prices have been artificially low in the US for decades. It’s been great for the auto industry, and it has helped keep other consumer prices down, but it’s also built up hugely false expectations, led to dangerous complacency in a number of industries, devastated our balance of trade, and cost us a good measure of our economic independence. People in every other country around the world are paying about twice what we pay for gas, and they find a way to live with it. Right now we only see the short-term cost, but maybe it’s time to look at the long-term benefits of higher gas prices, finally embrace reality and encourage them to go even higher.

Yes, lower gas prices do save us gas money and let us drive bigger and more expensive cars. They also slightly reduce the prices of most consumer goods, which are distributed nationwide by truck. Here’s what low gas prices have also done.

• They’ve destroyed our domestic oil industry by making it unprofitable to exploit the massive oil resources here in the US.
• They’ve destroyed the railroad industry because they make trucking goods cheap enough that trucks can outperform railroads, which are by nature a more cost-effective and efficient means of transporting goods.
• They’ve encouraged stagnation in the auto industry. Better, more efficient engines have been designed, but because gas prices have been so low the market demand for them is low, so they aren’t being produced with much enthusiasm.
• As a side-effect of this, low gas prices also contribute to higher levels of pollution because they encourage us to drive more than we really need to and not use alternatives.
• They increase the tax burden for everyone because high levels of traffic increase maintenance cost for highways.
• They’ve encouraged urban sprawl, which has spread people out too much and made urban mass transport impractical and expensive.
• Dependence on low gas prices has put us at the economic mercy of terrorist nations in the Middle East, which we depend on for our supply
• They’ve even been a large factor in the near-disappearance of the family farm, because with cheap trucking it’s easier to bring in produce from outside of the country or from huge agrobusinesses than to buy from small local producers.

The list goes on and on. Low gas prices are at the root of many of the long-term economic problems we face today.

Yes, high gas prices hit us hard in the wallet. But what’s the natural response to an unexpected expense? You look for ways to economize. You don’t like paying so much for gas for your Hummer? Go out and buy a smaller car. Go out and buy an electric car. Go out and buy a hybrid car. Drive a car that runs on a non-petroleum fuel – they do exist. Ever heard of Ethanol or Biodiesel? You might even take a look at public transportation. Your parents and grandparents probably used it and they survived.

Low gas prices discourage innovation and the introduction of new technology Did you know that a company called UQM Technologies has developed a hybrid engine for the Hummer? But because gas prices have been so low, it hasn’t been planning to make it available to the public and is just selling it to the military. Similarly, Dodge has a high-efficiency hybrid pickup that can run on biodiesel — a brilliant combination — but they aren’t marketing it to consumers because cheap gas keeps demand down. Several companies even have viable electric cars ready to go to market as well. They’ve just held off from major distribution because they couldn’t compete with regular cars because gas prices have been so low.

Similarly, distribution of alternative fuels for the already existing vehicles which can run on them has been slow because it was hard to compete with gas on price. Biodiesel sells for about $2.75 and pure Ethanol for around $3. The gas price has to get higher than that before they’re competitive. Until then they’re just much lower-polluting and cooler than petroleum.

Higher gas prices would change all of this. Higher gas prices mean that you might soon be able to buy a Hummer which gets better gas mileage than a mid-size sedan does now. Higher gas prices would mean:

• Instead of buying foreign oil we could use our vast domestic resources of harder to access oil like oil shale, which would create lots of jobs and business revenue
• Reducing our trade deficit and making the economy stronger by importing far less gas at a disadvantageous price.
• A rebirth of the failing railroad industry so we wouldn’t have to bail it out every few years.
• Giving the lazy car companies a kick the right direction and putting new and more efficient technology on the fast track.
• The return of farmers markets, farm cooperatives, a boom in small farms and the end of farm subsidies – all because it would become more economical to produce locally than trucking produce nationwide. Not to mention the huge growth in agriculture for the production of biodiesel and ethanol.
• Less endless highway construction to accommodate the ever-growing numbers of cars.
• Lower state and local taxes for road maintenance on roads that will handle less traffic.
• New and better transportation networks, making attractive but impractical systems like light rail a truly viable option.
• Reduced pollution, first from people driving less and ultimately from increased use of more fuel-efficient and less-polluting vehicles.
• A much stronger economy because all of these things would create jobs and opportunities to make money and start new businesses.

Every additional cent you pay for gas is an investment in strengthening our economy, improving our environment, and making our nation more independent. Do you like paying money to oil shieks who pass it on to terrorists?

Realistically, our current gas prices around $3 a gallon aren’t quite high enough to cause all these changes quickly – that’s actually still a relatively low price compared to other parts of the world. We’re getting closer and things are slowly changing, but to see real change we need to head for $4 a gallon or break the $5 barrier.

What we really need on top of this increase in gas prices is a whopping big federal gas tax. Don’t expect to see such a move from the Bush administration, but a $1 a gallon tax on gas would push the price high enough to bring about immediate change, plus it would put enough revenue into the federal coffers that they could balance the budget and pay for the War in Iraq and maybe even keep lowering our taxes at the same time. Another quarter or so in state taxes would solve state budget problems just as quickly.

Conservatively, with a $1 tax on each gallon of the almost 300 billion gallons of gas we consume each year we’d be looking at close to $300 billion in added revenue for the federal government per year. That’s enough money to solve a lot of problems. Here in the State of Texas a quarter a gallon would be at least $4.5 billion for the state each year. That’s more than we need to solve our education funding problems and turn the border with Mexico into some sort of futuristic video game arena.

So, embrace higher gas prices. They’re good for you and good for the country. Write your congressman, write your governor, write the president. Tell them you’re ready to see gas at $5 a gallon and the sooner the better. Pay more for gas, stick it to the Arabs and see our economy boom.

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About Dave Nalle

  • http://www.eclecticlibrarian.net/ Anna Creech

    Wow. Very thoughtful, reasoned, and unexpected coming from you. I think I have mis-judged you.

    My little 1995 Toyota Tercel is still getting 40 MPG, but I’d like to eventually get a replacement that is affordable and has a higher MPG. The hybrids are way out of my price range.

  • Lumpy

    Damn. I thought you were like Mr. Tax Cut, but here you are sounding like the most rabid of the enviroleft. What gives?

