Energy Conservation and Taxes
Jeff Zeleny reports this morning that President Obama promised Centrist Democratic Senators that "he will think about his proposal to raise taxes on gas and oil producers, which has evoked an outcry among small producers in gulf states." It is very clear that the obvious solution to energy conservation through the oil and gas taxes that most developed countries have adopted, will be a political battle here.
So I have another solution that would be far more politically savvy and achieve the same ends--a tax on imported oil and gas. Since we import almost 60% of our oil, the import tax would raise a lot of revenue, encourage production from the small producers who have been capping wells because of falling prices, push consumers towards more fuel efficient cars and set a floor under energy prices so that wind, solar and geothermal could be immediately price competitive. The political benefit would be that Blue Dog Democrats and Republicans alike in oil and gas producing states like Texas, Louisiana, Colorado, California and Montana would find it hard to vote against such a tax. I know Exxon and Chevron would lobby hard against this, but they are hardly the partners Mitch McConnell and John Boehner want to be fronting.
What am I missing?
What you are missing:
1) This proposal is protectionist which is a problem not only on general principles of free trade and competition, but also because there will be an added cost for Americans when foreign countries retaliate against US exports.
2) The proposed measure will raise the cost of energy in the U.S. (good for conservation and alternate energies, true), but it will more significantly act as a subsidy to the domestic oil industry (more than any other US energy supplier). Decades of such subsidization played a role in creating the long term over dependence of Americans on ENERGY GENERALLY, regardless of source. More wildcatting and waste at home is not what we need, and the environmental effect of oil pumped out of the Saudi desert is less than the damage done to Alaska.
3. We need real action; this is tokenism (probably). To really make a substantial difference the tax would have to be high, which would create all sorts of artificial distortions and distractions for international business, so it would probably end up being low. Much better to simply tax energy consumption generally, AS EUROPE AND JAPAN have done for DECADES. THAT is a key reason why they use something like half the energy per amount of GDP that wasteful Americans do. We urgently need to tax carbon-based energy anyway to save the planet from disastrous climate change. Clear tangible tax, not cap and trade smoke and mirrors.
4. Most Americans are quite dumb when it comes to taxes. One of those "dead ideas" talked about recently here. That is why we have never managed to even think clearly about pricing gasoline at it real social cost the way most other industrialized countries do. We have to tackle that irrational attitude directly, not pander to it with taxes imposed on bad foreigners (though actually paid by US consumers).
March 26, 2009 1:32 PM | Reply | Permalink
Wouldn't this be considered punitive tariffs under WTO?
And could this cause unintended consequences, like trade/finance wars, diplomatic issues and counter-tariffs?
Perhaps the intended goal still overrides any potential fallout, so it's a question of what war we're more prepared to fight.
March 26, 2009 1:46 PM | Reply | Permalink
I agree. Under the WTO, while member states can add tariffs or quotas or extra regulations in the interest of human, animal and environmental safety, it only works as long as there aren't any other less-trade-restrictive reasonable alternatives. (GATT Art. XX).
Therefore, if it smells like protectionism, the WTO tribunals will lay down the hammer. like raising taxes on all the oil producers.
But honestly, if the global warming crisis is real, we'd have to raise taxes on all of 'em.
Besides, I don't know if American foreign policy has changed so much to let us openly piss off the saudis.
March 28, 2009 1:40 PM | Reply | Permalink
Ancient loopholes that Democratic dependents of an old oil & gas lobby are seeking to defend are now just vestiges of back when that lobby was split between "majors" and "independents", but, also, a mainstay of, for instance, an influential Democratic-majority Congressional delegation from Texas.
Alas, all that is soooo ... over.
These loopholes are still important to a little piece of a larger and different lobby today and its latest wards, not really to the industry or even my party, much less to the country. They are ritual and nostalgia.
Broad tax policy -- a carbon tax domestically and an international -- simple, not financially complex -- "cap & trade" scheme are important. But, so are industrial policy and protection -- the policies of Hamilton and Lincoln.
