Gas Prices: Too High or Too Low?
The price of a gallon of unleaded gas is up 43%, or about $0.93, since January of this year. Hourly wages for most workers, before inflation, are up less than 2%, or about $0.30.
Ergo the squeeze on family budgets, right?
Well, maybe not. Or, maybe so, but maybe that’s okay. That is, not really okay, but…well, you know.It's common among those of us who want conservation to play a much larger role in our environmental policy to advocate for higher gas prices to discourage driving and encourage efforts to conserve energy. Of course, we’re usually talking about a gas tax in this context, and I’ll get back to that, but the point is: price signals matter.
Demand for gasoline may be inelastic in the short run, but history shows that if prices stay high, good things happen. People drive less, invest in cars (as in “not trucks/SUVs”) with better mileage, Congress starts talking about fuel economy standards, and even Detroit starts to think about high MPG.
But what about those of us who worry about families not having enough disposable income to make their budgets, to say nothing of putting a little something away for a cushion against future losses or the kids’ college fund?
And what if we’re the same person worrying about both?
I, for one, both welcome higher gas prices because they incentivize conserving, and bemoan them because they squeeze most families’ budgets.
That’s most, not all families. Higher gas prices act like a regressive tax: they fall most heavily on those who can’t escape them and are less able to afford them. According to the Bureau of Labor Statistics, families with incomes of around $35,000 spend about 5% of their income on gas for the car. (That’s 2005 data—the most recent—since then, as noted, gas price growth has far outpaced middle-income growth, so that share has likely gone up.) For families that average around $250,000, it’s 1%.
Part of the problem is stagnant earnings, and the fact that too many working families haven’t been getting their fair share of the productivity growth they’ve helped to generate. Our work at EPI on families’ abilities to meet their budgets, including housing, health care, child care, along with transportation, show significant shares of families are increasingly pinched by these expenses. And right now, along with rising gas and food prices, lots of people are paying more for health care and some are being hit with big upward resets in mortgage payments.
But the biggest issue here is where all that gas money goes. The profits of the oil companies are through the roof—Exxon Mobil’s $40 billion last year was the largest annual profit in history. And while they run ads claiming either a) they’re really not that profitable, which is laughable, or b) they really are, but they’re investing it in alternative energy research, forgive me if I’m unconvinced. And I haven’t even brought up the billions of dollars of subsidies big oil got in both the Clinton and the Bush years.
The fact is it’s tough to get in front of a painful prescription—higher gas prices—if it’s simply going to enrich oil companies, exacerbate inequalities, and not finance a progressive agenda, environmental and otherwise.
People often point out that in Europe, they don’t complain about gas prices that are much higher than ours (well, maybe not much higher than California’s are right now). But, and I’m speculating, that’s partly because the profits help to finance national health care, higher education, a much less porous safety net, and a greener enviro policy set.
So, before anyone applauds higher gas prices for helping to push us toward greater energy conservation, we might want to go after some of the industry’s windfall profits, and sink them into a progressive agenda. That seems like one good way of unifying dueling concerns for the globe and the wallet.
Oh yeah!
Thanks big oil for the screwing, can I bend over any further?
There is nothing good about the magnitude of the increase in gas prices, it drives the cost of everything sky high and spurs dangerous levels of inflation. Frankly this round of increases
is nothing more than gouging by the Big oil pricks and it is sanctioned by the Bush administration and Congress neither of which has either the inclination or intestinal fortitude to regulate the industry into submission or nationalize it for screwing over the economy and citizenry. Gasoline is selling in Venezuela for thirty some cents a gallon and little more than that in Iraq (it recently has been as low as a dime) Guess who is paying for those low prices.
The quick and dirty answer is the price is too damned high and anyone supporting/(trying to justify) it is a mealy mouthed sycophant to a pack of black hearted merchants of greed... end of story…
May 20, 2007 8:58 PM | Reply | Permalink
Uh - not entirely. The ecosphere of the planet is in danger and our unrestrained guzzling of petroleum weakens us as it strengthens our enemies.
I would much rather pay this tax (and that is what higher gas prices amount to) to our government than Iran or the Saudis. I support a revenue neutral and substantial (up to say $10 a gallon over time) increase in gasoline taxes and oil tarriffs with the revenue dedicated to high speed rail, public transportation, rebates on the purchase of fuel efficient, or plug-in cars and offset rebates for the middle and lower economic classes.
A windfall profits tax is also a no-brainer.
May 20, 2007 11:53 PM | Reply | Permalink
Just FYI - where I live (in Europe), gasoline costs about $5.50 per gallon at current exchange rate. In Britain, it's over $7/gallon right now - with the caveat that petrol has always been expensive in the UK and that the pound is now very strong vs. US dollar.
As far as I know, gasoline and diesel prices in Europe have generally not changed all that much in the last 5-10 years. There is seasonal variation but no major price hikes in recent years.
When I came to the US (California) in late 2000, I believe I was paying about $1.20 per gallon. When I left in late 2006, I was paying around $3.50. Roughly threefold increase in the space of six years.
May 21, 2007 3:54 AM | Reply | Permalink
Interesting. So maybe that's another reason--price stability--for differences between attitudes re this here vs. Europe.
But what about my speculation--agree or not?
May 21, 2007 5:04 AM | Reply | Permalink
Well, as someone who actually cares about the poor and working class, I am opposed to the so-called Green Tax or any other kind of tax that seeks to discourage consumption of fuel in order to protect the environent. I'm not opposed, of course, to the idea of less fuel usage, but simply increasing the price of gasoline guarantees that the people who will bear most of the 'sacrifice' of using less fuel will be those who can least afford it in the first place. The rich will continue to use fuel just as wastefully as they always have because they can.
So yeah, if you just want to save the planet and you don't care who makes the sacrifices, then go ahead and support higher taxes on fuel consumption. But if you want to save the planet AND you care about the plight of the disadvantaged, then you might be more interested in pushing for a very stiff tax on gas guzzler vehicles that makes their purchase prohititively expensive or in simply "taxing the hell out the the rich" and using those funds to finance research on how to improve fuel usage efficiency. If these kinds of initiatives do not reduce consumption enough, then fall back in desperation on the idea of making the cost of fuel more expensive to even the poor.
May 21, 2007 5:31 AM | Reply | Permalink
Good idea, re taxing guzzlers, and there's a good economic rationale: they create negative externalities that aren't reflected in their prices.
Also, my friend Dean Baker often raises the good idea of pay by the mile auto insurance.
May 21, 2007 5:42 AM | Reply | Permalink
Cannot really have this conversation without discussing inflationary pressures associated with high fuel costs. Sure a greater part of the family income is now consumed by higher gas prices. But the family is also going to see their groceries, clothing and energy costs increase. Anyone in freight will probably see their hours decrease as companies reduce the number of partial loads, so higher prices and less money for them. Same for all retail--the largest employment sector in our economy.
Nothing is in isolation. If prices were higher as a result fo taxes, then the delta between cost and tax would at least be available for programs that might help the family (we would have to wait til 2009 for that). Since the spike is based on the commodities market the money ends up in the wrong pockets. It's a loser for the american family--even if it reduces carbon emmissions.
There are less painful and more equitable ways of fostering demand for better efficiency.
May 21, 2007 6:34 AM | Reply | Permalink
There are several approaches that could be taken to influence behavior. For example there could be a vehicle inefficiency tax so that the difference between the realized MPG and the standard is taxed proportionately.
For example if the standard was 30 MPG and the vehicle got only 20 then the 10 MPG shortfall would taxed as, say, 10 time $1000. The tax could be partially recovered when the vehicle was resold as the new buyer would have to pay a proportional amount to the original owner in the form of a higher resale price.
Another approach would be deliberate rationing. To get around the concern for the poor everyone could be given coupons for a base amount of fuel per year. Those who drive less could sell their excess coupons and those who drive more would have to buy some to cover their excess. With modern technology this could all be handled paperlessly at the filling station.
Improving efficiency has not worked the way people expected. After the 1970's oil shocks vehicle efficiency went up, but as the effective cost per mile stabilized people drove more and bought more vehicles per capita. The net result is that after 30 years total consumption has not declined. There is no reason to think that this won't happen this time as well.
What is needed is a series of policies which permanently alter demand. This means changing land use policies to prevent sprawl, increasing the availability of mass transit and perhaps even changing the nature of work so less travel is required.
The way the supply chain exists these days needs to be rethought as well. Shipping products half way around the world so we can have strawberries in December is not a value neutral choice determined only by the ability to pay.
--- Policies not Politics
Daily Landscape
May 21, 2007 6:42 AM | Reply | Permalink
.> I, for one, both welcome higher gas prices
> because they incentivize conserving, and
> bemoan them because they squeeze most families’
> budgets.