  • http://www.culturesalad.blogspot.com Ray Ellis

    You never cease to amaze me, Dave. And I am foursquare with you on this one.
    Not to come across as a rabid treehugger, but I gave up on cars over a year ago, and I very rarely regret that decision. Those who say that you absolutely must have a car in Texas, especially in Dallas, are lazy or not creative or both.

  • http://www.futonreport.net/ Matthew T. Sussman

    You forgot one more advantage of high gas prices:

    • An excuse to blame Bush.

  • http://www.nrlc.org/ Tony G

    Blame Bush?

    Let’s see…Do you support us drilling in Anwar?

  • http://www.nrlc.org/ Tony G

    Dave, I believe we have to not look ahead and get used to paying five dollors a gallon and instead try as hard as we can to keep it low.

    Just because France pays 5 a gallon doesn’t mean we have to.

  • http://www.culturesalad.blogspot.com Ray Ellis

    Once again, the entire point of the article soared right past you, Tony.

  • Lumpy

    Hey, what about the poor working stiff who can barely afford to run his car at $3 a gallon. At $5 he’ll lose his job because he can’t afford to drive to work if his income is below about $35k a year.

  • http://www.nrlc.org/ Tony G

    I’m with Lumpy. Damn those Europeans and these American European wannabes!!!!

  • http://www.futonreport.net/ Matthew T. Sussman

    Let’s see…Do you support us drilling in Anwar?

    I’m staunchly opposed to mutilating bodies of former Egyptian rulers.

  • http://www.nrlc.org/ Tony G

    You knew what I meant…now answer the fricken question.

  • http://www.culturesalad.blogspot.com Ray Ellis

    This is why the dinosaurs died–they couldn’t adapt. You won’t lose your job because you can’t afford to drive to work–you’ll lose your job because you used that as a lame excuse rather than devise an alternative means of making it to work.
    Oh–and what is an “American European wannabe?

  • http://www.nrlc.org/ Tony G

    We shouldn’t have to adapt to liberal ideas if we don’t have to.

    An American who is a European wannabe is someone who says “Hey look! The French are paying 5 dollors a gallon so we should too!”

  • http://www.eclecticlibrarian.net/ Anna Creech

    Employers should to pay employees wages that are enough for them to live near their place of employment. I’m thinking of the low-wage workers that make up the infrastructure of resorts and other high-cost areas. Either pay them enough to live there or you go out of business because you don’t have employees.

  • JR

    Tony G: We shouldn’t have to adapt to liberal ideas if we don’t have to.

    Yeah, but we’ll have to if we have to.

  • http://www.1bigdragon.blogspot.com Peter J

    Sorry Dave,
    You do make a lot of very good points, theoretically. The only actual benefit that we can realize right now is public transportation. I lived in Boston and left my car parked most of the time but that’s pretty much only the case in larger more established cities. Everything else sounds too much like Right wing trickle down economics, they sound great too, only problem the only thing that ever trickles down is crap.

  • http://www.nrlc.org/ Tony G

    JR said: Yeah, but we’ll have to if we have to.

    This doesn’t mean that we shouldn’t do everything we can to prevent high gas prices.

  • JR

    Giving mentally retarded people access to the internet is a liberal idea, isn’t it?

  • http://www.culturesalad.blogspot.com Ray Ellis

    It’s one thing to talk thatalk–walking the walk is quite another matter. So that poses the question–what are your solutions, Tony? Or can you get past drivel?

  • http://silverstarhawk.livejournal.com Jared

    Eh, I’m bias. It’s a good argument, but my dad works for a transportation company. He’s paid by the mile. He drives what they give him. he has no say over what kind of fuel he runs on. And obviously public transit isn’t an option when the whole point is for you to drive from point A to point B. he’s having to spend more time away from home already because of the increase in gas so far. I shudder to think what continually raising the prices would do to the poor man.

  • http://absent-mind.blogspot.com/ Jet in Columbus

    Is it me, or is Tony related to BoingBat?

  • http://absent-mind.blogspot.com/ Jet in Columbus

    You’re not taking into account delivery drivers and people who rent cabs and then try to make a living putting their tips into the gas tank…

    I liked the article though, much as I tried not to, damn it.

    Solus mei sententia
    Jet

  • http://ruvysroost.blogspot.com Ruvy in Jerusalem

    Dave, its’s a great article. And if anybody believes in public transport, I do. But owning, and feeding a car was a ncessity in St. Paul, if you wanted a job that paid more than minimum wage. I suspect that this is still true. Bear in mind, that in Israel gas DOES cost $5/gallon, and Israelis tend to earn half of what Americans do – if they are lucky.

    In most of your country, intra-city transit, suburb to suburb public transit, and things of this nature just do not exist. Here, we have a pretty decent public transit system, but in the States you do not.

    The rails are falling apart in the States. Where will the money come to resuscitate them to carry goods and carry them to all the burgs and farms etc, that you speak of? Will this come from reduced taxes?

    The ultimate price you pay for everything in the States will rise to pay for the price of gasoline. Where does that extra money come from? Does it come from the rich? Give me a break!

    Tripling the world’s oil prices in 1973 has been draining your country of a lot of wealth for 3 decades. The recent increases, which amount to doubling the price of oil is impoverishing your country even more.

    You wrote a great article, but it just don’t wash clean…

  • Dave Nalle

    Damn. I thought you were like Mr. Tax Cut, but here you are sounding like the most rabid of the enviroleft. What gives?

    I didn’t make the point in the article, but it ought to be made. The gas tax I propose is NOT the same as the kind of taxes I ordinarily object to. It’s more on the order of a usage fee for those who drive a lot. It’s not a violation of basic property rights because it is entirely voluntary and only impacts those who choose to drive to the degree that they choose to consume gas.

    I’d recommend that a certain amount of money from such a tax be specifically earmarked for regional and local public transportation programs.

    As for it hurting the working man, he ought to be taking the bus, carpooling and finding other ways to live within his means anyway, callous though that may sound.

    Dave

  • Dave Nalle

    et’s see…Do you support us drilling in Anwar?

    Well, I certainly do, Tony. Increased domestic production should go hand in hand with conservation.