An oil-import fee might or might not be part of a plan -- a plan this administration and country does not have. Lacking a plan, self-serving wheeling-and-dealing of tiny patron/client clusters can produce earmarks and keep obsolete subsidies, defense programs, loopholes, and most of the archaic funding titles alive going on, in these cases, a half century regardless of war or peace, boom or bust, everything that happens in the career of a legislative aide turned Representative or Senator but now richly retired and mining a sort of garden-plot. Let's call it a "legacy lobby" in the spirit of today's insipid, official euphemisms.
March 26, 2009 2:01 PM | Reply | Permalink
Germany has generated a large shift in power production by enabling wind and solar energy producers to get higher rates for their electricity. This is a positive reinforcement instead of the negative one of taxing the unwanted items.
So we should offer new power production facilities, and projects to make ethanol from non-farm cellulose, or solar-derived hydrogen products, and all wind or solar electric producers, especially individual homes, the necessary high rates that would pull business toward that sector. It can yield either, or both, liquid fuels and stored electricity, freeing us from the wasting and contentious resource of oil, and the nasty and proven unhealthy use of straight coal burning.
March 26, 2009 2:53 PM | Reply | Permalink
I think we're better off using the carrot rather than the stick here. Letting non-fossil fuels get more money for their product somehow, rather than levying taxes and tariffs on the gas and oil and petrol producers.
I mean, if turning a blind eye to china's human rights violations during economic crises is okay nowadays, it would appear a tad bit hypocritical to do otherwise :o)
March 28, 2009 1:45 PM | Reply | Permalink
I like it myself, as I pointed out elsewhere. It's a broad based regressive tax. The kind of tax needed to mitigate the deficit. Every item needing transportation will increase in price. It's almost as comprehensive as a VAT.
And...don't forget the bump up in sales taxes from higher prices. Actually this would also be the ideal time to increase gas taxes for the Feds. Just like the EU.
March 26, 2009 3:20 PM | Reply | Permalink
what happened to the idea of the windfall profits tqx?
My thought on levying a tax on foreign oil is that the GOP would naturally demand the quid pro quo of offshore drilling in environmentally sensitive coastal waters, opening the ANWR to drilling and more widespread oil and gas exploration in the already exploited arctic.
March 26, 2009 3:32 PM | Reply | Permalink
Why only imported oil and gas?
Would you impose this tax to make the recession deeper, or wait a couple of years and then impose it?
I think a $1/gallon additional gasoline tax, and similar for other petro-products would raise billions while effectively encouraging the use of alternatives over petro products and making good gas mileage for cars and trucks a stronger selling point. Not sure about petro used for chemicals or plastics. End use taxes are easy to do.
March 26, 2009 8:50 PM | Reply | Permalink
I note that Tesla has released its new model S sedan, at $50,000 net with tax credit of $7500. 160-mile range upgradeable to 300 miles. Smaller battery pack charges in 45 minutes. Can be swapped out since it is mounted under the car.
Since they are setting that price against only production of 20,000, we can guess the price would drop hugely at a production scale of hundreds of thousands.
Wish I could buy one now. Anyone saying you can't have battery-operated machinery (so we need to burn oil) is just plain out of touch. And they forget that in WW II we were sinking Japanese shipping with battery-operated submarines.
March 27, 2009 9:55 AM | Reply | Permalink
A little physics:
The energy content of 1 gallon of gasoline is about 36 kW-hr. Let's say your gasoline-powered car gets 40 mpg, you'd need 40 gallons to drive 160 miles Even if your electric vehicle were 4X as efficient as a gasoline engine, 160 miles would take the equivalent of 10 gal of gas, or 360 kW-hr of electric energy. If you're charging that at home on a 220V power supply, it would take 82 hrs at 20A. Even this is optimistic since it assumes no power loss in the transformer and wires.
March 27, 2009 11:17 AM | Reply | Permalink
Oops...damn decimal point. 4 gallons to drive 160 miles and 8 hrs to charge for an equivalent distance. Still a far cry from 45 minutes.
March 27, 2009 11:26 AM | Reply | Permalink
Go to Tesla's web site. Their steady-state (low-demand) Roadster mileage is 110Wh/km. Full charge for the Roadster is something like 40KwHr, achieved in 4 hrs. 10 KwHr/hr is 50 amps at 200V.
http://www.teslamotors.com/efficiency/well_to_wheel.php
March 27, 2009 11:39 AM | Reply | Permalink
Their numbers seem a little bogus. They might claim 110Wh/km, but that translates to the gasoline energy equivalent of 196 mpg. Color me skeptical. Typical gasoline engines are about 20% efficient, so the most you can get is a 5X improvement even if they were 100% efficient, which, of course, they're not. Gasoline-electric hybrids are about 35% efficient. They claim a 3.2X efficiency advantage compared with a Prius, which translates to 112% efficiency. Nice trick if you can do it.
