Anticipated gasoline price

[ERD50]

That's why the feds and the states should each add some more taxes to a gallon of gas.....give it back to the poor and middle class through a tax break...keep us motivated to use less gas...I want to get weaned off of OPEC oil...

That is what I think should be done. It would cost almost nothing - as you say, make it 'revenue neutral'. But, it would encourage people to conserve and seek out alternate energy.

But, as I've said before, what politician will push for that?

-ERD50

 

[Ed_The_Gypsy]

Disaster!

I have just read that in Mexico, blue agave is being cut down to plant corn to make ethanol for the US market. No mas tequila!

Who says civilization isn't coming to an end?

 

[Independent]

That is what I think should be done. It would cost almost nothing - as you say, make it 'revenue neutral'. But, it would encourage people to conserve and seek out alternate energy.

But, as I've said before, what politician will push for that?

-ERD50

I'll vote for this (and for a politician who I thought could get it through).

Greg Mankiw, who was the chairman of Bush's Council of Economic Advisors from 2003-05 is a big proponent of gas taxes. Probably one of the reasons why he "was" chairman of the CEA. He keeps a list of people who have advocated gasoline (or crude oil) taxes on his blog under the title "Pigou Club". (A Pigou tax is one that tries to charge for a negative externality.)

Mankiw's blog is at: Greg Mankiw's Blog

 

[Danny]

That is what I think should be done. It would cost almost nothing - as you say, make it 'revenue neutral'. But, it would encourage people to conserve and seek out alternate energy.

But, as I've said before, what politician will push for that?

-ERD50

I'll vote for this (and for a politician who I thought could get it through).

Greg Mankiw, who was the chairman of Bush's Council of Economic Advisors from 2003-05 is a big proponent of gas taxes. Probably one of the reasons why he "was" chairman of the CEA. He keeps a list of people who have advocated gasoline (or crude oil) taxes on his blog under the title "Pigou Club". (A Pigou tax is one that tries to charge for a negative externality.)

Mankiw's blog is at: Greg Mankiw's Blog

Thanks for the link.

What we need is some [-]politicians[/-] state(wo)men with the courage to have a mature conversation with us. We need a Vision of where we need to be and layout some plans to get there.

 

[ERD50]

Thanks for the link.

What we need is some [-]politicians[/-] state(wo)men with the courage to have a mature conversation with us. We need a Vision of where we need to be and layout some plans to get there.

Yes Independent, thanks also.

Dan, excellent point. However, I am really being distracted by:

I have just read that in Mexico, blue agave is being cut down to plant corn to make ethanol for the US market. No mas tequila!

Who says civilization isn't coming to an end?

From wiki:

Tequila is produced by removing the heart of the plant in its twelfth year, normally weighing between 35-90 kg.

Twelve years before a new plant can produce tequila! Think of the consequences!

Worse part is, it takes what, about 85 gallons of gasoline (equivalent) to produce about 100 gallons of ethanol (equivalent)? Something like that.

I need a drink.

-ERD50

 

[Danny]

Anyone else notice people are driving slower. I see it and I'm one of them. I'm clocking the speedlimit. I also coast more to the stops and acceralate more slowly - try to keep the rpms under 3,000 even 2,000 if I can. Admit there are some that are not hip, but I'm legal so deal with it!

 

[TromboneAl]

but I'm legal so deal with it!

Spoken like a true geezer. Better to be a geezer than a guzzler.

We usually drive 55 (got 44 mpg on last two tanks), but it feels like no one else does. I rarely pass anyone.

Gas Tax: great idea that won't happen.

 

[Coffeepusher]

Inflation/oil curiosity

Adjusted for inflation, even today's gas price is about the same as it was 20-25 years ago.

Whenever I hear this quote (despite the fact that I don't question its truth or relevance), I get a little antsy. Isn't it true that rising energy costs are a profound cause of inflation in an economy? Wouldn't that fact simply become a circular arguement?