    Dave, I believe we have to not look ahead and get used to paying five dollors a gallon and instead try as hard as we can to keep it low.

    Just because France pays 5 a gallon doesn’t mean we have to.

    But the articifially low price has been the standard for years and it’s really not working. It’s what killed the Texas oil business in the 1980s, and has had all the other negative effects I note in the article. The idea is not to pay more to keep up with France, but to pay more because it will strengthen our own economy and in the long term will reduce our dependence on foreign oil.

    Dave

  • http://jpsgoddamnblog.blogspot.com JP

    Dave, I seem to be joining the chorus of people who usually don’t agree with a lot of your points, but are saluting this particular article. This is fantastic.

    Lumpy: Regarding your “working stiff” comment–he’s not going to be threatened with losing his job because he only makes a certain amount per year. He’s threatened because he’s been seduced, like most Americans, by artificially low oil prices that allowed him to move 25 or 30 miles from work–which causes him to require a car. I’ll bet the suburban or exurban neighborhood he lives in has no public transportation, and that he hardly thought about that when gas was $1 a gallon. He wasn’t a forward thinker.

    Meanwhile, those that drive for a living do earn some sympathy from me. However, end user prices will rise in order to pay the driver more to compensate for the rise in gas prices. Problem solved.

  • http://jpsgoddamnblog.blogspot.com JP

    I liked this so much, Dave, i’ve linked to your blog (and here to BC) and quoted you from my own blog. Again, great work!

  • http://www.elitistpig.com Dave Nalle

    Dave, I seem to be joining the chorus of people who usually don’t agree with a lot of your points, but are saluting this particular article. This is fantastic.

    Now if only you folks would realize that you should be agreeing just as much with my other posts we’d be on our way to peave, harmony and prosperity.

    I’ll bet the suburban or exurban neighborhood he lives in has no public transportation, and that he hardly thought about that when gas was $1 a gallon. He wasn’t a forward thinker.

    I live in an Exurb which is lucky enough to receive city bus service. They’ve got a bus that comes direct to a downtown parking area a number of times a day and goes straight into the city where you can catch other buses just about anywhere. Our local urban system isn’t terribly well run, but the basic structure is there. If the demand existed, this sort of system would be the answer to this problem. They’d step up the schedule, expand the routes and make it more efficient if anyone was riding the buses. Plus they’d run a bus line out to every exurb in time to get people to work and take them home. I used to ride the bus to work or ride my bike about 15 miles every day when I lived in the Washington DC area – I didn’t suffer for it.

    Meanwhile, those that drive for a living do earn some sympathy from me. However, end user prices will rise in order to pay the driver more to compensate for the rise in gas prices. Problem solved.

    What we would likely see is more local production and more large regional distribution centers, hopefully based around the railroads. Then a lot of those long-haul truckers would end up having to take jobs as short-haulers or delivery drivers. They would have to adjust, but they wouldn’t suffer.

    Dave

  • http://www.elitistpig.com Dave Nalle

    We shouldn’t have to adapt to liberal ideas if we don’t have to.

    What’s ‘liberal’ or ‘european’ about this idea. I’ve proposed a usage fee that could be used to balance the budget. Both the idea of fees instead of direct tax systems and a balanced budget are things which fiscall conservatives believe in, not tax and spend leftists.

    Dave

  • http://silverstarhawk.livejournal.com Jared

    “Meanwhile, those that drive for a living do earn some sympathy from me. However,
    end user prices will rise in order to pay the driver more to compensate for the rise
    in gas prices. Problem solved.”
    I’m not going to try to completely discredit this point, since it may very well prove true eventually. That said, the increase in price we’ve seen so far has resulted in very little additional compensation for drivers. This might sound very selfish and cold, but had there not been such a demand to transport so many mobile homes to New Orleans and similar areas over the last nine months, my father would have probably had to look for other work. These units are the biggest of the gas guzzlers, getting about 7-12MPG most of the time. Instead of driver wages being increased, the demand for them is simply going down. Only necessary cases, such as FEMA’s last September, are giving the industry its life.

    I really like the approach Dave has laid out. Certain industries, however, would need a bit of hand-holding along the way, until all the different ripple effects had leveled off. I just don’t want that small factor to escape notice.

  • Joey

    I can agree that alternative technologies are needed. I can also state that we’re about 50 years out from full realization of those technologies. About the only technology that is ready for prime time, in place of petrotech… is nuclear.

    Or, are you just talking about gas and cars?

    If that’s the case, let’s talk about tele-commuting. Putting DSL and Cable in the hands of EVERY community, not just those in overpopulated areas.

    But goods and services can’t function through telecommuting. True? Yes. What then, raise the cost of goods and services? Food, cloths?

    We ARE a petro-economy. Making a scalar shift is years away, decades even. Kiss your lovely retirment goodbye, the dream of assisted living is over. Welcome to live under the over pass.

    Get real.

  • Clavos

    I can agree that alternative technologies are needed. I can also state that we’re about 50 years out from full realization of those technologies.

    Not necessarily, Joey. Over the past century and a half or so, science and technology have accelerated exponentially overall.

    In many specific instances, when a given need has been identified, the applicable branches of science have focused their efforts in addressing these issues with very postive (and relatively quick) results. One obvious example that comes to mind is how quickly NASA achieved Kennedy’s stated goal of putting a man on the moon. The really cool thing about that was the numerous smaller developments that were part of the larger program which ultimately became consumer products, e.g. teflon.

    Once a need becomes either politically expedient or economically attractive, it is usually met rapidly.

    I think there’s plenty of reason for optimism.

  • Anonymous

    No, not really. Look at other countries where gas is far more expensive (Europe) and you will see that traffic is a big problem. And the reason we have high prices is due taxes. Why would you want that?

    Besides, as you point out, you have a huge population spread and that is not going to be fixed anytime soon (if it needs fixing, that is)

  • http://www.landofthefreehomeofthebrave.org/wp/ Margaret Romao Toigo

    Capitalism is humanity’s most efficient and democratic adaptation to the natural laws of supply and demand. When free markets are truly free, a lot of problems will take care of themselves.

    I always enjoy your work, Dave (even though I may disagree with you every once in a blue moon). This one was one of your best, yet.