March 27, 2009 12:00 PM | Reply | Permalink
For what it's worth, their home charger will do the trick in 3.5 hours, just as they claim, provided you supply a 70-amp feed. Most people won't put in a 70A feed just for the car. The 50A I described earlier is possible, but 30A to 50A is what you'll actually do (or rather, what I would do): this uses 8 AWG wires (40A or lower) or 6 AWG (50A), and uses inexpensive (relatively) breakers and plugs. A NEMA 10-50P plug goes for $42, the receptacle is $10 (no idea why so much cheaper), and 25 ft of 6 AWG cord is $190, all from stayonline.com.
March 28, 2009 6:55 AM | Reply | Permalink
A few points on electric vehicles: first, efficiency comparisons to hybrids get hinky because of regenerative braking. Prii, for example, are 2wd, so capture at most half the energy available from braking. A 4wd electric would capture it all, leading to apparent excess efficiency. Second, although passenger vehicles are nice, it would be great to see some concentration of electric-drive R&D on trucks, vans and other trade vehicles. Pickup trucks that are not owned by macho-tripping yuppies typically need a range of 50 miles or less a day, and a huge subset of those spend the working day parked at sites where 220V100A is a couple of welding clamps away.
But on the more general tax issue, the thing that's hard to understand is why this hasn't already been done. A big reason, I think, is that taxes don't necessarily affect the market-clearing price of petroleum products, but they sure as heck affect the distribution of the revenue.
March 30, 2009 3:22 PM | Reply | Permalink
Take Tesla's numbers with a grain of salt. You don't get that charge time for a full charge (the charging circuits are complex and will give you a "nearly full" charge reasonably quickly if you have a beefy enough supply, but it's more typically 8+ hours from "fully dead" to "fully recharged"). Also, driving habits affect the Roadster's "mileage" pretty significantly. The Top Gear guys managed to drain theirs in a mere 55 miles, vs the nominal ~200 mile range.
The car is still quite workable, provided you do not drive like a maniac (aka Jeremy Clarkson :-) ). I'm still hesitant to buy a Roadster for myself, though, for a number of reasons, not limited to the fact that both the ones the Top Gear guys were playing with broke. (Again, there's the "drive like a maniac" factor ... but there's only three reasons to buy the Roadster, and "drive it like a maniac" is one of them.)
(My reasons for hesitating include the price, that I live in Utah rather than California, and that a two-seater is terribly impractical. The "cool" factor is tugging awfully hard though....)
March 28, 2009 5:25 AM | Reply | Permalink
Well, ct, be sure to check out Tesla's new Model S, which will be available in 2011 (taking orders now). It is a sharp looking sedan, and still quick by any standard, with lots of storage space -- and at half the price of the roadster. Still a stretch for me, but getting close enough to have me running some numbers (e.g. could I save enough extra by, maybe, 2012 or 2013, to replace my current car with one of these, instead of another "normal" car?).
-- ARG
March 28, 2009 6:46 PM | Reply | Permalink
Already have. Unfortunately I'd like to replace my current car next year ... not sure if I can stand to wait until 2011. :-)
March 28, 2009 6:57 PM | Reply | Permalink
They must use different conversions, since they claim a gas-equivalent mileage of 135 mpg, not 196.
March 27, 2009 12:25 PM | Reply | Permalink
The energy content of a gallon of gas is 36 kW-hr. Period. There aren't different conversions any more than there are different numbers of inches in a foot. They're doing what marketing people do - they stretch the truth.
Also, drawing 50A at 200V isn't practical: the resistive losses will be tremendous...assuming you don't burn your house down.
Purely electric vehicles have a lot going for them, but they run into a couple of pretty intractable problems, one of which is that nobody's household wiring is capable of charging them in a reasonable period of time. How many people even have 220V in their garage? And even if you did, who has wiring that can handle that kind of current? To be practical you really need 480V.
