Gas prices

[TimG]

I am a little surprised, did you all not have chemistry in high school?

High school chemistry in the US is probably not what it is in many other developed countries.

 

I suspect strongly that an overwhelming majority of US citizens have no idea what the chemical reaction is in even the simplest examples of combustion.

[jeffford76]

Now that the cost of gas has come down, the airline fuel surcharges and extra bag fees will surely go away, right?

[jdonn]

Now that the cost of gas has come down, the airline fuel surcharges and extra bag fees will surely go away, right?

I strongly expect they will never go away. I heard the liquid restrictions will be relaxed sometime next year though.

[mike777]

I am not quite sure how this carbon tax works, if cars burn the carbon don't we tax the car? If people's houses use more from the power plant don't we tax the house?

 

If a business uses more carbon then the customer pays the tax or the business goes bankrupt and out of business.

 

For instance if a bank or GM or F or C or an airline use more carbon, the customer pays the tax for it or they go bankrupt if the customer is not willing to pay for it. Or I suppose the central government then bails them out so the taxpayer ends up paying the carbon tax it seems.

[jikl]

Virgin has already cut fuel surcharges in Australia. Apparently they also held back in July when the price went right up (the others increased it). Our other airlines have not followed suit yet.

 

Sean

[Al_U_Card]

I like the idea of "feebates".

 

The SUV buyer pays X+y% for his registration while the hybrid owner pay X-y% for his. Revenue neutral, makes the guilty pay.

 

Ideally we can get the slowpokes in the auto industry to design something other than hatchbacks and tailfins.....

[mike777]

I do not know that much about Hybrid Cars but I assume to build and maintain them means burning alot of Carbon. I assume if they run on batteries that the juice burns some carbon, not to mention building and maintaining the roads they ride on.

[mycroft]

To take a shot at the original question:

1) more travel occurs in the summer - that's supply and demand.

2) gas companies got hosed by the shutdown in refining after Katrina, and with evil nasty hurricanes predicted to hit the rest of the refining area in Texas, people decided to hedge their bets with the refined gasoline they had.

3) They managed to totally blow away the CA$1/litre barrier - it will never be a problem for them again.

 

To the companies' credit, it is coming down, quite dramatically (the CA$1/litre barrier didn't seem to hold much going the other way, either), as they say, following the price of crude oil by about the 6-8 weeks the oil companies say it takes to do the refining and processing. And I noticed the rise was (with the exception of 2)) similar.

[hrothgar]

I am not quite sure how this carbon tax works, if cars burn the carbon don't we tax the car? If people's houses use more from the power plant don't we tax the house?

 

If a business uses more carbon then the customer pays the tax or the business goes bankrupt and out of business.

 

For instance if a bank or GM or F or C or an airline use more carbon, the customer pays the tax for it or they go bankrupt if the customer is not willing to pay for it. Or I suppose the central government then bails them out so the taxpayer ends up paying the carbon tax it seems.

I'm probably going to regret bringing this up, however, someone claimed that folks were ignorant about the axioms of classic Marxism... Can't let something like that go unchallenged

 

Marx had a notion of crystalized labor. In much the same fashion, we can consider the crystalized carbon embedded in different good.

 

Goods that are produced in a multi-stage production process would have an embedded carbon tax that is proportional to the carbon emissions associated with each stage of that process. Ceteris paribus goods that have a more energy intensive production process would have higher tax carbon taxes.

 

In the case of your car examples, there are two separate carbon taxes that need to be considered: The carbon tax to cover the producttion cost of the car and the carbon tax to cover the operation of the car.

 

I'm going to make a vain attempt to ward off the inevitable idiocy by saying:

 

1. I don't believe that a carbon tax is in any way Marxist, Socialist, or communist and I suspect that most mainstream economsits would agree. (I took economics classes at the University of Chicago and using tax structures to deal with externalities was consider mainstream)

 

2. While this may sound complicated, its not any worse than a VAT...

[Lobowolf]

(I took economics classes at the University of Chicago and using tax structures to deal with externalities was consider mainstream)

How long ago? Did you have any classes with Austan Goolsbee?