Agreed.
.> That’s most, not all families. Higher gas prices
> act like a regressive tax: they fall most
> heavily on those who can’t escape them and are
> less able to afford them.
The problem is that just given the nature of the numbers it is the people in that group who consume most of the gasoline in the US. Even if the rich towed their Mercedes limos around behind their Hummer H3s all day their total consumption of gasoline would still be trivial compared to the bulk of middle and lower-middle America. In order for price signals to reduced consumption that segment will have to feel some discomfort. Which is what makes the whole situation almost impossible politically.
sPh (who is feeling the pain of higher prices)
May 21, 2007 7:04 AM | Reply | Permalink
A major part of the problem is that our communities have been designed since the 1950s or so under the assumption that the automobile would be the primary form of transportation. Until there's an alternative form of transportation (or an alternative type of automobile fuel), raising the price of gas creates a severe hardship on the poor and lower middle class. Transportation is a necessity and those who can't afford it are at a severe economic disadvantage. To solve the problem, we not only need alternative fuels--but maybe a different way of designing communities that allows for different (less expensive and less environmentally harmful) modes of transportation.
May 21, 2007 7:24 AM | Reply | Permalink
.> Until there's an alternative form of
> transportation (or an alternative type of
> automobile fuel), raising the price of gas
> creates a severe hardship on the poor and lower
> middle class.
So what do you suggest as the incentive to create alternate living arrangements (which would generally be a return to the 1880s-1920s arrangements with public transportation + 1 private vehicle)? While I don't buy the extreme version of the free market dogma, one thing that has been absolutely clear since 1970s is that real estate developers control our environment and respond only to the probability of obtaining cold hard cash. We can pass all the laws we want and chide the developers till kingdom come but unless there is some monetary incentive people will continue buying in exurbs. That includes the middle and lower-middle income people who make up the bulk of our population and consume the bulk of the gasoline.
sPh
May 21, 2007 7:38 AM | Reply | Permalink
James, the rich are always different from you and me, and there's no point in worrying about it in this context. Their use of private planes and big cars isn't easily controlled; their overall contribution to pollutio in this way is relatively small; and some will use their greater wealth on costly green vehicles we'd never dream of imposing on others. In sum, we can certainly tax the wealthy in the interest of raising revenue or income redistribution, but raising them is a distractor from issues of energy, not an explanation.
So that leaves the cost to the poor. Easy enough: give them back the money you're raising, and if they end up spending it on something else than driving, they're happier and so are we; tax some cars more and subsidize others. In any case, it's hard to imagine how to move toward smaller, more fuel-efficient vehicles without distorting the market in some such way. And someone may suffer, but people adjust habits, and we're all going to suffer real costs from energy use. We're on a very, very costly path, and you can't put off facing it forever.
John
http://www.haberarts.com/
May 21, 2007 7:39 AM | Reply | Permalink
The last time we had a massive rise in the price of gasoline, my friends in Europe couldn't understand what the fuss was all about. We were still paying less than half what they paid. I found comparative prices for 2005 (maybe someone will find something even more recent)--but these figures are illuminating. The first indent provides the country, the second, the benchmark city, and the third the price adjusted to U. S. Dollars.
The table continues: follow the link. I stopped transcribing at the point where the price was no less than $1.00 above the average price in the United States.
Fifteen countries (and I suppose there are more) where the gasoline costs more than it does here. What do the citizens of these countries get in exchange for the higher prices? I haven't been to all of them, but I have been to Amsterdam, Oslo, Copenhagen, London, Frankfurt, and Geneva for long enough periods of time to speak with at least a little knowledge.
The get cheap, efficient, and frequent public transportation: within the cities themselves and the outlying areas themselves. They get high speed train service at least two generations ahead of what is available here, which competes quite effectively with airplanes and airports. The transportation is subsidized for the working poor and for pensioners. In some cities, novel arrangements are included. For example, in London many employers provide transit passes as one of the perks of working, and these, last time I checked, are not taxed.
They also get cities which are not dominated by the ugliest structures known to mankind: parking garages (and even uglier, surface parkling lots, looking like cavities in an ill-cared-for mouth). And they have invented novel ways to assist people getting around, for example, a host of different kinds of community bike systems. The United States is way behind on this, but experiments are starting to spring up here and there.
We pay a social cost for cheap (yes, by developed world standards, cheap) fuel. Nobody particularly likes to pay more for anything, but sometimes we can be surprised by what we get in return, if we demand that we get something in return.
Full disclosure: I decided not to drive fifty years ago. Fifty years without a car. Fifty years without a driver's license. Calculate what I've saved by that choice. The most difficult thing--getting alternative identification, which, of course, was available only at the Department of Motor Vehicles, inaccessible by public transportation.
aMike
May 21, 2007 7:54 AM | Reply | Permalink
I could see a windfall tax on the oil companies.
Then use some of that money to subsidize gas for the poor. My suggestion would be to issue a credit card to people with incomes below a certain level or levels allowing them to buy up to $75 worth of gas every so many days. For example:
income income etc.
Of course it is easy to see how this could be abused but I think the benefit would be worth the risk.
May 21, 2007 8:11 AM | Reply | Permalink
Absolutely, and it's important to note that the longer you put it off, the nastier changes will be when they become more and more unavoidable. (And we've already put off starting the changes for far too long.)
An appropo comparison is to driving -- good drivers are always looking ahead, slowing down in advance of a stop, changing lanes before they get to the exit, etc. Bad drivers are reactive rather than predictive -- sudden stops, last-minute lane changes, and so on. It's harder on them, their passengers, their vehicle ... and they're much more likely to get into bad accidents.
We need to make adjustments to our driving now, before we end up losing control and going over a cliff.
May 21, 2007 8:25 AM | Reply | Permalink
Yes, the price stability is what causes the difference, which is mostly psychological. In Europe, people have adjusted to high gasoline prices years ago. They use public transport a lot, they use fuel efficient cars, etc.
As a random data point, the car I now drive usually consumes about 4.5 litres of diesel per 100 kilometres, which works out to 52 MPG if I'm not mistaken. This car is almost 10 years old and about the size of VW Jetta.
And yes, I agree with your speculation. Some governments for example tell drivers (whether that's strictly true is another question) that the gas tax will be used to finance the building of new motorways or maintenance of existing roads. That actually is a pretty fair deal - the people who drive the most burn the most gasoline, and they are the ones who should pay the most for road infrastructure upkeep. Difficult to argue with that.
A side benefit of relatively high gas tax is that in the case of an oil crisis, the tax can be lowered to cushion the impact somewhat.
The thing about gas prices is that yes, they impact some people more than others, but they are a great way to change peoples' (even the entire society's) behaviour. If gas prices are high, people will factor that into their decisions the next time they buy a car. This puts pressure on manufacturers to develop more efficient cars, etc. etc.
IMO a gas tax is a good thing from a long term perspective, because gasoline (oil really) is a kind of drug whose use is going to get us (and already is getting us) in big trouble. The sooner we wean ourselves off the oil dependency the better. Once the secondary costs of oil like environmental damage or wars to "stabilize" the ME are factored in, oil is a really bad deal.
May 21, 2007 8:27 AM | Reply | Permalink
I decided not to drive fifty years ago.
Yes; but was it epiphanic? See, Duane's Depressed.
May 21, 2007 8:27 AM | Reply | Permalink
Interesting that you put that word in quotes. I've sometimes thought that the US (et al) have put a lot of effort into stabilizing the ME ... and making sure it didn't get too stable.
May 21, 2007 8:32 AM | Reply | Permalink
The monetary incentive is that if gas is expensive, then living in exurbs becomes expensive, which will push down the demand and therefore prices of property in exurbs. With the obvious consequence that it exurbs will become less interesting to real estate developers.
That is, if they didn't lie to me in Economy 101 :)
May 21, 2007 8:32 AM | Reply | Permalink
Right, but the discussion here is that US as a society cannot take any actions to deliberately raise gas prices (e.g. a tax) because it would hurt the middle class (the bulk) and poor. Waiting for prices to rise naturally (which I suspect they will) is a bit like waiting until the minimum stopping distance before the cliff to determine if your brakes actually work.
sPh
May 21, 2007 8:49 AM | Reply | Permalink
I'm not going to defend the oil companies, but their profits have to be taken in context. Since the large number of mergers over the past decade the size of the survivors has gotten much larger, thus the size of their profits in dollars is also larger.
To take Exxon as an example their revenue was $337 billion but their profit margin was only 12%, this is not out of line with many other industry sectors. Much of the rise in the cost to the consumer in the past few years is because of the rise in the cost of a barrel of oil. Something like 80% of the oil reserves in the world is now under control of the national governments, not the oil companies.
The US has also seen a rise in the past few months because of local problems with refineries and other domestic supply issues.