A much better solution is a plug-in hybrid with a gasoline (or better yet, diesel) engine to charge the batteries. A 50 mi range per charge is sufficient for most people most days, and, since you can easily draw enough current for that on existing household wiring, most people would rarely ever use fuel. The gas engine is there for longer trips.
March 27, 2009 1:21 PM | Reply | Permalink
I agree about multi-purpose cars being better if hybrids.
Tesla has sold cars, so they're doing something right, and there is not a large advantage to charging in 4 as opposed to 10 hours, if one is doing it at home. It would be logical to do it at work, during daylight, drawing solar electricity in the company lot.
I like series hybrids, and have a post coming later today on them. But I'm not automatically discounting the Tesla numbers; the LA Times reviewed the car in actual driving and so on and I remember no quibbling, except that it is unlikely most would drive meekly enough to achieve the maximum range.
March 27, 2009 2:10 PM | Reply | Permalink
Solar electric won't net you very much power for the car, although every little bit helps.
We need more distributed cogeneration, so that when you charge the car at work, you are doing so with electricity that is generated by the in-office-building unit that also provides heating/hot-water and air-conditioning, at a total of 80 to 90 percent efficiency, rather than the average of about 35% we now get out of centralized generation. (The new systems, labeled "trigeneration" by the United Technologies marketing people since you get electric, heating, and air conditioning, cost more up front, then less to run, giving an overall net savings. The net savings is small and might be best handled through a leasing company that installs and operates the trigeneration systems. They need maintenance once a year in most configurations. It's really a nice setup.)
In other words, for no cost at all—most likely, even a slight net savings—we can more-than-double our energy efficiency, and provide all the on-site electric-car-recharge needed.
March 28, 2009 5:16 AM | Reply | Permalink
Oops, slight correction: trigeneration is apparently a standard term. I had been using the acronym BCHP—Building Cooling, Heating, and Power—for years and first saw "trigeneration" in UTX marketing literature for their "PureComfort" system, and just assumed they invented it.
There are other companies that offer trigeneration systems. I just like the UTX system, as it has the low maintenance I described. They recently moved it from their small fuel-cell-oriented "UTPower" division to their large Carrier division. (If you'll forgive a corporate link, the web page for the PureComfort is now here.)
March 28, 2009 6:39 AM | Reply | Permalink
I am absolutely convinced that we need "distributed generation", as you described.
I've posted this elsewhere: Germany manages to get 20% of their country's electricity from small solar sources (homes, farms, businesses). They achieved this by guaranteeing a subsidized rate for selling electricity back to the grid, for 20 years, such that the investment made for the solar panels would be sure to pay off in time.
We need programs like that here.
If the entire top of a car had solar panels on it (let's say 2 square meters), how much electricity could you store while parked at work (for 9 hours)?
-- ARG
March 28, 2009 6:56 PM | Reply | Permalink
- the efficiency of the panels
- the amount of sunlight reaching them
Panel efficiency is typically about 12% for crystalline silicon (though some are up near 20%) and lower for most other (cheap and/or flexible) technologies. First Solar reports about 10%. (Expensive tri-layer stuff, useful mainly in space applications, goes up to about 36%. There's a theoretical upper limit in the 50 or 60 percent range if I remember right, off the top of my head, for any photovoltaic technology.)The "amount of sunlight" is the more interesting angle, rather literally when it comes to "angle". (This is also where "efficiency" numbers can get a bit squirrely. First Solar's thin-film panels have less of a drop-off in overcast conditions.) Most calculators will use a "peak sun equivalent" number. That is, in early morning or late afternoon, even if you have a nice clear sky and hence direct sunlight, it's (a) attenuated by the atmosphere and (b) hits a fixed-mount panel at an angle. If you have conventional crystalline silicon panels, you can mount them on tracking systems to point them at the sun. There are both single- and dual-axis trackers. These will increase the output of the panels, but at the expense of maintaining the tracking system. The tracking system will also need power itself (assuming it is a powered system; there are alternatives, but they have various drawbacks). Most people go with fixed mounts because they are cheaper and completely reliable.
If the (thin-film) panels are on (part of) the car itself, this is equivalent to fixed mounts.