  • http://biggesttent.blogspot.com/ Silas Kain

    Dave, you never cease to amze little ol’ me.

  • http://absent-mind.blogspot.com/ Jet in Columbus

    Silas-Stop that! You’ll give him a swelled head, then God knows what’ll happen next!

  • Malapropist

    While you’ve made your case quite persuasively, Dave, you’ve glossed over one fact, which is this:

    When gas prices rise, there are two groups that will feel the sting: corporations, which use gas in bulk, and the working class, for whom gas represents a major portion of expenses. The middle class will cope, and the upper class will barely take notice.

    Meanwhile, the poorest shoulder the highest burden in terms of percentage of income, and corporations pass the cost on to the consumer.

    You made a comment about how the working class should be investigating more creative methods of transportation, which you mentioned might sound callous. Callous? No, this sounds more like wishful thinking to me. See, Dave, it’s precisely these people, the working class, who have the fewest options in all facets of life.

    No one is looking out for them, there’s no gurantee that things are going to work out, or get better, they’re just trying to get by. If you’ve never existed week to week, paycheck to paycheck, let me tell you, it’s like juggling a house of cards, and the burden is oppressive. You make do, you sigh, you frown, you come home from work with a headache and a realization you’ve just enough time to eat, zone out at the tube a bit, and sleep before you do it all again, six, even seven days a week. These people have the least ability to change their situation, and you’re asking them to make the biggest sacrifice.

    What happens when even after paying for the car, paying monthly for the insurance, paying for maintenance because this old car is your only, tentative link to society, the only thing keeping you above water, what happens when even this is not enough, and you find you have to pay more, and it’s non-negotiable, otherwise your car stops running.

    Shall this working man move somewhere where the bus service is comprehensive enough for him to use it in a reliable way? This probably means he’s got to move to the city, where rents are higher and low-income housing comes with a 6 month waiting list. Plus, he’s got to accomplish this in a way that he can find a new job while keeping his old one(s) long enough that the income stream is not broken. Plus he’s got to find time to do all this in, that’s most likely during the day when offices are open and he is always working, so he has to get out of work somehow, which probably means lost pay, even a bad mark on his reputation in the company.

    Meanwhile, middle class people switch to a more fuel-efficient car or pay less on their credit-card bills to make do with higher gas prices, and the truly rich hand a few more C Notes to Jeeves or whomever is driving their car that day. No biggie. An inconvenience maybe, sure. But for these people, is it the major, life-altering obstacle that working people find it to be? No.

    And the way you make a $1 federal gas-tax increase sound like free money for the government, this would come at a huge cost to the economy, for reasons described above, as every consumer product gets more expensive and every consumer has less to spend on it. Plus, do you think the federal government can be trusted with another $300 billion a year? No, within 10 years we’ll be staring down another deficit, and all the blowhard pundits on cable news will purport to be baffled, because, after all, don’t we have all this money now, which means we can condone every pork-barrel item that pops up from sea to shining sea?

    So, what’s the solution, then? There isn’t one, only degrees of managing the problem in the long run, which will be done by countless and unrelated groups of people, carried out in actions for which the consequences will never directly be seen.

    All I’m saying is the money needed to handle the problem can’t come from a regressive gas tax. It needs to come from the percentage of Americans who control more than two-thirds of the wealth in this country. That’s the top 1 percent.

  • Clavos

    Malapropist,

    The data you link to is unsourced and most of it is pretty old (1998).

    While it is true that a small percentage of the population controls a sustantial portion of the nation’s private wealth, it’s also true that this wealth is the source of capital for business expansion and capital spending, which benefit the entire economy.

    A quick glance at the list of the wealthiest people displayed in your link indicates wealth accumulated from Microsoft, Wal Mart and Mars Candy, among others. These corporations have and do provide employment for thousands, as do their suppliers, vendors, and services providers, ad infinitum.

    It’s very fashionable these days to adopt a “soak the rich” attitude, but too much soaking can have a deleterious effect on the rest of the economy; as the wealthy class is increasingly taxed, they are less inclined to invest in our economy, and more prone to shift their assets to overseas tax havens.

    That said, I’m not advocating that the wealthy be exempted from taxation, simply that they not be unfairly targeted.

    Finally, I would point out that the Reagan years showed us that less taxation results in more, not less revenue for the government because of the resulting expansion of the economy.

  • http://www.elitistpig.com Dave Nalle

    I can agree that alternative technologies are needed. I can also state that we’re about 50 years out from full realization of those technologies. About the only technology that is ready for prime time, in place of petrotech… is nuclear.

    50 years for alternative technology? What planet are you living on? We’re talking mostly about transportation here, and I’m already driving an alternative fuel vehicle.

    Or, are you just talking about gas and cars?

    Yes, the article is exclusively about automobile fuel and related issues, as should have been pretty dang clear.

    If that’s the case, let’s talk about tele-commuting. Putting DSL and Cable in the hands of EVERY community, not just those in overpopulated areas.

    Indeed. I’m doing my part in this area. I’m involved in a rural internet project which is providing high speed wireless internet to a 600 or so square mile area of rural Texas. WISPs are the wave of the future.

    But goods and services can’t function through telecommuting. True? Yes. What then, raise the cost of goods and services? Food, cloths?

    I already buy everything but groceries over the internet, and I could buy them too if I wanted to, since I have a freezer – I did it for about half a year but got lazy. But it’s true that my proposal would lead to a boom in business for the various delivery services.

    We ARE a petro-economy. Making a scalar shift is years away, decades even. Kiss your lovely retirment goodbye, the dream of assisted living is over. Welcome to live under the over pass.

    As far as the issues I’m covering in this article we’re really less than a decade away from total conversion to other forms of fuel or energy for transportation. That might pave the way to more rapid change in electricity production as well. Ethanol production resutls in a LOT of leftover biomass which could be used for biomass generators of which there’s a grand total of ONE in the US at this time.

    The key thing is that an increase in the price of gas would drive these needed changes through the marketplace without the clunky and unfair mechanism of imposing change from above through government fiat.

    Dave

  • http://www.elitistpig.com Dave Nalle

    No, not really. Look at other countries where gas is far more expensive (Europe) and you will see that traffic is a big problem. And the reason we have high prices is due taxes. Why would you want that?