The real worry is that a firm like Exxon is spending comparatively little on exploration and increasing capacity and instead using the profits to boost the stock price through buybacks and other financial tricks.
People on places like the oildrum blog take this as a sign that global reserves are at a point where there isn't much more to be found, hence the aim to maximize returns in the short term.
--- Policies not Politics
Daily Landscape
May 21, 2007 8:58 AM | Reply | Permalink
If the price hike was spread over a number of years, it would give people plenty of time to adjust. 20-50 cents a year will add up quickly over a longer period, without causing a major shock.
Politicians have to bite the bullet and tell people that the choice is between slowing down now and hitting the wall at full speed later. There is no open road ahead.
May 21, 2007 9:00 AM | Reply | Permalink
Re: The thing about gas prices is that yes, they impact some people more than others, but they are a great way to change peoples' (even the entire society's) behaviour.
Problem is, the people who are most affected are usually the ones least able to change. If you make 200K a year you can probably go out and buy a new Prius in response to high prices. A single working mother barely scraping by on 25K can't even afford to buy a new clunker if her current one dies, let alone a brand new car. One reaso ni ahve argued that, in teh US at least, a better way to approach this problem is with taxes/subsidies for vehicles, not on fuel. New vehicles that fall below a target mileage rate woudl bet axed (with teh tax escalating steeply as the mileage falls), and new vehicles that exceed the target woudl be subsidized (with the subsidies growing steeply larger as the mileage becomes larger).
Re: So what do you suggest as the incentive to create alternate living arrangements (which would generally be a return to the 1880s-1920s arrangements with public transportation + 1 private vehicle)?
I don't know that you'd have to go back that far. The 1950s subdivision in which I grew up had a surprising number of destinations within walking or biking distance: my grade school and my middle school, two small parks, four (later five) churches, a grocery store, a Kmart, a pharmacy, a full service gas station, two banks, a hardware, a convenience store, a pizzerria, a "greasy spoon" eatery, a barber/beauty shop, a shoe store, a lady's clothing store, a dental clinic, a medical clinic, a dry cleaners, a laundromat, a lawyer office, even a Planned Parenthood. My father's commute of 20 miles (one way) was the outlier among our neighbors: most people worked within 5-10 miles of home (and many closer to 5 than 10).
Re: They also get cities which are not dominated by the ugliest structures known to mankind: parking garages
Parking gargages need not be ugly: that's the architect's fault. And in the USA we have a lot of architects whose taste is inferior to the average house cat's. Not just parking gargaes, but modern-day public buildings in general, from churches to schools to city halls to hospitals, look as if a concrete asteroid created by a Cubist god had crashed to earth.
May 21, 2007 9:50 AM | Reply | Permalink
.> Problem is, the people who are most affected
> are usually the ones least able to change.
> If you make 200K a year you can probably go
> out and buy a new Prius in response to high
> prices. A single working mother barely scraping
> by on 25K can't even afford to buy a new clunker
> if her current one dies, let alone a brand new
> car.
So we in the US ignore the underlying problem, continue to apply virtual subsidies to oil prices (including use of our military as needed) - and then 5-7 years from now the price jumps to $7/gal anyway when production decline crosses demand from India. Except this time it happens in one shot. What happens to the poor single mother then?
sPh
May 21, 2007 9:53 AM | Reply | Permalink
Big oil plays the commodities market as a hedge against the actual market. Exxon's record profits last year were based on the high price of oil AND their positions in the commodities market. Their exposure determines whether they like the current price and effects their strategy for dealing with the market. So it's not just that they are fortunate enough to see crude prices go up and therefore they have a good year. There's some market manipulation involved--they hedge in more ways than one.
I'm not terribly sympathetic to big oil. It's not a new market, so I expect a level of sophistication that allows them profits, but avoid exploitative practices. For example, Big Oil retools refineries in the Spring (ostensibly to adjust the mix for the summer months), and every year likle clock work the gas pump prices rise. Each year the retooling takes a little longer... This plus the non-investment in new refining is reason enough to suspect I'm being taken for a ride.
May 21, 2007 10:28 AM | Reply | Permalink
Those are some really elucidating numbers and points, aMike.
Especially, the parking gargages.
I live a mere few miles outside of DC and it's incredible how limited our public transportations options are.
May 21, 2007 10:44 AM | Reply | Permalink
JPF: "Problem is, the people who are most affected are usually the ones least able to change." That certainly sounds plausible, but it isn't so. The ridiculously large number of SUVs on the road in the last decade suggest that trends in cars really do change among the masses. The idea that we're begging people to shift from a routine car to a Prius creates a straw man, or at least leads you down the wrong road.
John
http://www.haberarts.com/
May 21, 2007 10:44 AM | Reply | Permalink
This plus the non-investment in new refining is reason enough to suspect I'm being taken for a ride.
The Republicans say that environmentalists are the cause of no new refineries. A peak oil advocate says that investors know that soon there will not be enough oil available to keep the existing refineries busy so a new one would never get paid off. I tend towards the second belief. I know that having just enough refining capacity allows the shut-down of just one refinery to jack up the profit margin of all the others.
May 21, 2007 10:49 AM | Reply | Permalink
It was more a product of a fairly extruded asthenic body type: a veritable Tall Skinny Chicken Boy. The 37" legs wouldn't fit under the steering wheel of the 54 Chevy Station Wagon with stick shift. I've never regretted this, as I see better from the back row at most parades I attend. Now if my gym basket hadn't been on the bottom row my childhood would have been idyllic.
aMike
May 21, 2007 11:27 AM | Reply | Permalink
You don't need to buy a Prius to get better gas mileage. What does a used Geo Metro go for? A standard Civic gets over 40 MPG.
There was an article in Tha Nation last year about high gas prices and they used the example of some woman in Northern CA who drove 100+ miles round trip every day to work. Their point was higher gas prices hurt the poor. My comment was the woman was driving a Ford Explorer, it gets what 12 MPG? With what she is spending on gas she could easily pick up a used car that gets 40+ MPG. In addition living 50+ miles away from work in some small rural town is a privilidge not a right, you make the choice for that lifestyle, it costs.
May 21, 2007 11:34 AM | Reply | Permalink
"I don't know that you'd have to go back that far. The 1950s subdivision in which I grew up had a surprising number of destinations within walking or biking distance: my grade school and my middle school, two small parks, four (later five) churches, a grocery store, a Kmart, a pharmacy, a full service gas station, two banks, a hardware, a convenience store, a pizzerria, a "greasy spoon" eatery, a barber/beauty shop, a shoe store, a lady's clothing store, a dental clinic, a medical clinic, a dry cleaners, a laundromat, a lawyer office, even a Planned Parenthood."
This is a good point, you don't everyone to live in high desnity places like Manhattan, the older suburbs were generally mixed use. It is the post 1960s "planned communities" that have everything zoned into ex-urban wastelands.
May 21, 2007 11:37 AM | Reply | Permalink
.> This is a good point, you don't everyone
> to live in high desnity places like Manhattan,
> the older suburbs were generally mixed use.
Which is why I specifically specified "1920s". Go look at the 1920s railroad neighborhoods (outlying) and/or suburbs of Chicago (e.g Rogers Park, Beverly, etc). They had (1) single family homes (2) with garages (3) and were walkable to (3a) the train (3b) the grocery store, dimestore, etc. (4) resulting in ecologically supportable density without the Manhattan feel.
What they _didn't_ have was (1) 1/2 acres of grass for each house (you had to walk to the park if you wanted more grass than your 15x30 back lot (2) "ample free parking" anywhere and everywhere. And they _did_ allow parking on the street, even (horrors) at night.
sPh
May 21, 2007 12:19 PM | Reply | Permalink
Um, I made a suggestion as to how to help the poor rather than screw them. And get lots more fuel efficient vehicles on the road.
As for "production declines" what we are seeing has nothing to with any peak oil hysteria. It doesn't even have a lot to do with OPEC for once. A big part of the current high price of oil can be atributed to Bush's foreign policy fiascos in the Middle East. But as to the price of gas right now, we are being manipulated by the oil companies. Oil hasn't gone up this year (apart from the usual fluctuations). There are no natural disasters to blame. Econometric models suggest that gas prices should have stabilized (national average) at about $2.70/gal during the usual pre-summer run-up. Gas futures have been steady or even falling. I think it's fairly obvious that the price is being "fixed", in a big way. And I am not a conspiracy theorist or market-hater normally. It's just that all the evidence points to that conclusion, and someone really needs to investigate big oil, and throw the book at them if evidence of such behavior is forthcoming.
May 21, 2007 12:34 PM | Reply | Permalink
I too have seen some statistical evidence suggesting that the price hikes at the pump are too large to be explained by the rise in the cost of crude oil.