Consider: It's 2011, a barrel of oil is $130 and the price still doesn't top the 1980 "Adjusted for inflation" peak because the increasing price of oil has inflated the dollar that much more. While in the mean time, real wages have barely moved, a gallon of milk costs 5 bucks, and a semester of college at a modest institution costs 50 grand.

Any thoughts on this?

 

[dumpster56]

Whenever I hear this quote (despite the fact that I don't question its truth or relevance), I get a little antsy. Isn't it true that rising energy costs are a profound cause of inflation in an economy? Wouldn't that fact simply become a circular arguement?

Consider: It's 2011, a barrel of oil is $130 and the price still doesn't top the 1980 "Adjusted for inflation" peak because the increasing price of oil has inflated the dollar that much more. While in the mean time, real wages have barely moved, a gallon of milk costs 5 bucks, and a semester of college at a modest institution costs 50 grand.

Any thoughts on this?

Its 2007 and the price of a barrel is 100 and 130 could be alot sooner than the year 2011.

 

[REdreamn]

I fail to see how an increase in gas tax alone will result in anything other than more dollars for pork. If the increase were used dollar-for-dollar for alternative energy research/credits, then maybe it could help. There needs to be a space race style paradigm shift to really focus us toward alt energy. I don't think the oil lobby will allow it.

 

[ERD50]

I fail to see how an increase in gas tax alone will result in anything other than more dollars for pork. If the increase were used dollar-for-dollar for alternative energy research/credits, then maybe it could help.

I agree 100%. But Congress does not have a good track record in such things.

The money wouldn't even need to be used for credits/research. It could just be returned to the public in the form of a higher standard deduction, making it revenue neutral. So, on average it wouldn't 'cost' people anything, but the relatively higher price of fossil fuel would drive free market alternatives.

The problem I have with Congress determining alt energy credits/research, is that you are letting politicians make technical/economic decisions. Look at ethanol - an alt energy disaster funded by Congress. I say let the free market respond. The only incentive required is higher fossil fuel prices. Entrepreneurs will fill the demand with creative solutions.

-ERD50

 

[REdreamn]

True to a point, ERD50. The b!tch of the thing is, though, that the alt energy market is responding to something that is not technically a market (the oil "market"). Despite the rumors that they are at max pumping capacity, I think that opec holds all the cards wrt production and uses it like a puppeteer to control pricing. If they want $60/bbl, viola! If they want $100/bbl, done. If they thought we (the US) were really serious about utilizing alt energy, we would see $60 again in a heartbeat.

 

[audreyh1]

Worse part is, it takes what, about 85 gallons of gasoline (equivalent) to produce about 100 gallons of ethanol (equivalent)? Something like that.

-ERD50

Even worse - sugar cane is something like (at least) 3x more efficient than corn for producing ethanol. Brazil has become energy independent because they are capable of producing vast quantities of sugar cane ethanol.

But can we take advantage of their cheap ethanol? NO!!! We have super high tariffs on imports of Brazilian ethanol. What an outrageous rip-off of the American Public!

It's all a giant farm welfare program.

Audrey

 

[REdreamn]

In a perfect world, we would be able to take advantage of cheap Brazilian ethanol. BUT, start loading that stuff onto the energy market, and Brazil will go from a rich rain forest to Indiana South in no time (am I a Green, maybe). A good start: aggressive tax credits for p-v, higher CAFE standards to include light trucks, and shun the oil lobby to give tax credits for plug in hybrids. At least the plug in hybrid won't cause us to latch onto one specific electric source, and everyone knows that p-v is as close free energy as there is (flamebait).

 

[ERD50]

Brazil has become energy independent because they are capable of producing vast quantities of sugar cane ethanol.

No, that really is not it at all.

The people of Brazil only use 12.5% as much energy per capita as we do.

Energy Consumption: Total energy consumption per capita

Brazil ~ 1M Kilogram-Oil-Equivalent units per capita
USA ~ 8M Kilogram-Oil-Equivalent units per capita

So, if the US converted to just 12.5% alternate energy, we would be just as 'independent' as Brazil. Probably more so, not ALL their energy comes from ethanol. All it would take is to have a similar standard of living as the average Brazilian, and we would need to get by w/o much heat or AC.