    The population density in Europe is 5 times what it is in the US, hence really bad traffic despite high gas prices good public transport and fewer drivers on the road per capita. We’re not that far gone yet. We’re in a position where we could change and adapt pretty easily and we’d benefit dramatically by encouraging market forces to drive such a change.

    Dave

  • http://www.elitistpig.com Dave Nalle

    Capitalism is humanity’s most efficient and democratic adaptation to the natural laws of supply and demand. When free markets are truly free, a lot of problems will take care of themselves.

    Exactly, but the way I see it a tax on gas wouldn’t be a violation of the free market, but rather a way to simulate an acceleration in an inevitable trend, forcing us to adapt before it’s too late and delaying a genuine energy crisis by decades.

    I always enjoy your work, Dave (even though I may disagree with you every once in a blue moon). This one was one of your best, yet.

    Thanks. It’s reassuring that some people out there are getting it.

    Dave

  • http://ruvysroost.blogspot.com Ruvy in Jerusalem

    Funny, Dave, you haven’t answered a thing I wrote.

    If you want to move large numbers of people and get them out of their cars, and charge high prices for gas, you need to provide an alternative means of transit to replace the intercity trolleys the oil companies encouraged counties to dismantle years ago and to provide a method of getting goods to market from farms etc., that would replace skyrocketing trucking costs. Except for pointing out that you live in an exurb that has decent bus service that could be built upon, you do not really address the issue of transportation. Not all exurbs are as lucky as yours is.

    Railroads cost money. You can’t just hire a load of Chinese to drive spikes in the ground for next to nothing like you could a century and a half ago. There are costly EIS’s to be filed, the NIMBY crowd to deal with, lawyers waving easements in your face, the environmentalists worried that a certain kind of cockroach will be endagered by running track over a particular piece of ground (that they happen to own) and all sorts of folks with their hands out for a buck. Of all people, you should know that.

  • Dave Nalle

    I didn’t mean to ignore you, Ruvy. I know how sensitive you are…

    But I think most of your issues were addressed in my responses to other questions, but here you are anyway.

    If you want to move large numbers of people and get them out of their cars, and charge high prices for gas, you need to provide an alternative means of transit to replace the intercity trolleys the oil companies encouraged counties to dismantle years ago and to provide a method of getting goods to market from farms etc., that would replace skyrocketing trucking costs. Except for pointing out that you live in an exurb that has decent bus service that could be built upon, you do not really address the issue of transportation. Not all exurbs are as lucky as yours is.

    The rails are still there, running freight. They run through almost every town of any size. You just need to put back the stations that were torn down 30 years ago and start running some passenger cars again. Even here in Texas every town with a population over a few thousand still has a freight line running through it, and those tracks can carry people too. And we’re one of the worst interconnected rail states in the nation. It’s better almost everywhere else.

    Railroads cost money. You can’t just hire a load of Chinese to drive spikes in the ground for next to nothing like you could a century and a half ago.

    Which is why I suggested using some of that tax revenue to fund public transportation upgrades and expansions.

    There are costly EIS’s to be filed, the NIMBY crowd to deal with, lawyers waving easements in your face, the environmentalists worried that a certain kind of cockroach will be endagered by running track over a particular piece of ground (that they happen to own) and all sorts of folks with their hands out for a buck. Of all people, you should know that.

    This is why we need to act now, before it’s too late. Those rails are still mostly there. You don’t need a new EIS and people already have the rails in their backyard running a token train or two a day. We haven’t dismantled most of that infrastructure YET, though it’s right on the borderline. If we act now we can bring it back from the brink and put it to use. We won’t get the trolleys back anytime soon, but buses running on biodiesel or CNG can take their place. But we CAN connect the suburbs and exurbs to downtown areas using retro-rail.

    Dave

  • http://musical-guru.blogspot.com Michael J. West

    Ohhhh, Anthony. I’m so happy to have you back on BC. Without our silly little boy, what were we? Nothing at all.

  • http://musical-guru.blogspot.com Michael J. West

    You know, Dave, I find a lot in this article I agree with, a lot that I want to challenge, and a lot that I feel should be hashed out. But the fact is, I don’t drive. I don’t have a car. I suppose when I get married in October, I will have my fiancee’s car, but right now she is the one who drives and pays for gas (I’m not even on her insurance).

    Thus, until I have more firsthand knowledge, I’ll leave the issue alone. Will you still be responding to comments on this one in the fall? :-)

  • http://www.chantalstone.blogspot.com chantal stone

    I’m late to this game…but Dave I agree with you 100%—scary

  • troll

    might not the economy wide inflation engendered by this proposed tax (as large corporations and small businesses alike increase prices) outweigh its benefits

    I can report as one who puts on the miles plying his trade that the pressure to increase prices already is no small problem – so far I have held the line but I have reduced the area that I cover leaving some folks without services…hopefully local talent will pick up the slack

    troll

  • http://www.elitistpig.com Dave Nalle

    might not the economy wide inflation engendered by this proposed tax (as large corporations and small businesses alike increase prices) outweigh its benefits

    A bit of inflation might not be such a bad thing in our economy. Remember fuel prices are only one factor in how much things cost, and if they force some of the economizing measures which I mention then in the long run the inflationary impact would be minimal.

    I can report as one who puts on the miles plying his trade that the pressure to increase prices already is no small problem – so far I have held the line but I have reduced the area that I cover leaving some folks without services…hopefully local talent will pick up the slack

    Trade your current vehicle for a diesel Volvo or VW and run on biodiesel. Then, as the price goes up your fuel cost will remain the same, because such a tax would not apply to alternative fuels like biodiesel. Or you could become a kept man like Michael and have your woman pay for your fuel.

    Dave

  • http://www.landofthefreehomeofthebrave.org/wp/ Margaret Romao Toigo

    I have no problem with usage taxes. I’m one of those strange people who thinks that usage taxes would be more fair and efficient than our current income taxes (but that is another subject).

    You’re right that a tax on gas wouldn’t be a violation of the free market. And it would likely simulate the acceleration of the inevitable trend toward alternative fuel sources and greater energy efficiency, if it is implemented in conjunction with income tax (as long as we still have them) credits that prevent over-taxation and provide part of the incentive.