Of course, the response is, 'they charge what the market will bear,' and this being near the start of vacation season, and the fact that there are a few refineries off line, and blah, blah, whatever.
In other words, absent a smoking gun, it's hard to prove gauging. So better to set up a system to a) get the incentives right without hurting disadvantaged folks, and b) recoup extranormal profits and use them to offset the damage and support green alternatives.
May 21, 2007 1:30 PM | Reply | Permalink
Who wants higher oil prices? Who benefits? Would a war in the middle east drive up prices? Which world leader is a puppet for oil companies? Which world leader would lie to his subjects to start a war while handing over American Taxpayer dollars to his friends so they can rebuild a country.... rebuild it just enough that they can get their hands on the oil -at our expense? To hell with the citizens of that country. Think about the people who REALLY REALLY want higher oil prices, and then please be cynical enough to imagine that such huge wealth (=power) is not enough impetus to do ANYTHING to get it.If you think anything besides profits and power is guiding this country right now, then think about our constitution and our civil rights. Who gets more protection, the oil and armament dealers, or our constitution? How much public transportation could have been provided for the cost of the war in Iraq? THAT WOULD NOT HAVE BEEN IN THE INTERESTS OF THE PEOPLE IN POWER. How much could we have raised teacher's salaries? Not in their interests.The rise in price is the result of an all out no-holds-barred-anything-goes desperate attempt to get money and power. They will most likely succeed while American Citizens trust news services like Neocon Party Radio to bring them unbiased reports. I'm getting off topic. These are cynical malignantly evil people controlling our information and our gas prices, and eroding our constitution. Get used to it. It won't change. If you want to know what will happen to a country that does what this one is doing, there are numerous historical examples. Its not a happy ending.The last great Nation that was prodded- by enhancing the citizens fears -to go into war, and was governed by a cooperation of corporations and leaders, and tried to exert one set of morals on everyone, and hid behind cries of patriotism and safety while exterminating their "foes" was Germany. Fortunately for Americans, they are ignorant of history, and unable to draw logical parallels, and will simply be stunned when the effects of orgiastic corporate greed come home to roost.
The point is, EVERY company working in Iraq is stealing from us, and all their profits should be given back to us. That is the windfall we should demand.
May 21, 2007 3:17 PM | Reply | Permalink
I'm going to don my aluminum foil hat for a minute and ask a what if: what if they are gaming the system like the power companies did a few years back?
I live in Los Angeles and I remember the hot summers, rolling black-outs and ever rising electric bills. At the time there was similar conversations about conservation, maintenance burdens and "charging what the market will bear". But after people got fed up enough and started to poke around the shadowy scam became crystal clear and the only reason more people were not roasted at the stake for it was because of George Bush and Dick Cheney were running the show.
Am I the only one who sees something awfully familiar here? And I know oil and electricity have an intimate relationship but this seems to me to be a bit more than mere coincidence. If you remove gas and enter electricity it would be nearly verbatim. Profits thru the roof, people getting hosed and ironically we here in Cali seem to catch it right in the kisser. Maybe it's the "industries" way of getting back at all of us "green" Cali-types! When do we see the accounting explosion and the new Ken Lays!? I'm almost convinced that it's only a matter of time.
(I'm not sure if I'm joking about most of this or not! Lol)
May 21, 2007 3:43 PM | Reply | Permalink
You're likely correct and you have no need for a tinfoil hat. Every major oil company out there has a trading desk that's bigger than Enron's or Dynegy's ever was. That's just a fact.
People argue that the oil companies just get big profits when oil is up. Not true. Those traders go long and short oil every trading minute of every day. They don't live and die by the commodities markets. If they did, their shareholders should sue them. They play those markets. And, as you suggest, they liekly manipulate them.
A little known fact about the commodities markets: there are no insider trading rules. This is why the most successful cattle traders work for big farming companies and why the most successful soybean traders work for ADM. The traders know what the inventories are and where they are. That doesn't make them infallible, but it makes those traders very, very good.
The really big oil companies are not just explorers and producers. They have trading desks that Goldman Sachs would kill for.
thosethingswesay.blogspot.com
May 21, 2007 5:31 PM | Reply | Permalink
Let us not just look at who uses how much energy, but at who ultimately profits from that expenditure. True, private jets are not a big part of the equation. But who really paid for that private jet? Chances are, much of it was earned on the backs of working people who spent a portion of their paycheck for gas to get to work. Gas taxes are worse than regressive when gas is necessary to survival. James makes an important point. Those who get hit the hardest can least afford it. And why should they take the brunt of the cost of cleaning up a situation that others profited from?
There is already an untouchable class in America that use public transportation not by choice. We have added to their numbers by allowing the oil companies to practice anticompetitive gouging (think right after Katrina or the energy crises of summer ‘01). On top of this there are countless regressive taxes, to those who can't afford it, for auto sales, registration, insurance, inspections,etc. etc. etc.
CAFE standards have gone down in practice over the last decade. Far from disincentives to buy gas guzzlers, a 50G tax write off to “businesses” buying SUVs has been gifted to those who don‘t need it. People are still starving in this country. There are thousands of bankruptcies daily. Homeless ranks swell. The only group outpacing the very rich are the working poor.
In this country, laws and regulations govern our behavior (incentives and disincentives are part of that). The real impediment to alternative energy and conservation is a non-responsive government that has denied the problem and makes it worse with sops to big business and the wealthy. The real question is not just what to do but who is going to do it? A global effort like the Kyoto protocols from our elected leaders would be a start. Holding our “representative” government to account by demanding progressive taxes, aggressive pursuit of white collar crime, and punishment of monopolistic practices would be a start.
May 21, 2007 6:08 PM | Reply | Permalink
Anyone know what the price of gas is in Canada, and whether gas prices there have been following the US ups and downs or if they have been stable?
May 21, 2007 6:58 PM | Reply | Permalink
Re: most difficult thing--getting alternative identification, which, of course, was available only at the Department of Motor Vehicles
Don't all states issue Personal ID cards to people who do not or cannot drive? As for getting to the DMV, if you live where you can survive without a car, presumably it is in some densely populated area with some sort of alternative transportation at hand. I have never lived anywhere (including suburbs) where a DMV was not within biking distance (as a practical matter, I consider biking distance to be anything less than five miles one way).
May 21, 2007 7:02 PM | Reply | Permalink
Here's a thought experiment. Dick drives a Prius 40 miles to work. Jane drives a Hummer 5 miles to work. Who uses more gas?
So you tax the hell out of gas and hope that eventually, the Janes of the world will buy Priuses, the Dicks will get jobs closer to home and Dick and Jane will unite to demand better mass transit, more sensible urban planning and dramatic improvement of inner city schools.
It seems to me, it would be a better plan to finance all those other good ideas with a progressive income tax, rather than wait for the Dicks of the world to unite and demand what we think should come naturally.
May 21, 2007 7:34 PM | Reply | Permalink
Yup, it was a Personal ID.
Rhode Island is rather strange (well, that's a given). There is one public bus system for the whole state, and one can get to any of the major towns by public transport for $1.50 plus a dime for a transfer. At the time I got my alternative ID, the Department of Motor Vehicles was located in Pawtucket, the town immediately north of Providence. I live about 18 miles south. But it wasn't on a bus route. It was walkable from a bus route, but not convenient for a person who didn't know the place.
Since, I have to say, a number of alternate offices have opened, one in the town next to mine, so things aren't as inconvenient as they were then. It just struck me that if a person needed an alternate form of identification because he or she didn't drive, it would make more sense to issue it from post offices or from town halls, which are usually in the center of things. The State Capitol is about two blocks from the central bus embarkation point in downtown Providence.
aMike
May 21, 2007 8:00 PM | Reply | Permalink
If a revenue neutral tax is passed it can actually benifit the poor - here's how.
I'm pulling these figures out of my, uh the air to illustrate so bear with me.
Suppose the gas tax is raised $2 a gallon and the average poor person buys 1000 gallons of gas a year. If you then rebate $1000 dollars and increase subsidies for public transportation (reducing fares), you have then given some choices to this poor person. Instead of paying $3000 now or $5000 with the new tax along with repairs insurance and other auto expenses, this individual may choose to sell the car (saving say $7000 a year) and pocket the $1000 and take (now cheaper) public transportation. Or they might take the $1000 and trade the old gas guzzler in on a more efficient car - or buy a bike, or move closer to their job.
I'm not going to claim that substancial increases in the gas tax won't cause dislocation and pain. Properly structured though, there would be positive changes in behavior from us all and there would actually be benificiaries.
The stakes (our national security and the future of the ecosphere) are high enough to justify drastic action.