Now, how much sun you get depends on latitude and time-of-year, and also on cloud cover. The best results are in summers in places like southern California, Arizona, and much of Texas. Here you may get as much as 6 "peak sun hours" (PSH) a day. Between, say, 8 AM and 5 PM, you get most of that, let's just arbitrarily say 5.5 PSH.
Now we take the on-earth solar irradiance number for a "peak sun hour" (about 1 kW/m2) and multiply by the efficiency and the PSH number. At 10% and 5.5 PSH, our 1 kW x 10% x 5.5 hrs gives .55 kWh. That's for one square meter, so 2 square meters gives 1.1 kWh.
As you can see, this really is not very much.
If we had some kind of technological breakthrough, and got to 50% efficiency, we would get 5.5 kWh. This is much better, but still not as much as I, at least, would like.
March 28, 2009 7:17 PM | Reply | Permalink
50A at 200V is practical (within limits). Most homes today have 100 to 200A (240V) service. (I had my 1940s-era house in Calif upgraded from 70A to 100A, so there are some that are lower.)
Of course, it is true that if you were to tap anywhere from 1/4 to 1/2 of the entire incoming feed to charge the car, you would have to watch your other loads (no running the A/C and electric range and electric stove while cranking up the electric water heater while your wife and all five daughters all run their 1500 watt hair dryers while using their 1200 watt bathroom heaters in all six bathrooms :-) ).
As for "how many people even have 220V in their garage": just about everyone with an electric dryer. Typically this is a 220V (but 20A, not 50A) circuit. (Assuming, of course, that the dryer is in the garage. About half are in basements; and perhaps a few use the more typical European layout and have them in the kitchen, along with the 20A 220V electric stove circuit.) There are typically two to four 220V circuits in the house: one for the dryer, one for the central air conditioning, one for the water heater (if electric), and one for the range/stove (if electric). (Could add "if electric" to the dryer as well, as some people have natural-gas fired dryers.)
March 28, 2009 5:10 AM | Reply | Permalink
Seems like you could add some "smarts" to the car charging circuitry, to avoid any conflicts. If everybody's asleep, the only big draw might be the A/C.
Around here, the garage is pretty cold -- most dryers are in the house somewhere. (Mine is in the upstairs hallway.) I have a gas dryer and water heater, too.
I have a really short commute to work, so the full electric is very interesting to me. I could literally charge just once a week for my normal driving needs. Only issue would be longer trips (would have to take the old-fashioned gasoline car, I guess).
-- ARG
March 28, 2009 7:04 PM | Reply | Permalink
My electric dryer is in the house here, but mine was in the garage in California.
"Smart grids" should definitely include demand-side moderation both inside the house and in the plug-in car.
March 28, 2009 7:20 PM | Reply | Permalink
I see more help than harm in that tax on imports but face it...we are a nation helpless as babies without our cheap petroleum. What won't we subsidize? I hear our banks and mortgage insurance industry is "too big to fail" but I don' hear from any mainstream politician or pundit that our pushers and pimps for fossil fuels are too important to fail. Its a sacred or untouchable taboo: you just don't question, either in political or economic context, the logic of procuring endless gas and oil by government intervention and twisted tax support if need be.
We are so screwed.
March 29, 2009 9:09 AM | Reply | Permalink
FWIW, I live in a 6500 degree-day climate with 54% available sunshine, Boston. I had to have "conventional" heat sources to obtain both a building permit an a construction loan. So tax policy alone does not have the power to mend our ways. In terms of up front costs, an all-electric house is the cheapest to build but if not super insulated, the most expensive to operate. So I have a 200amp X 240v service.
I just don't use it.
I designed the house as a passive solar with massive heat sinks and wood stove as secondary heat source. I pay about $300 a year to heat my house and I don't even know if that heat pump we HAD to install works: have not turned it on in 25 years.
Consumer consciousness would change the market. Market forces would influence the bankers. Oil and gas industry would have to stick their pipelines where the sun don't shine or in China...it is up to us but not in a one-year time frame.
And if I ever put a wind power turbine or hook up photovoltaic, I have a good enough connection by which to sell juice back to the power company.
March 29, 2009 9:34 AM | Reply | Permalink
March 29, 2009 7:40 PM | Reply | Permalink