    I agree with your overall philosophy, I’m just playing the bean-counting devil’s advocate in the details.

  • http://blogs.epicindia.com/leapinthedark Richard Marcus

    Dave, a very timely article and well argued. We in North America have been paying far less than the market price for our oil and gas for the last twenty years and have become the bigest consumer hogs in the world.

    In Canada we are paying around a $1.00 a litre whcih works out to around $4.00 a gallon-around $3.50-3.75 U.S. when converted up to greenbacks, so we’re not that far apart on the pump.

    Canada has been working at the harder to access oil sourses for a while- the tar sands projects in Alberta are quite an expensive means of rendering crude oil-but our production must be good considering all the companies being bought out by India and China these days.

    That’s the thing, it doesn’t matter whether we want to be Euro-liberal wussies or not. With Globalization we don’t have a choice in the matter. There are other countries out there with larger populations than North America that are demanding the same if not more of a share of the fuel pie as us which means if we want any of it we’re going to have to pay for it.

    Twenty-five years ago when I was in Germany visiting, they were paying 75 cents a litre for gas or about $3.00 a gallon. Every one drove either Volkswagon Golfs, or diesel Mercerdes.

    I was able to take a train from Germany to London England for less money than it would have take to pay for the gas to drive the distance, and that was at full fare not a student rate or rail pass.

    High gas prices will only hurt us if we continue to view the personal gas driven car as the only sollution to transportation problems.

    The federal and provincial governments in Canada are considering paying for publich transportation improvements through special user fees on gas, hopefully encouraging people to use the system more so that it can pay for itself and become more efficient.

    I know there is the impression that Canada is “tax happy” but look at the prices we both pay at the pump and you’ll see that in a lot of areas we are pretty much equal. North America needs to be self suffcient, as do our individual countries. We can not rely on any outside sources any more due to increased demand from other countries and the uncertainty of the world situation.

    It’s not going to be an easy transition for anyone, but it is inevitable that gas prices will keep rising and we will have to find different ways of getting around. The more you bury your head in the sand and resist, the worse off you are going to be in the end.

    I don’t know what it is about your posts Dave, but the ones I agree with sure prevoke huge comments on my part. Maybe it’s just I can’t believe we’re agreeing and I’m trying to rationalise it for myself.

    Great post Dave and thanks

  • Joey

    “50 years for alternative technology? What planet are you living on? We’re talking mostly about transportation here, and I’m already driving an alternative fuel vehicle.” — Dave

    Dave, I’m living on earth. Come on… any shift in energy, is going to mean a shift on infra-structure… delivery systems, refueling stations… all that minutia which you have somehow glossed over. We have hydrogen technology RIGHT NOW. Not having the vehicles and NOT being able to get a refueling system up and running in a fortnight… is a problem.

    That’s the 50 year mark. Google Hydrogen economy and read all the glaring reports from industry/goverment/university. It’s all there.

    That’s the reality of the situation. We’re not going to see the fruition of alternative energy for 50 years… unless you are refering to batteries. That technology is older than most and is restricted by physical size limitations and is weight restrictive.

    Define your “alternative” fuel vehicle? Gas/electric is not an alternative, it’s a hybrid. Eth? Biodiesel? What. Are there enough out there for everyone to buy? No. Are there enough people who can afford NEW “alternative” fueled vehicles? No. Are there enough refueling stations to supply the fuel needed for an overnight shift? No.

    That’s reality… on earth.

  • joey

    “I was able to take a train from Germany to London England for less money than it would have take to pay for the gas to drive the distance, and that was at full fare not a student rate or rail pass.”

    Wouldn’t that be nice in America. We ripped most of our spur lines up in the 70’s and made bicycle paths out of them. Hmmm. The would carry more commuters if the rails still existed. Thank you tree huggers for pulling the plug on that option.

  • troll

    Dave – *inflation might not be such a bad thing in our economy.*

    please elaborate

    Margarette – *I have no problem with usage taxes.*

    neither do I – I’d like to see a particularly stiff one applied to labor

    troll

  • troll

    gack – meant ‘Margaret’ of course…my apologies

    troll

  • http://www.thebluesmokeband.com Brian Sorrell

    Dave,

    I’ll add to the chorus that your article is excellent. However, I’ll also add that most of your stuff contains very good reasoning, even when the conclusions are politically distasteful to some. Many readers don’t recognize good reasons when conclusions don’t match their intuitions. (My humble experience as a philosopher).

    If I might add some substance to the “alternative transportation” point (building from your #28): GET A BIKE! Dave is correct in that a 15 mile ride is harmless even if you’re only in mediocre shape. Those who complain that low-wage earners won’t be able to get to work…. Just ride. A quality bicycle can be had for less than a month’s bus fare, and rain and cold-weather gear is an additional half-month’s fare.

    In my case, I stopped driving to work. Though it was only a couple of miles, I’m saving a full tank of gas each month — that’s current $50 or so. Plus, I’m getting $2 / day for riding from a county sponsored rideshare program. I work 4 days a week, so I’m looking at almost $40 / month on an average month. I’ll have paid for my new bicycle and gear in just a few months time. Oh, and my car insurance plummetted when I told them that I don’t drive anymore — I put 8 miles on the Jeep last month :)

    On top of the vast financial savings, you strengthen your heart and burn off fast-food calories.

    I say, push biking and you’ll see a healthier and cleaner America.

    And cheers to Dave for raising the inter-connectedness of these issues.

    Brian.

  • zingzing

    i live in a downtown and take the bus to work. that means several things in this city:

    1) i don’t pay for gas
    2) i don’t pay for insurance
    3) i don’t pay for parking at home
    4) i don’t drive drunk
    5) i don’t have to drive at all
    6) i get to work, or anywhere, faster than you do (h.o.v. bitches)
    7) i don’t pay for parking at work
    8) i don’t even pay for the bus (most employers will pay for your bus pass)
    9) i don’t pay for upkeep
    10) i don’t have a car payment

    hrm. okay, let’s see. i think, and this is just an estimate, that this little fact (not owning a 2-ton object) saves me money in several ways:

    $200/month in gas,
    $60/month in insurance,
    $125/month in parking at home,
    $100/month in parking at work,
    $50/month in upkeep,
    $250/month in car payments…
    and no chances of dui’s, less stress (from driving in traffic or trying to fucking park)… all while saving $785 a month!? that can’t be right. shit, it’d be great if i saved $300 a month.

    everyone, ditch your car, move to the city and live the good life.