May 21, 2007 8:46 PM | Reply | Permalink
Exactly, Mike. You illustrated the point I tried to make elsewhere in this thread much better than I did. If you think of an automobile as the only possible means of transport, a rise in the gas tax is scary and unfair to the poor. In fact, nobody would benifit more if (and it's a big if) the tax were properly structured.
May 21, 2007 9:24 PM | Reply | Permalink
They use the regulatory environment as an excuse for not building new refineries. What I've been carping about for years is the number of times I have seen in the business pages that a small refinery had been bought up and closed down. This renders the argument about insufficient capacity meaningless. This refinery "shortage" has been engineered and has been 30 years in the making.
May 21, 2007 9:33 PM | Reply | Permalink
As I pointed out earlier in the thread, oil companies have been buying up and closing down refineries for 30 years.
May 21, 2007 9:54 PM | Reply | Permalink
I gave your comment a 5, but I have one caveat. In some places (especially California), housing is so expensive in the urban areas that civil servants and others can't afford to live in them. This necessitates the ridiculous commutes.
May 21, 2007 9:59 PM | Reply | Permalink
I'll go along with the incentive to use public transportation. Except, there is little to none available here- especially that which does not conform to 1st shift ONLY usage.
I'd go along with requiring higher MPG standards on new vehicles, except for 2 things. (A) they'd have to rise by 16% to be factual at the moment, without adjustment for REFORMULATED (translation: head gasket-eating SHIT gas) Fuel, and (B) fuel economy standards tend to fall or be ignored in Oil-company-loving administrations. We're equal to about 1984 right now; I don't care how many little shitboxes you sell, it won't make up for all the locomotives, powerboats, jets, crotch rockets, snowmobiles, and- my personal favorite- big-ass 4-wheel drive dually pickups that are the phallic symbols of this generation of aging fatass male boomers.
Don't get me wrong- I fall into the aging fatass male (tail-end boomer) category. But I am both unable and unwilling to piss away that kind of coin on a vehicle I don't need, just for show.
We replaced our dead Escort with an '05 LeSabre, for family capacity reasons. It gets an average of 22.5 MPG. No worse than a dying Escort.
But the 5% figure is off for fuel costs. We're more like 10%, + 10% for home energy, + 10% for the car, + 30% for mortgages and 30% for food.
Maybe we would have gotten a hybrid if we could have afforded the $500+/month. It ain't a-gonna-happen.
The other car's a beater '90 Cavalier. Low miles/high rust.
Lastly- huge profits to oil companies are NOT a tax. They are NOT justifiable by some profit margin mathematics. We pay all of their expenses up front, plus the subsidies.
Does anyone here consider their paycheck, or any part of it, to be PROFIT? How does that work if you're farther in the hole every passing year?
May 22, 2007 1:09 AM | Reply | Permalink
No left-of-center politician or opinion-maker (viz., Bernstein) should ever fall into the trap of "welcoming" higher gas prices. If lower fuel prices cause people to do bad things, like buy gas guzzlers, tax the guzzlers, not the gasoline.
Welcoming high gas prices because they "make good things happen" is like welcoming an illness in your adolescent child because it will keep him off the streets. In fact, it's worse, because the major beneficiary of high prices is the already obscenely wealthy and influential oil industry.
So belay that bilge, Mr. Bernstein. It's both immoral and politically stupid. The appropriate response to the current spike in gas prices is to use them to insinuate more governmental controls over the oil industry. Eventually, the carbon-based fuels corporations will have a huge bill to pay, as the tobacco industry did. But there's no point to cheerleading their rape of American consumers.
May 22, 2007 3:38 AM | Reply | Permalink
I like it.
The key is having alternative transportation options in place so people can respond to anti-driving incentives.
May 22, 2007 6:19 AM | Reply | Permalink
Would more expensive cigarettes be a bad thing too? Just wondering...
May 22, 2007 6:25 AM | Reply | Permalink
I don't agree. Sometimes prices go up, and while I'm the first (ok--among the first) to see market failures, distortions, gouging, etc--especially when we're talking about the oil biz-- there are at least some fundamental supply and demand forces at work here.
So, like I said in the post, price signals matter, and I don't always oppose them.
That said, tax the guzzlers, sure. Higher energy prices, when they're justified, are part of the solution too.
But I take your point re taxing gas--it's highly regressive and you'd need a scheme to deal with that.
I like ideas others have had here: use the proceeds from taxing energy and oil profits to fund alternative transportation options.
May 22, 2007 6:32 AM | Reply | Permalink
Jared,
I wrote a book "Horsepower War" that dealt with CAFE standards among other things. I've been following this for years, and, with respect to your link to Bob Lutz and the Chevy Volt - to be charitable - let's wait and see. First of all, even GM admits that, uh, actually...the technology doesn't exist to make the Volt do what they say it will do. (Remember the Gary Larson cartoon with the Scientist writing on the board, and it says something like "Cold Fusion" there's this long equation with the last step saying "a miracle happens." - that's the Volt)
Detroit, and it seems like GM in particular, love trotting out these 'feel good' concept cars - it even seems like they do it when they're in a particular jam with CAFE or, more recently, taking California's Air Research Board to court over their efforts to decrease CO2 gases (a backdoor efficiency increase! how dare they!)
Bob Lutz is a charlatan - actually an unusual personality in GM's long history. They made the Volt to get a nice Tom Freidman editorial - it worked like a charm too, but that's all they wanted. In the very next breath Lutz will complain that Americans won't buy efficient cars and that GM doesn't make money on them - refreshingly candid statements, and at least the latter one is irrefutably true as well.
I covered the Chicago Auto show, and I put it to Chevrolet's top PR liason wrt the VOLT: "Bob Lutz says American's don't want efficent cars - so why would you waste money developing something that Bob Lutz himself says people don't want?"
He launched into a soliloquy about 'consumer choice' and even his eyes were really glazing over. When I mentioned the PR bonanza it was getting, then his eyes really lit up. "Mission Accomplished!" I'm sure he was thinking.
The most distressing thing about it all is they put out these cars they say will get 200mpg, but then in the next breath say that a 20mpg full size SUV is like asking for cold fusion - so you want to say "Hey, which is it - are you lying about the 20mpg SUV or the 200mpg supercar?" The sad fact is, they're lying in both cases.
I hate to be nattering nabob of negativity, but it's the triumph of experience over hope. For more stomach turning tales of Detroit deception check out my reader blog "KingElvis' Blog"
May 22, 2007 7:46 AM | Reply | Permalink
The safest vehicles are on average the heaviest, and the most fuel efficient are the lightest and the most dangerous. The bottom line is with all else equal you want the most metal between you and the telephone pole. Taxing heavier vehicles will result in more people dead or maimed.
My 90cc mororcycle got super mileage, but in a collision with a tree, I would have been toast.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
May 22, 2007 8:32 AM | Reply | Permalink
You're not a 'nabob of negativity'--you're a 'reminder of reality,' which is, of course, very valuable.
But let me ask you this. Presumably, these guys respond to market demand, though granted, in the case of Detroit, with a huge time lag. If gas prices stay high, which I think they will, or we design gov't incentives and disincentives that push and pull the right way, will they be forced to actually try to design cars like the Volt and give up on SUVs?
May 22, 2007 9:13 AM | Reply | Permalink
Re: The safest vehicles are on average the heaviest, and the most fuel efficient are the lightest and the most dangerous.
Except that highway deaths went down all through the 70s and 80s even as car sizes and weights also downsized. Vehicle size and weight are a very minor determinant in this. Far more significant are whether the driver and passengers use their seat belts. Moreover, modern day cars are in fact engineered to be safer than the old behemoths of the past. Even their lightweight plastic components yield a safety benefit since you less likely to suffer serious injury when impacting a flexible or breakable plastic object than a hard, sharp metal component. Anyway, anyone who worries about car safety can improve it enormously simply by driving better.
May 22, 2007 9:14 AM | Reply | Permalink
Highway deaths have been going down since the 1920's. It certainly is true that the addition of seat belts and ABS systems made smaller cars safer than older heavier vehicles without such features. So the decrease you point to is in part a trend that predated the change, and in part comparing lighter but better equiped vehicles to heavier but poorer equiped ones.
However, that comparison proves nothing. A heavier car is safer that a lighter vehiclewith the same safety equipment.
http://trb.org/news/blurb_detail.asp?id=1961
This is for only a 100 pound reduction. Big mileage improvements will require more than 100 pounds. Also note that this only counts fatalaties and missed the maimed completely.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
May 22, 2007 10:37 AM | Reply | Permalink
Maybe.
But I think that people forget about the aesthetic experience of driving when we have these conversations.
I drove a Prius a few weeks ago and while it was fine, I also found it underpowered and just plain weird when it was in electric mode. It wasn't fun like other cars.