We wouldn't even need to go that far for energy independence, we have our own coal and oil. But we don't have very much land capable of producing sugar cane.

-ERD50

 

[TromboneAl]

What's the status of ethanol from switchgrass?

 

[Independent]

I agree 100%. But Congress does not have a good track record in such things.

The money wouldn't even need to be used for credits/research. It could just be returned to the public in the form of a higher standard deduction, making it revenue neutral. So, on average it wouldn't 'cost' people anything, but the relatively higher price of fossil fuel would drive free market alternatives.

The problem I have with Congress determining alt energy credits/research, is that you are letting politicians make technical/economic decisions. Look at ethanol - an alt energy disaster funded by Congress. I say let the free market respond. The only incentive required is higher fossil fuel prices. Entrepreneurs will fill the demand with creative solutions.

-ERD50

The BBC did a poll in 21 countries that included questions on raising taxes on "energy sources". Americans are more negative on this than most other people. However, if you say "raise taxes on energy and earmark the revenue for 'clean' energy", then 74% of Americans are in favor. If you say "raise taxes on energy and lower other taxes so the net is zero", then 64% of Americans are in favor.

My preference would be $1 or $2 per gallon on crude oil. Rebate the tax on a per-person basis like ERD50 says. We use so much oil that, we would get $1,000 or $2,000 per person rebate on our income tax returns.

Like ERD50, I wouldn't use any of it for a gov't run program to support 'clean' energy since I think the market will do better at finding the winners.

I'm not sure how the $1 or $2 tax would be split between consumers and producers. Consumers will pay some in higer pump prices, producers will pay some in lower world market prices for crude. But all the tax revenue goes to reduce our taxes.

 

[TromboneAl]

Example of misguided government regulation:

How silly is this? Imagine: There goes a working-class stiff in a little Chevrolet Aveo with a traditional gasoline engine that gets 30 mpg or more and that meets the nation's toughest clean-air standards. But because she is not driving a gas-electric car, she must -- in many metropolitan areas nationwide -- use the congested regular traffic lanes commuting to and from work.

But there goes the owner of the company that employs her. The boss can afford the $112,000 price tag of a 2008 Lexus LS 600h L super-luxury sedan. Never mind that it gets substantially worse mileage than the Chevrolet Aveo. Never mind that its overall energy costs -- production, distribution, end disposal -- are measurably higher. Never mind that it is, for purposes of this argument, only carrying its driver. Because it is a gas-electric hybrid, in many urban areas, it gets to run in the High Occupancy Vehicle lane with only the driver inside.

Ah, and never mind that the electric portion -- the gasoline-saving part -- does its best work in congested city traffic and hardly works at all on the highway, meaning that allowing the hybrid luxury car to run freely in the HOV lane defeats the design intention of its own technology as that of the HOV lane, which is meant to reduce traffic congestion by encouraging carpooling.

 

[ERD50]

What's the status of ethanol from switchgrass?

T-Al, there was an update on Science Friday a few weeks back. I forget the exact numbers, but 10-20 years?

They made it easy to understand:

Set a piece of bread outside in the rain. It falls apart and starts getting broken down by microbes in short order. This is like making ethanol from grain.

Set a 2x4 out in the rain. It can take years for it to decay. This is like making ethanol from cellulosic materials.

They need to continue doing work to genetically modify 'bugs' to break down the cellulose. Uh-oh, GMO fuel?

Excellent (but sad) examples of misguided policy in that last post. It is just so crazy, but every one of those may have been enacted with the best of intentions.

But it is just throwing solutions at symptoms rather than thinking through the root of the problem.



-ERD50

 

[dumpster56]

T-Al, there was an update on Science Friday a few weeks back. I forget the exact numbers, but 10-20 years?

They made it easy to understand:

Set a piece of bread outside in the rain. It falls apart and starts getting broken down by microbes in short order. This is like making ethanol from grain.