  • Joey

    Zing

    I grew up in, moved to various others, returned to, got transferred to another and no longer reside in a City. I used public transportation, buses, sub-ways, trains, commuter buses, bicycle’s, walked, motorcycled. You name, I did it.

    My latest job has me living in an area which NONE of those options are available. I am getting ready to transition to another job 60 miles away. To another city which doesn’t have public trans to speak of. I’m 60 miles away, no body is paying me to move, so I’m not moving. There is no benefit to move (i.e. terrible housing, would still have to drive). Now I could move closer, and still have a drive… but the housing isn’t as nice as the one I am fortunate to presently reside in.

    I have contacted various commuter options, none exist to the area I am going. There may be a carpool available, however, I will have to drive 20 miles to hook up. But… I will be able to use the HOV, which will save a bit of time and headache at the end of the day. Oh yeah… plus I get to pay for parking… whooptee do!

    Dr. Phil what do I do? I have no desire to work where I am going. My company just told all of us to change job locations. Suck it up? Sure. It’s the only option I have. But… there are a few alternatives like working from home a whopping 2 days per month.

    So, your bulleted foray into solving everyone’s problems doesn’t necessarily work for everyone. Neither does the pigeon holed approach of this article. I would ascertain that the problem in which Dave address is quite a bit more complex, broader and scope and depth than the fantasy laid out in the reading. It’s not dynamic enough. Not with the current standard we find ourselves living in, nor with any projectable 20 year plan. Go to your county or city planning office and take a look at the 20 year plan (they all have them) tell me if you see mass transit laid into the sprawl? It’s an after thought and like HMO’s will be left to the private sector to plug into and add to the mix. Sounds like fun.

    Maybe I’ll move to Kansas, get a tax break reinhabiting some dying township and start over. I’m already running two businesses on the side, plus my “regular” work. This lifestyle I have created is not working out for the most part. And energy is the primary reason.

  • Dave Nalle

    Dave, I’m living on earth. Come on… any shift in energy, is going to mean a shift on infra-structure… delivery systems, refueling stations… all that minutia which you have somehow glossed over. We have hydrogen technology RIGHT NOW. Not having the vehicles and NOT being able to get a refueling system up and running in a fortnight… is a problem.

    Who said anything about hydrogen technology? That’s not a realistic alternative in the short run. I’m talking about available technologies which can be provided with existing hardware and refueling stations. E85 goes right in the regular in-ground tanks and so does biodiesel. Both are easily available and production can be increased to meet demand.

    That’s the 50 year mark. Google Hydrogen economy and read all the glaring reports from industry/goverment/university. It’s all there.

    Hydrogen sounds great in theory, but it’s not happening in any immediate future.

    That’s the reality of the situation. We’re not going to see the fruition of alternative energy for 50 years… unless you are refering to batteries. That technology is older than most and is restricted by physical size limitations and is weight restrictive.

    You seem to be stuck in one mode – hydrogen or nothing, but the truth is that we have alternatives available already, we just need to get them moving along.

    Define your “alternative” fuel vehicle? Gas/electric is not an alternative, it’s a hybrid. Eth? Biodiesel?

    Both, plus CNG, Propane and LPG which are simple and inexpensive conversions.

    . Are there enough out there for everyone to buy? No.

    Sure there are. Right now there are hundreds of thousands of vehicles in the marketplace which can run biodiesel and millions which can run on E85 and expanding the number available would be no challenge at all, just a matter of changing production priorities to meet demand.

    Are there enough people who can afford NEW “alternative” fueled vehicles? No.

    Nothing ahppens overnight. But with the right motivation to drive demand for alternatives the change will take place pretty quickly. The average conumer buys a new car every 3 years. If those new cars run alternate fuels then in fairly short order most of the nation will make the shift. There will always be some who can’t afford a new car, but they’ll buy used cars, and more and more of those used cars will be suitable for alternate fuel as time passes by, so eventually a complete shift will be accomplished.

    Are there enough refueling stations to supply the fuel needed for an overnight shift? No.

    Yes, because any gas station can sell E85 or Biodiesel.

    Dave

  • Dave Nalle

    Dave – *inflation might not be such a bad thing in our economy.*

    please elaborate

    Moderate inflation normally goes hand in hand with certain types of economic growth. If it’s normal inflation it’s accompanied by wage growth and greater availability of credit, which is a boon to business and real estate. So long as the inflation stays under 5% or so it can also help spur overall economic growth. In general mild inflation is a characteristic of a strong, active economy. It’s only when the inflation starts to rise towards 10% or more that it starts to work against economic growth.

    Dave

  • troll

    thanks Dave – I’m looking for data sets to test your thesis (which I have heard before but never examined closely)…got any specific sources at your fingertips – ?

    troll

  • http://www.thebluesmokeband.com Brian Sorrell

    Joey’s frustration is understood, however, the expression of that frustration leaves no positive program to address the problems. Dave’s article does address the problem. Zingzing’s comments suggest viable solutions.

    Obviously zingzing’s proposal will not work for everyone: no single proposal will ever work for all cases. If Joey’s point is to dispense with Dave’s general discussion and zingzing’s general solution because they don’t apply to his specific case, that’s bad reasoning.

    Furthermore, joey (the same as Joey?) in comment #53 suggests that train rails were ripped up for the purpose of providing bicycle paths. This is wrong. Various “rails to trails” programs are excellent examples of “adaptive reuse”. It’s not that biking groups drove the rails out of business then took them over for their own (nefarious?) purposes of destroying public transportation. The trains stopped running — as Dave aptly points out, because cheap gas got everyone into a car — and cycling groups negotiated to reuse the abandoned areas. From where I’m sitting, that’s to be commended, not condemned.