It made me miss my old turbo-charged Ford... or the Mustang I had before that. I suppose tastes will change but right now the Prius isn't much cheaper than a lot of faster, more powerful, more fun to drive cars on the market.
Somebody make me a sporty hybrid!
thosethingswesay.blogspot.com
May 22, 2007 10:48 AM | Reply | Permalink
.> Somebody make me a sporty hybrid!
The Honda Accord Hybrid was specifically optimized for performance rather than ultimate fuel economy (as opposed to the Civic hybrid which was more Prius-like). Its 0-60 time was better than the equivalent pure gasoline version as a result of using the electric motor to boost acceleration when the throttle was mashed.
Not sure if Honda is still selling that model though; it was not too popular.
sPh
May 22, 2007 10:59 AM | Reply | Permalink
That sounds like fun!
thosethingswesay.blogspot.com
May 22, 2007 11:01 AM | Reply | Permalink
LongTom, there is also another trap into which one should avoid falling into and that's the trap of ignoring the masses (American consumer).
The brightest, most enlightened efforts will fail miserably in this country if the average American consumer feels they have to "sacrifice" anything. Be that time, money, effort, or however else you want to quantify it, the average American will want no part of it if it requires these sacrifices. It's inconvenient. It's a hassle. The idea that's ingrained into most of us is that people shouldn't need to worry about "things like that" here in America.
I think there's plenty of blame to go around as to why concepts like conservation and public transportation are difficult sells in our society. The blame lays with corporations as well as consumers. I am personally a huge fan of public transportation but as an example there is a different stigma to "taking the bus" as opposed to "taking the train" in many American cities. How do you get around this? I guess what I am ultimately saying is that making these sort of services and products available is an important part of the battle, but consumer/user participation can be seen as an equally important part. And I'm not thoroughly convinced that Americans are really terribly motivated in that department and one of the things that may be required is a strong kick in the can in some cases.
May 22, 2007 11:12 AM | Reply | Permalink
Not to cast stones or anything even remotely like that but as the several posters above me here demonstrate, consumer attitude is an equally important factor.
We all hate paying high gas prices. But who is willing to give up the cherry muscle car for the alternative? Driving an electric "just doesn't feel the same". Perhaps it's something more than a difference in perspective but it represents an entirely separate battle that must be fought.
Why do we drive? Is it to get to work or the store? Is it to feel freedom manifested in the ability to travel anywhere at anytime? Is it that cultural variables create certain stereotypes for certain types of vehicles and the people that drive them? It's almost certainly a combination of all of them and more, and this represents why making these kinds of changes in our country are so extremely difficult and much more complex than just raising gas prices or legislating automakers to build different types of vehicles.
I'm reminded of being a kid and my dad refusing to spend $50 for me on a pair of sneakers or letting me wear blue jeans (he called them dungarees) to school because only poor kids wore them when he was a kid (and we weren't poor dammit!). We use and buy products for many reasons other than their explicit purposes or uses and we all need to come to terms with what those are and ask ourselves: What truly is important?
May 22, 2007 11:48 AM | Reply | Permalink
I don't know the answers but there certainly a cultural component to this. People like their cars. Driving is fun (sometimes).
And some people prefer fast cars to slow ones or cars that can haul things and go off road to ones that can't and big ones to small ones...
Cars are also expensive. Nobody wants to go into debt to own a car that doesn't make them happy. If you have to make that payment every month, it might as well be for something you like.
thosethingswesay.blogspot.com
May 22, 2007 11:53 AM | Reply | Permalink
This is an important thread for me because my personal bias is anti-car. I have a theory that your happiness in life is inversely related to time spent in the car.
The point being that I'm sure I don't give enough weight to positive views re cars and driving when I think about this stuff.
May 22, 2007 12:54 PM | Reply | Permalink
Thanks for responding JB.
I delve into this pretty deeply in my book and blog, but these are the key points.
It turns out, Henry Ford was wrong. Making money on low volume luxury cars is a snap. Making money on mass market cars, not to mention economy cars is tough. BMW and Mercedes hardly ever lose money. On the obverse, Mercedes "SMART" cars - the two seaters that look like closets on wheels, have NEVER turned a profit. It doesn't matter that you see them all over Europe.
GM has gotten to the point where it's just making cars to break even - only the trucks are profitable - they should be. A Chevy Tahoe's base price is something like $35,000.
Before 1959, GM refused to even make small cars. The problem is that you need most of the same components to build a small car. They're only marginally smaller - consider that a 'small' Dodge Neon is only about 20 inches shorter than the 'big' Chrysler 300 - so that's like 10% difference, but you can easily pay $36,000 for the 300, but few would dream of paying much more than $18,000 (half the 300) for Neon. In general, people just won't pay as much for a small car.
Also, this is still an oligopoly model where you spend a billion dollars and four years developing a new model. You obviously can't turn on a dime there since, really, who knows what will happen next year, let alone in four years. Because of all the risk involved the carmakers are inherently backward looking and more concerned with copying competitors - it's a business model that puts a damper on radical change.
In short, nobody will abandon SUVs - at best they will shrink marginally and/or add expensive technology like hybrid drive. Like the old cliche about robbing banks says "that's where the money is."
I think an interesting solution is to mandate all cars weigh within 1000lbs of eachother. That way you address the safety issues mentioned above in this thread.
On expensive cars it would be worth it to invest in expensive materials like carbon fiber and aluminum, and you can use expensive 'baroque' technology like turbochargers. You can make them nice and big, but with carbon fiber, they won't be heavy, and with high tech gimmicrky, they can have plenty of reserve power while getting decent mileage. Essentially you transfer the luxury buyer's money from buying gasoline to buying engineering.
For mass market cars, they can cut horesepower and weight marginally, but still turn a profit because they use cheaper steel and lower cost drive trains. They couldn't be big and powerful, but then nobody expects mass market cars to be big and powerful.
May 22, 2007 1:12 PM | Reply | Permalink
My bias is pro car. But I think I've at least matured enough to see it as a kind of vice. I was raised in a rural environment with plenty of empty dirt roads to blast down. In the urban setting - even in relatively car friendly Chicago, the car really is quite a burden.
May 22, 2007 1:15 PM | Reply | Permalink
Yes, Joan Claybrook has been shouting in the wilderness for years about this. Finally she can say "I told you so."
May 22, 2007 1:18 PM | Reply | Permalink
Fascinating.
The production model you describe seems to me a big part of the problem--as you say, it's backward looking and very clunky.
One of the alleged advantages in the new economy--outside of sectors like autos--is much shorter production schedules that can shift on a dime. Apparel manufactures, eg, brag that they can respond very quickly compared to years ago, to changes in taste and fashion.
Just-in-time inventory is a hallmark feature of the new economy.
Yet, as you describe it, the auto sector just ain't set up that way--ergo, the very long lags I mentioned in an earlier post. And, thus, a rationale for gov't intervention that nudges the invisible hand in the right direction.
May 22, 2007 1:25 PM | Reply | Permalink
That's a very good point that is often forgotten when people like Tom Friedman pontificate on the wonderfulness of draconian gas taxes.
I love that a millionaire journalist wants 'behaviour changing' taxes that are:
A: Regressive
B: Won't affect him at all
So all of us in the lower classes will just crowd into cities and not have cars - or houses. We'll live in cramped apartments and our kids can join gangs...sweet.
May 22, 2007 1:28 PM | Reply | Permalink
I see where you're going, because by definition, urban planning isn't 'demanded.' In fact sprawl is nothing if not a result of saying "let the market decide" what our cities/exurbs look like.
There's an eco development in Chicagoland that sponsors lots of plugs on NPR. But the problem is that you can't really say one group of nice people get to "choose" urban planning, while "jerks" get to "choose" sprawl. Literally, the two cannot exist side by side. The benefits of planned communities then acrue to the 'jerks' who might have slightly less traffic to deal with AND a cheaper, bigger house on more land, and the vices of sprawl aren't escaped by the people paying more for less house/land.
May 22, 2007 1:36 PM | Reply | Permalink
Haha, anit-car. I suppose to a certain extent you could say I am too.
I grew up in the VERY rural north east PA and driving was not an option, you simply had to do it...lots of it. I grew up with it and I suppose enjoyed it too. When I went to NYC to go to college I was exposed to real public transportation and I've never been the same again. I viewed driving as an enormous burden both in time and especially in money. And once we all enter the work force time is money so those 3-4 hours of unpaid commuting a day can add up to an enormous waste of...life I guess.
I moved to Los Angeles for work years later and I lived out here for 9 years w/o a car. I was fortunate to either car pool initially or later to live within 2-3 blocks of my office. People out here of course looked at me like I had 3 heads but I can say I agree with the happiness factor you mention. I was MUCH less stressed and angry than my peers who commuted hours a day.