Set a 2x4 out in the rain. It can take years for it to decay. This is like making ethanol from cellulosic materials.

They need to continue doing work to genetically modify 'bugs' to break down the cellulose. Uh-oh, GMO fuel?

Excellent (but sad) examples of misguided policy in that last post. It is just so crazy, but every one of those may have been enacted with the best of intentions.

But it is just throwing solutions at symptoms rather than thinking through the root of the problem.



-ERD50

Changing the way we live here in the states. Railroads smaller communities, suburban sprawl is so over and unsustainable without cheap oil. Then IF we had leaders with vision.. Why don't we have those european high mileage diesels here in america?? 50 to 60 mpg small cars?? Oh the american public doen't want them?? I here that all the time. BULL. We need a leader to TELL the american public that high and VERY HIGH gasoline prices are here forever, that the big vehicle here is OVER that we will give you a big tax credit to get rid of the suv and get into a smaller high mileage car. This will be a temporary way of life until new technology is developed to move us around on the ground.

 

[FinanceDude]

Changing the way we live here in the states. Railroads smaller communities, suburban sprawl is so over and unsustainable without cheap oil. Then IF we had leaders with vision.. Why don't we have those european high mileage diesels here in america??

Until Congress gets the EPA to relax their air quality standards, those cars won't be sold here. If we modified them to meet our air standards, the mpg drops about 30% or so.............

Oh the american public doen't want them?? I here that all the time. BULL. We need a leader to TELL the american public that high and VERY HIGH gasoline prices are here forever, that the big vehicle here is OVER that we will give you a big tax credit to get rid of the suv and get into a smaller high mileage car. This will be a temporary way of life until new technology is developed to move us around on the ground.

Remember the world we live in, our politicians ONLY real goal is REELECTION. So, you think they CARE about real life for the average American??

 

[ERD50]

50 to 60 mpg small cars?? Oh the american public doen't want them?? I here that all the time. BULL. We need a leader to TELL the american public that high and VERY HIGH gasoline prices are here forever.

The only thing that is going to make the American public 'want' small, high-mpg cars (Like Europe) is permanently HIGH gasoline prices (Like Europe).

TELL them about high prices? Hah! No one is going to listen to a leader if they don't deliver on what they say. Roughly half the public won't listen anyway. They have to HAVE high prices before they will ACT!

Isn't is that simple? Supply/demand?

Heck, for me personally, I keep looking at ways to reduce my upcoming heating bills. Bottom line, almost everything except turning down the thermostat (even further!) and putting on another sweater is just too expensive. I'm gonna have to buy those gloves w/o fingertips next....

-ERD50

 

[HFWR]

What's the status of ethanol from switchgrass?

Why switch when you can have [-]alcohol[/-] ethanol AND grass...

 

[youbet]

They have to HAVE high prices before they will ACT!
Isn't is that simple? Supply/demand?

Absolutely! There is zero possibility that Americans will band together to reduce energy consumption so that demand drops and prices stay low. It will never happen. Rather, high demand will cause prices to increase, which will moderate demand.

Aren't they paying approximate $9/gal right now in Europe? And life goes on ........

In retirement, I may drive 20k miles a year. (It was much less than that during my first year of RE, but lets use 20k as a talking number since DW and I would like to travel around the country extensively in the future.)

We might average 20 mpg splitting the miles between a high efficiency car and our F150 pulling a small RV.

That would be 20k/20mpg = 1k gal/yr. At $3, that's $3k/yr for gas.

At $9/gal, yearly cost for gas would be $9k, an increase of $6k.

Those are the kind of numbers you need to build into your RE budget if you're planning consuming much energy. Oh yeah, don't forget other consumables increasing in price driven by high energy costs!

 

[ashtondav]

Yes. Here in the UK we pay $9 a gallon for regular gasoline. More efficient diesel, very popular now in economy cars, is $10 a gallon.

In most of Europe it's about 25% less.

Something has to pay for free medical care!

Oh, and you see a lot more smaller cars over here.