[mike777]

Using the car example I think I am bit worried a carbon tax would lead to job losses for USA car makers, and create jobs for nonUSAcar makers. I have the same worry with other industries be it a refinery, toy maker or textiles. In good economic times perhaps many will be willing to pay extra, in poorer economic times people may just not buy the product. I assume a VAT tax would have the same issues.

 

 

I do not know any countries that impose a carbon tax but it would be interesting to see if it helped or hurt jobs.

 

I know there is an article, NBER Working Paper 13264 by Christina and David Romer that investigates macroeconomic effects of tax changes. The authors argue that exogenous tax increase of 1% of GDP lowers real GDP by about 2-3 percent and the effect is highly persistant.

 

I just worry that a carbon tax would hurt jobs and GDP growth.

[cherdano]

I think the argument in favor of carbon tax, while reducing, say, VAT, is very easy:

Carbon tax generates income for the state while discouraging production of CO2.

VAT generates income for the state while discouraging consumption in general.

 

It is really incredibly silly to make a huge ideological argument out of this question. Marxism???

[helene_t]

I do not know that much about Hybrid Cars but I assume to build and maintain them means burning alot of Carbon.

True but irrelevant. If you want to tax CO2 emission, you just raise the taxes on coal, gasoline, diesel etc. according to their carbon content. Doesn't matter if it's a consumer or a car manufacturer or an airline who buys the fuel. Doesn't matter if you use a liter of gasoline to drive 5 km in your SUV or to drive 50 km in your hybrid. Or if you use it to light your bbq. The emission is the same in all cases so there is no reason the government would care.

 

While this may sound complicated, its not any worse than a VAT...

It is much simpler than VAT. To charge VAT, the government needs to find out how much money was charged for a commodity. Gas taxes are just so many cents per liter. The government doesn't care what the price is.

[hrothgar]

(I took economics classes at the University of Chicago and using tax structures to deal with externalities was consider mainstream)

How long ago? Did you have any classes with Austan Goolsbee?

This was back in 1987.

 

The only prof who made a real impression was Roman Weil, and that was accounting rather than economics

[luke warm]

do those of you who support raising taxes (or implementing new taxes) think it would be even slightly idiotic right now?

[helene_t]

Thats not the issue, Jimmy. Nobody is arguing that overall tax pressure should increase. At least not in this thread. (Yeah, I know you think this carbon tax is just an excuse for raising the tax pressure....)

 

If there is a fear of a recession it probably won't be a good idea to tighten the fiscal regime right now. OTOH some say the US deficit is unsustainable. What do I know. But that's for another thread.

[hrothgar]

do those of you who support raising taxes (or implementing new taxes) think it would be even slightly idiotic right now?

The government should commit to phasing in a carbon tax starting in five to eight years and finishing 10-15 years out. (Said so much in an earlier post)

 

I think that this would have a significant positive impact on short term economic growth without requiring any government spending.

[P_Marlowe]

do those of you who support raising taxes (or implementing new taxes) think it would be even slightly idiotic right now?

Nobody sane likes it, if taxes rise, and if you raise taxes now, it

certainly wont ease the burden of the current recession.

 

But of course if you dont do it, you have to pay a price as

well, and basically the world and the US currently pay the

price for the boom which took place in the last couple of days.

 

Recently I have read about Paul Volker.

http://en.wikipedia.org/wiki/Paul_Volcker

 

The article says, he ended a crisis, which lead the foundation of

the growth later, but his meansures started a recession (which

led to high unemployment).

So the short term was bad, the long term was good.

 

So take your pick, but be aware that decreasing taxes or not

increasing will increase the depth, and the depth is already at a

record level, and you have to pay for the depth as well.

 

With kind regards

Marlowe

 

PS: The biggest part of the German household is social / welfare,

but after that, at 2nd place comes already the payment for credits,

it was 2-3 years ago (just a side comment, seldom mentioned), ...

one would have lots of money, if one would get rid of this part.

 

Maybe you should look at the US household and look how many

money gets spend on payments for dept.

[Finch]

I like the idea of "feebates".

 

The SUV buyer pays X+y% for his registration while the hybrid owner pay X-y% for his. Revenue neutral, makes the guilty pay.