I leased a new car last January, I guess I just thought I'm getting older and that I should have one again...I'm not sure. But I currently have only put 987 miles on it and so even with a car I'm still looked at like I have 3 heads!
May 22, 2007 1:44 PM | Reply | Permalink
LA without a car! That's unheard of--downright unAmerican...
May 22, 2007 2:01 PM | Reply | Permalink
Have you ever seen the movie Repo-Man? In it is the quote: "The more you drive... the stupider you are."
But, I was raised in car country and I had some cars I just loved.
Now I live in a city and I don't own a car. But when I do get out of town and rent a jalopy, I remember that I like driving fast with the windows down and the stereo blaring.
thosethingswesay.blogspot.com
May 22, 2007 2:02 PM | Reply | Permalink
The industry is 100 years old. There are aspects of the industry that are more 'five year plan' Stalin-ish planning than light-on-your-feet 21st Century entrepreneurs. The Rocky Mountain Institute has some interesting papers on changing the automotive industry paradigm.
Amory Lovins bases everything around carbon fiber construction - OK then you'll need a future's market for carbon fiber - we don't have that now. The production model would be more 'light on its feet' because the fender toolings is much cheaper than steel tooling - but it wears out quickly - that would make it so you could have two different bodies in the same model year or quickly respond to taste changes. You could have more 'niche' products and 'niche' carmakers, because with the steel/oligopoly model, they always want 'hits' like the Mustang or Ford Explorer - it's so much more profitable to be pumping out 300,000 of the same car a year than 100,000 because the tooling is paid for so much sooner.
Anyway, it's worth a looking at some of their white papers.
May 22, 2007 2:07 PM | Reply | Permalink
Silly question. Cigarettes are unnecessary. They are the opposite of utilitarian. No one has to smoke. The only reason not to price them sky high is to prevent a black market, as exists with other drugs.
It IS necessary to use gasoline. At least so far. And the issue isn't just whether gasoline is "more expensive." The issue is who's getting the surplus value?
May 22, 2007 2:29 PM | Reply | Permalink
The real question is this: Is using gasoline good for you? For people addicted to nicotine, cigarettes are a necessity too...
BTW I wonder how you explain the people who don't have a car, or drive very infrequently. Some of them have posted in this thread.
May 22, 2007 3:12 PM | Reply | Permalink
Those Buicks get great mileage. Cruise on the highway and you can exceed the EPA rating - almost unheard of.
The sickening irony of the dually pickups is:
A: They aren't even regulated by NHTSA CAFE standards - there's no mileage sticker inthe window or anything.
B: If the were regulated, they would obviously get a CAFE fine. Some fines are as low as $1000 - yet you know those guys would be comparing CAFE to Kristalnacht if they had to pay a fine - and on vehicles that sell for $50K.
C: That kind of truck got a CAFE waiver originally because of it's alleged 'commercial' use. Certainly in 1975 few were pleasure cruisers. Even as pickups were becoming plusher, they didn't even have things like power windows then.
Now of course these things are set up as luxury cars. I'm in the city and I can rarely remember seeing on carrying any burdens or towing, yet I see plenty of them.
May 22, 2007 3:48 PM | Reply | Permalink
Re: I have a theory that your happiness in life is inversely related to time spent in the car.
I actually enjoy road trips through open spaces. I have driven east-west across the USA three times and driven north-south across it several times too, and through various parts of Canada. But I agree that city driving is no fun, and if practical public transportation existed to get me around I'd be happy to save the car for long trips and various heavy-transport errands and true emergencies
May 22, 2007 4:22 PM | Reply | Permalink
Re: A heavier car is safer that a lighter vehiclewith the same safety equipment.
Not really. Because the heavier cars are more likely to kill or seriously injure others they hit. So it's really just a wash, more or less. You are preaching selfishness ("I'll protect myself but I don't give a damn if I kill you when I come barrelling from the bar at 2am in my Hummer"). That's what got us into this mess. Maybe if people would give up some of that marginal security-- "cowardice" might apply here-- and compensate by driving better (and less, and take a cab home from the bar instead) we'd be better off in the long run. I've always owned smaller vehicles, I've never felt particularly endangereed in them and I even came through a wreck that totaled a car once with nothing more than seatbelt bruises (because I was wearing my seatbelt). Ask any traffic cop of ER worker who's more likely to come through the average vehicle-totaling crash: the unbelted guy in the big car or the guy wearing his seatbelt in a smaller one. So to hell with the big cars! People the world over manage to survive without them. Why can't America?
May 22, 2007 4:24 PM | Reply | Permalink
Amory Lovins is amazing.
Charlie Rose did a show with him, you can watch it online if you'd like @:
http://video.google.com/videoplay?docid=4569577556800822039
He's an absolutely fascinating guy with so many great ideas IMHO and he mentions the carbon fiber technology and the automotive industry.
May 22, 2007 4:49 PM | Reply | Permalink
Absolutely fascinating. I'm going to have to go get that book. You make note of this:
James Howard Kunstler argues that just-in-time inventory is another tool made possible by cheap energy, and post peak oil, this kind of thing is not going to be possible on a large scale without massive investment in more efficient infrastructure like rail. Any thoughts? I think it would be fun to get him posting here. :-)
aMike
May 22, 2007 5:35 PM | Reply | Permalink
If they smoke cigarettes while filling the gas tank, they will soon need neither.
--
Howard
*equal opportunity offense to both extremes*
"Those who cannot remember the past are condemned to repeat it" [George Santayana]
May 22, 2007 7:57 PM | Reply | Permalink
I still remember the great sense of freedom I had at 16 when I acquired my first driver's license. Suddenly, I could take myself where I was going -- with no need to accommodate my parents' schedules or try to work something with public transportation.
(For the record, during the summer when I was about 12, I participated in some kind of activity once or twice a week at a school about 3 miles from my house, along busy roads. My mom dropped me off on her way to work and then I took the bus home. Well, one week the bus system canceled the route, with little or no publicity. I waited and waited and walked home in tears.)
Anyway, for me, a car is freedom. I can purchase groceries without worrying about how I'll carry them. I can stay at a friend's house as long as I want, because I don't have to worry about the schedules or about walking home alone in the dark. If I wanted to, I could get anywhere in the country. (It might take a while, but I could do it.) And, I don't have to try to figure out how to carry dress shoes / walking shoes when I'm not actively using one of the pairs of shoes. I'm in control of my own destiny, if that makes sense.
May 22, 2007 8:38 PM | Reply | Permalink
Not at all. We would all be safer if we all drove heavier vehicles. Collisions with trees, telephone poles, fire plugs, etc. are all more survivable with a heavier vehicle. If anything, it is selfish to demand a policy that will result in more additional annual deaths than the war in Iraq, just because you don't choose to drive a safer vehicle.
Read the study on the link. Its not a "wash." Lighter vehicles mean additional fatalaties. Period.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
May 22, 2007 8:44 PM | Reply | Permalink
The answer to this debate, I think, is something like what we already have -- different sized cars for different uses and that let people take their own risks.
Volvos are still incredibly safe, by the way, and they're not all huge tanks.
But it depends on what you're using the car for. For low speed city driving, a smaller car makes a lot of sense. For long hauls at high speeds, it might make sense to have something bigger and tougher.
Though I'd always feel safe in a little Porsche.
Heck with it, I just want a little Porsche!
thosethingswesay.blogspot.com
May 22, 2007 8:53 PM | Reply | Permalink
Again, I dispute your premise. But here's a way to see real world results. Europe's cars are all much lighter than ours. Is Europe's traffic death toll significantly higher?
FYI: Accidents in which someone strikes a tree etc. are almost always the driver's fault (generally driving too fast for the road, condition etc.) So again: drive safer. Or if you that much of a coward stay off the road.
May 23, 2007 3:40 AM | Reply | Permalink
The question to me however is what do Americans really want: freedom of movement or male ego strokers? IMHO we could build a self-sustaining living ecology that included reasonable amounts of personal transport[1], giving us all the freedom of movement we wanted. But we can't do so and also have the average family driving 2-3 5000 lb, 600 hp ego strokers. Although I fully understand the personal freedom argument, it is not clear to me that that is what Americans actually value most.
sPh
[1] Biodiesel and electric (solar and nuclear generated) Honda Fits and Scion xBs for most daily transport needs, with low hp/high mileage Dodge Caravan-style available for easy rental when needed.
May 23, 2007 4:53 AM | Reply | Permalink
Dispute the premise? Here is the link to the facts. This is a NHTSA study of this country's drivers, on this country's roads, with this country's weather conditions.
http://trb.org/news/blurb_detail.asp?id=1961
Source link
Repeated assertion does nothing to dispute the facts of this study.