  • zingzing

    my comment wasn’t meant as a real solution. a tongue in cheek “solution” at best. it’s true though that i do find i save quite a bit of money and headaches… since i sold my car. actually, you can add the $1000 i got for my car to my coffers as well. paid for a nice vacation to the keys this spring.

    i know that people live in places with no public trans, and that people live in places that don’t offer any viable alternatives to driving a car around. but, if you want to bitch about the price of gas, etc, you can always ditch the car, move to a big city and live that way. you don’t have to stick with your current job, you don’t have to keep living where you do. and i know not everyone wants to live in a big city. but, there are perks…

  • http://www.elitistpig.com Dave Nalle

    Troll, look for a summary of the work of an economic historian named Nikolai Kondratief and his theory of economic cycles. The non-inflationary growth which we’ve had in the last few years is kind of unnatural, and there really ought to be more inflation to accompany it.

    One of the best non-gobledygook explanations of why moderate inflation is desirable is in a paper from the National Bank of Canada of all places.

    Dave

  • http://www.elitistpig.com Dave Nalle

    Brian, I think the appropriate response to Joey’s concerns might be the classic “Your mileage may vary.” Every solution is not going to work for every single person in the nation. We’re talking about influencing mass trends here which will ultimately benefit everyone in the nation, even if there are short term transitional issues for a few.

    dave

  • http://www.thebluesmokeband.com Brian Sorrell

    The thing is, zingzing, your tongue-in-cheek response does represent a real solution. Sure it’s not for everybody, but to Dave’s point — nothing is for everybody.

    My tongue in cheek reason for paying attention to the calorie counter on my bicycle spedometer is that I can keep track of the beers I burned off :)

    Even with the tongue jammed firmly in the cheek, some truth can leak out.

  • Joey same as joey

    What percentage of people live withing alternative modes of communting?

    What percentage of people live in urban areas?

    What percentage of people live in areas that do not cater to thier commuting needs, yet have industry cost centers and have work available?

    Pushing paper or working retail in a city is not an option for many people. I push paper, but I work in a field that requires me to be around HEAVY industry. Heavy industry around ports. Heavy industry you are not going to find in but 2 or 3 places in the country.

    Starbucks employment is not an option. I am a knowledge user, but not a network tech. I live 60 miles from a large metropolis that doesn not offer viable public tranportation alternatives.

    Okay… Dave, let’s talk modern technology. Diesel? Alright, where’s the modern Euro-slant on diesel technology in the U.S.? VW? Mecedes?

    At 25K a pop? You’re dreaming. I don’t see the large industrial trust involved. It’s not apparent. It’s disjointed. I can get Diesel where I live, but not readily where I will be working. That presents a problem. I would love to eek out 40mpg on a gallon of diesel. I get 32 or 33 on gas… but I’m running a 10 year old Camry, and can by a lot of fuel on the 22K I didn’t spend a new “technological proficient vehicle” am I justified? I’m not whinin’…. you’re not presenting the whole picture.

    j

  • http://www.elitistpig.com Dave Nalle

    What percentage of people live withing alternative modes of communting?

    I don’t even know what this sentence means.

    What percentage of people live in urban areas?

    What percentage of people live in areas that do not cater to thier commuting needs, yet have industry cost centers and have work available?

    Pushing paper or working retail in a city is not an option for many people. I push paper, but I work in a field that requires me to be around HEAVY industry. Heavy industry around ports. Heavy industry you are not going to find in but 2 or 3 places in the country.

    I have no idea what you do specifically or what your options might be. You may be unique and unable to adapt to changes that may be necessary to modernize our fuel usage, but I bet there are some sensible solutions out there that would apply in your situation with just a tiny bit of effort.

    Starbucks employment is not an option.

    Well who the hell wants to work at Starbucks?

    I am a knowledge user, but not a network tech. I live 60 miles from a large metropolis that doesn not offer viable public tranportation alternatives.

    I’m not clear on why you have to live 60 miles out from the nearest city, or why you can’t live nearer where you work, but your situation is not exactly typical of most people in the US.

    Okay… Dave, let’s talk modern technology. Diesel? Alright, where’s the modern Euro-slant on diesel technology in the U.S.? VW? Mecedes?

    Don’t forget Ford, Dodge, GMC and Jeep. Plus used diesels from BMW and Volvo as well as all those other manufacturers.

    At 25K a pop? You’re dreaming.

    Actually, there are 3 different diesels which start new at well under $20k, with the lowest being the VW Golf at $16K, which is not at all bad for a new car.

    I don’t see the large industrial trust involved. It’s not apparent. It’s disjointed. I can get Diesel where I live, but not readily where I will be working.

    You can MAKE biodiesel yourself if you’re at all serious, and the availability is increasing rapidly.

    That presents a problem. I would love to eek out 40mpg on a gallon of diesel. I get 32 or 33 on gas… but I’m running a 10 year old Camry, and can by a lot of fuel on the 22K I didn’t spend a new “technological proficient vehicle” am I justified? I’m not whinin’…. you’re not presenting the whole picture.

    So? Trade your 10 year old Camry for a 20 year old Volvo, run on biodiesel and use the money you make on the trade to set up your own home biodiesel processing plant. They run about $1500 for a professional setup which will produce more than enough biodiesel to keep a car running indefinitely. The layout in materials and supplies for home processed biodiesel is lower than buying any form of gasoline.

    What’s clear here is that you are more interested in complaining than you are in finding solutions.

    Dave

  • Mike

    You should have a chat with T. Boone Pickens, he’s been talking about this for a while and citing many of the points you make. I think, however, he’s a bit conflicted …. he’s a big investor in natural gas distribution systems which is also his proposed alternative.

  • http://www.elitistpig.com Dave Nalle

    I’d be running my truck on CNG if it didn’t require a fairly significant conversion including a special tank for the gas. It’s not a bad idea, but it’s just less practical for the average consumer.

    Dave

  • http://blogcritics.org/archives/2006/06/10/165119.php jas

    Gas tax only encourages government to get drunk on gas money. It further victimizes the public. You must hold corporations accountable for curbing environmental technologies, born decades ago that can solve our problems with pollution and global warming.

  • http://www.diablog.us Dave Nalle

    Jas, those corporations you’re irrationally hating are the companies which are also pioneering biofuels and alternative energy technologies.

    You really have no idea what you’re talking about.

    Dave