In the 4/6 print edition of Mail call, a respondent wrote:

"A 25-cent increase in gas price on a 25 mph (sic -- this should be MPG) auto is 1 cent per mile. That is about 2 percent of a total cost per mile on a 1,000-mile trip, costing anywhere from $400 to $500 or more. That would add $10. Big deal. Why all the fuss?"

I want to offer a response as to why such a tax increase should be a fuss. Using data from the DOE's Energy Information Agency and the U.S. Census Bureau, we can calculate that a 25-cent increase on gasoline and diesel would tally out to $436.04 in new gas taxes per household per year. Put another way, that would be $166.95 in new gas taxes for for each man, woman, and child in the United States.

I submit that's a significant chunk of change -- enough for people to be upset about. So, what are the taxpayers to receive in exchange for that money?

Better Roads?
Better Mass Transit?
Better Bridges?

Less spendable income.
Increased prices for truck-shipped merchandise.

25 mpg????
What freakin' soccer mom's gas guzzelin' behemoth SUV gets as many as 25 mpg????

Yes, Let's double the gas tax.

I'd rather see the state sales tax go to 6% first, myself. LA and Chicago were at 9 and 8.5 when I lived there, so it's no big deal to me.

When the gas tax was first implemented, it was supposed to act as a user's fee with all the money going to state and federal transportation trust funds to cover roads and supporting projects. That made sense -- the more a person drove (and thus used the roads), the more he paid in. The same philosophy is behind the taxes on aviation fuels and other air transportation taxes.

However, politicians at the state and federal level are increasingly finding ways to draw money out of the trust funds for non-road purposes, or for questionable road purposes. The classic example is Boston's Big Dig, but other examples abound. (A tidy chunk of the Roundhouse restoration project in Martinsburg comes from the federal trust fund. Now, I think the Roundhouse project has merit, but I quetion whether it should be supported with highway dollars when our road system is falling apart.) The classic example, though, is fancy mass transit projects like DC's Metro -- not only is it an environmental disaster (construction & operating energy costs are worse than if cars were used), but more metro buses would have been cheaper and way more convenient. But the DC Metro looks a lot better as a backdrop to a smiling politician....

I don't think they should put any more taxes on gas as expensive as it already is, and it's going to keep going up in my opinion. I, however, disagree with tifiery on the DC Metro as it's far more efficient than a bus, and IMO is a whole quicker because you don't deal with traffic plus it runs on electricity not fuel. I just wish they'd change the way they charge you to ride the Metro, it's so much more confusing than any other subway system I've riden (MARTA in Atlanta and MTA in NYC).

And just how do you think electricity is generated ???

Coal : 50%
Natural Gas : 18%
Fuel Oil: 2%
Nuclear: 20%
Hydroelectric: 7%

The rest comes from geothermal, solar, wind, and biomass (wood).

So, some 70% comes from fossil fuel.

Source: http://www.eia.doe.gov/neic/quickfacts/quickelectric.htm

Some studies have concluded that the world has already reached
peak oil production as far back as 2000....others point to 2007,
while the most optimistic forecast reaches out to 2019....regardless,
people (and businesses like the automakers and fuel producers)
need to get a grip, swallow their pride, suck it up, bite the bullet,
whatever you want to call it, and realize that this resource is non-
renewable and we HAVE to conserve. Frankly, if someone wants
to drive a gas-sucking SUV for whatever reason (safety, status,
utility), then by all means, do so. Personally, I would feel guilty
driving one.

Here's an article on oil reserves and production forecasts:

http://www.wri.org/wri/climate/jm_oil_000.html

Yeah I guess you're right. We need to start investing in the hydrogen fuel cell, where the only exhaust is water.

5 Car,

"Truer words were never spoken," as the story goes! Also, our dependence on fossil fuels causes the US to make political decisions that are embroiling us in the turbulence of the mid east and other parts of the world. Perhaps we would find it in our national interest to be involved anyway; however, we sure have no choice with our current situation.

Okay, but's let's not go and punish the consumer for the failure of our government and industry to develop and market acceptably-priced alternatives.