Pointing to the driving record in Europe is a useless comparison. They are not driving on our roads, they are not driving the same number of miles, they are not driving at the same speeds, with the same weather conditions, with the same congestion, etc., etc.
This is like attributing the low crime rate in Finland to the fact that private persons can own machine guns.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
May 23, 2007 6:06 AM | Reply | Permalink
Large scale design, engineering, and production processes aren't easy, and they often depend on huge amounts of accumulated knowledge (some documented, some not) that is very difficult to duplicate. Many industries appear to outsiders as if they would be simple to improve and fix, but attempts to do so flounder. An excellent example is the Eclipse light jet, which was going to be Silicon Valley's demonstration to the aviation industry of how it was doing everything wrong. The Eclipse is now 5 years late, with a different engine, weighs 20% more than promised, and costs almost twice as much as originally advertised. In the meantime Cessena designed, certified, and delivered the Mustang light jet using traditional methods enhanced with the latest technology in less time for the same purchase price starting _after_ Eclipse and finishing sooner.
I do think that there is a lot of room for improvement in the US auto fleet IF US consumers would buy the improved vehicles. Sociodynamics tells me that they won't.
sPh
One example: carbon fiber is indeed very light and very strong. You have to be careful about using it in vehicle structures though because it can be _too_ strong; it doesn't crumple. As a result in a moderate-speed accident you can (if you are not very careful) end up right back at the 1950s where peoples' cars would survive accidents but their bodies would be scraped off the windshield from the internal deceleration. Not something that is intuitively obvious to the outsider (it took the traditional auto industry 80 years to figure out crumple mechanics).
May 23, 2007 6:33 AM | Reply | Permalink
Check out the oped in today's (5/23) NYT by former energy guy for Pres Ford. A sobering historical account of these issues, especially the difficulty in moving in the right direction.
The more I learn about this, the clearer it becomes that good stuff--actions that move us toward confronting the problems--won't happen absent gov't intervention.
May 23, 2007 6:48 AM | Reply | Permalink
This is a tiresome quibble---obviously we accept some risk in our lives, and most of us don't drive to the store in a semi tractor.
Three ways to be safe on the road---1) Be massive, and the rest of the world is relatively softer, 2) Be roomy, to allow for crush zones, and 3) Don't run into fixed objects.
Depending on 1) means all cars have to be the size of the largest vehicle, trucks. Since that is not reasonable, we look for cars to be themselves softer (2). This approach is relatively insensitive to overall weight. And avoiding accidents in the first place beats the other two. Which has better stopping distance, the semi or the Mini? Which has better obstacle-avoidance handling?
I resent the guy who drives a Hummer because he likes his family to be safe, and puts me at larger risk as a result (ignoring the selfish resource-hogging).
May 23, 2007 7:02 AM | Reply | Permalink
I think this is a further illustration that saying "let the market decide" isn't the solution.
You don't have to quote from Mao's little red book to come to the realization that the interests of individuals are not the public interest or society as a whole. Jeez, even Great Britain built planned cities.
May 23, 2007 7:20 AM | Reply | Permalink
Hi Jared -
Ed Andrews had a pretty good article about this issue suggesting that the reason we have higher gas prices, even as oil trades lower than last year's levels, is because refining capacity is not keeping up with demand. If that's true, then accusations of price gouging are likely misleading and taxing the industry won't do anything to bring gas prices down. If the issue is a supply problem, I think it is inherently wrong to think you will find more gas coming to market (or a price reduction) by making it less profitable to produce.
When the government cut out oil subsidies during the Reagan years, smaller refineries, which were uneconomical without them, simply shut down. The result: refining capacity today is about the same as it was in 1980. About the same.
Whatever the economics of refining, it's a market reality that no new refinery has been built in the last thirty years. It seems the government should be encouraging the construction of more of them by making the proposition more market-friendly. Currently it takes years to bring a new refinery online, the lead time on such investments averages about 8-10 years before ANY profits begin coming through the door. What kind of industry is going to attract to competitors when the payoff could be a decade away? Half of that time is taken up going through the regulatory permitting process. The government could help speed that up by making a fast track program for the permitting process. And to the extent that new, cleaner refineries are constructed and manned, adding to capacity while creating new jobs could prove to be a win-win direction on net.
May 23, 2007 9:03 AM | Reply | Permalink
My beautiful bride had her last two small cars totaled because some clown ran a red light in one case and tail ended her at a stop in the other case. In both cases her injuries would have been less with more metal between herself and the cars that rammed her.
I don't have a problem if you want to drive a light weight flimsy vehicle that is less crashworthy. You are increasing your own risk. But even if there were no Hummers, there would still be UPS trucks, mail vans, beer trucks, etc., etc. Again as the NHTSA studies show added vehicle weight saves lives.
I resent the guy wants to regulate everyone but the very rich out of driving more crashworthy vehicles.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
May 23, 2007 10:59 AM | Reply | Permalink
Look, I am willing to apologize for being snarky this morning (that’s what I’m like in the aftermath of a domestic tiff at 6:30 am). But as the other poster notes here, we have to accept some risk in our lives. I mean, we could reduce motor vehicle traffic deaths to 0 by banning autos entirely, but obviously we don’t. And the point you seem not to be getting is that the increased risk can be compensated for by increased seat belt use and better enforcement of traffic laws (especially DUI laws). This seems to be how Europe has held its traffic death rates down, and also a big reason (along with improved roadways and better safety design even in lighter cars) why our death rate did not go up during the last downsizing period of 1970-1985 despite a huge increase in the number of drivers and number of miles driven. So yes, I regard the increased risk as an acceptable, and manageable trade-off. Better a handful more highway deaths than deaths on battlefields in the Middle East, in some terrorist nuke attack on NYC or in global-warming fueled natural disasters.
May 23, 2007 11:17 AM | Reply | Permalink
You sounded 100% reasonable up to the last sentence.
The sons of the prophet are noble and bold,
and quite unaccustomed to fear.
But the bravest by far in the ranks of the Shah
was Abdul Abulbul Amir
May 23, 2007 11:40 AM | Reply | Permalink
In both cases her injuries would have been less if the other car were softer and/or lighter.
I do have a problem if you want to drive a heavier car, increasing my risk.
Perfect symmettry, except one case, going to lighter cars, is beneficial to our country, other peoples, and the planet in general. The alternative, personal freedom to be selfish (heavy cars), is a prescription for trouble in every way.
How about setting a kinetic energy limit instead of a speed limit--I get to go 60mph and you get to go 40mph.
May 23, 2007 5:02 PM | Reply | Permalink
I am going to provide you with a link to a documentary/drama. I want you to watch it. It is in 6 parts. Why do I want you to see this you ask? Because, it has to do with your future, our future, our children's future, the future of our way of life that we have come to take for granted, that we think will never change.
I have been following the politicians on their campaign endeavors for sometime now as it is tops in the news along with the economy, the collapse of various banks and the price of a barrel of oil.
It seems to me, the politicians are not going to be honest with us (no surprise there) for fear of losing votes on the 4th of Nov. They want to keep us from the truth and tell us that they will correct the current events, basically, telling us what we want to hear whether educated or not or even doable.
They tell us that they can do something about high gasoline prices. Why? Because we in America and the west think that we should not have to pay 20 cents a mile to drive our cars based on 4.00 dollars a gallon divided by 20 MPG of gasoline. That is pretty cheap when you think about it. What would it cost to grab a ride on a rickshaw? You think the dude is going to peddle your ass around for 20 cents a mile? Not likely to find a rickshaw here in America but, what about a Taxi or the bus or mass transit of any type? Even walking is more expensive as you must eat to fuel your body. 20 cents a mile to drive your car isn’t sounding so bad now is it?
What the politicians don’t want to tell you is that there will never be cheap, 1.35 a gallon gasoline again. Not today, not tomorrow, never again. They don’t want to tell you that we are very fortunate at 4.00 bucks a gallon and should not complain about the price compared to what other countries around the world are paying. They don’t want you to know that we have peaked in oil production although the demand continues to rise. They keep telling us that there are plenty of oil reserves. Reserves that cannot be quantified due to political manipulation. They know that to tell us the truth would mean certain doom for Obama or McCain at the polls. However, it is the truth and that is the future.
The USA consumes 25% of the total amount of all oil consumed globally. Increasing refinery output will only bring us to the end of our oil supply sooner. The demand for oil must decrease. To increase production is not the answer. The major oil fields have been tapped. The remaining small fields are going to be very expensive to drill and once we deplete those, then what? We need solutions to get us off the oil patch. We need alternatives, not more drilling that will ultimately lead to depletion. We need to start solving this delema now or tomorrow, the lights will go out.
Please view these video’s…
http://www.youtube.com/watch?v=rSQ0KtnaMVc&feature=related
October 2, 2008 12:56 AM | Reply | Permalink