 

Ideally we can get the slowpokes in the auto industry to design something other than hatchbacks and tailfins.....

I don't know if it's the right idea or not, but in the UK vehicle tax (annual payment to the Government to be allowed to run a car) costs more or less depending on the carbon efficiency of your car.

 

http://www.direct.gov.uk/en/Motoring/Ownin...cle/DG_10012524

 

Also, if you have a company car, the amount of tax you have to pay on the benefit depends on its carbon emissions.

[pclayton]

OK fair enough. I won't continue to argue against basic chemistry.

 

I've just always thought of 'gas taxes' as inequitable, because some users go further (thus using the infrastructure more) than others. Obviously there is a fundamental difference between a gas tax and a carbon-based tax.

[helene_t]

OK fair enough. I won't continue to argue against basic chemistry.

 

I've just always thought of 'gas taxes' as inequitable, because some users go further (thus using the infrastructure more) than others. Obviously there is a fundamental difference between a gas tax and a carbon-based tax.

That's right, it is much more tricky if the purpose of the tax is to finance infrastructure.

 

Still, if the alternatives are fuel tax and income tax, I suppose fuel usage is better than income as a proxy for road usage.

[bid_em_up]

OK, today I filled the tank with Sunoco regular for $1.87 a gallon. Gas price swings are making the Dow look stable. by comparison. Questions:

 

The obvious first question, only partly facetious: Will falling prices at the pump lead to a bail out for large oil companies? "Our profits have fallen from truly obscene to merely grotesque, oh,  the pain, the pain..."

Unlikely, imo.

 

More serious (I hope): Can anyone actually explain this? Yes I have heard of the Law of Supply and Demand, but is that the whole story? I haven't been driving that much less. Neither has anyone I know. The housing and  mortgage mess was partly from supply and demand, partly from some people screwing around. What's up with gas?

Try reading some information on the trading of commodity futures. From what I have seen, the huge run-up in the price of oil, had more to do with speculators trading futures than it did any actual supply/demand issues. The supply & demand issue is what has brought oil prices back to more "normal" levels (along with the speculators facing margin calls due to falling prices.)

 

Final question: Is it not time, and way past time, for a substantial increase in the tax on gas?

Not only no, but hell no.

 

Your essays on this subject will be graded and promptly returned. Two misspellings will lead to an automatic F.

Dear Professor,

 

Please excuse any misspellings I may have. I recently had cataract surgery in one eye, and cannot see a dang thing with or without my glasses at the moment.

 

Thanks.

[bid_em_up]

Nice idea. Also impossible to implement.

 

When I go to the gas station, do they ask me what kind of car I drive so that I get taxed accordingly? I would challenge: "the amount that gets emitted is roughly proportionate to the gas used".

 

If you are trying to impose the tax at the time of the vehicle registration, thats tough too, since you have the problem of determining how many miles I drive.

 

Even then, people that drive in Los Angeles and Seattle emit a lot more CO2 per mile, since the cars are sitting idling in traffic compared to someone that drives in Billings or Lubbock.

Phil,

 

It is not totally impossible to implement. Difficult, maybe, but not impossible.

 

A GPS system or something like OnStar could calculate and transmit the amount of mileage driven each month, and then you could be "taxed" or charged for the number of miles driven.

 

There is some talk in the state of North Carolina to moving towards exactly this type of tax/fee structure and eliminating the gas tax altogether. I think it's a bad idea, but I would not be surprised to see something like this implemented in the next 10 years.

[cherdano]

I guess it needs to be said once more: as far as driving is concerned, a carbon tax is just a gas tax. (Ok, maybe it will be charged earlier in the supply chain as a tax on the oil sale, but that doesn't really make a big difference.)

A carbon tax is just a tax on commodities such as coal, oil, natural gas, with the rate of the tax being proportional to the amount of CO2 they produce when burnt.

[luke warm]

ok, let's say a carbon tax is implemented... richard (if i read him correctly) thinks this would result in a net benefit to the economy... i'm having trouble seeing how... what would happen to all goods and services if such a tax was implemented? i assume the 18 wheelers would take a big hit, right?