Consider hybrid vehicles for example. If our government and the various transportation-related industries had put more money, time and effort into it sooner, we'd have had them on the market years ago.

There are quite a few hybrid models in development now...
Toyota will be offering a new SUV hybrid that does 0-60
in 8 seconds !!! I saw something this morning about another
foreign manufacturer's SUV that will go 600 miles on one
tank of fuel....that's pretty impressive !!!

Why have the CAFE values been frozen since 1990 ?? Who's
running this country; DC or Detroit ?? I think everyone
needs another reality check ala 1974 when the national
speed limit was reduced to 55mph and every make and
model of car was downsized and restricted to a maximum
speed of 80. And while we're at it, let's go back to
even/odd gasoline sales. I bet half the drivers on the
road today have no idea what it was like to have to
wait in line to get gas. Let them witness first hand what
it's like, or better yet, what it will be like in the not too
distant future if we continue to burn gas as freely as we
breathe.

I think I was in High Schol during those odd-even days.

The 55 mph speed limit? Sammy Hagar is my hero - "I can't drive 55!"

Well, let's not go too crazy about hydrogen fuel cell cars. Remember how hydrogen is made -- by passing electricity through water (see above description of how electricity is made), or by drawing out of nat gas. Fuel cell cars do have lower air emissions, but then current combustion engine cars have surprisingly low emissions because of technological progress.

As for oil, remember only about 10% of U.S. oil comes from the Middle East. Only two of the top 10 oil-producing nations are in the Persian Gulf. The world oil market is a fascinating critter -- and is quite different than what people commonly think it is.

As for CAFE -- there are plenty of vehicles at the various dealerships that get better mileage than the CAFE standards. People don't seem to want them, because they don't sell (even though some of them are priced below cost!). Part of the reason is because of safety (as the NAS noted in its recent report on CAFE, one tradeoff that policymakers must keep in mind about CAFE is that it encourages automakers to make less rigid, lighter cars. There's even been some modeling of how many highway fatalities are statistically attributable to CAFE.)

I admit, I'm a radical free marketer. I tend to want people to be able to get what they're willing to pay for, so long as they pay for all of the costs they create. CAFE works against that....

Ford's coming out with a hybrid SUV as well, and the new Chevrolet Mailbu get's great gas milage.

Tfirey,
Just love you libertarian type folks! Often thinking outside of the box!. Perhaps 10% of US oil comes from the Middle East-for arguements sake- but the proven reserves in that area are the most substantial in the world as we know it today. Also, extraction is less expensive in this area. With the advent of 2 billion people who have become, at least nominally, emerging capitaists (think China, etc.) and with the rise in wealth that brings (consumption), it is imperative that alternative resources be developed and utilized. The US is affected by every hiccup that occurs in the oil/natural gas market. The politics of oil color our foreign policy with-sometimes-unintended consequences.

Chartim:

I definitely can't disagree with your take on US foreign policy in the Gulf. It's absolutely crazy for the US gov't to think we get any sort of special breaks from the Saudis in exchange for our military protecting the House of Saud. That pseudo arrangement has to be the poorest foreign policy move the US has made since supporting the brothers in Vietnam.

And you're also right about the cost of producing oil in the Gulf. As I noted in another string on this board, it almost seems like you can strike a gusher with an ice pick there.

But, with all of that said, it's still silly to claim the U.S. has to reengineer its entire economy because a percentage of the world's oil supply comes from OPEC and the Gulf. If the U.S. were to suddenly become completely oil self-sufficient, U.S. oil prices would still fluctuate exactly along with the world oil price because the world oil market is fully fungible. (Ask the Soviet Union how trying to price indepentent of the world market worked out.) And, if the U.S. were to go to a zero-oil economy, mountains of money would still flow into the Middle East (and into the hands of regimes and actors we don't like) because everyone else would still be buying oil, and the MidEast has the cheapest-to-produce oil in the world. And, as long as the US continues to have a military presence and supports Israel, we'll be targets of the Islamists regardless of what we buy from the Gulf. What's more, because all of the alternative energy sources now available have significantly higher costs (monetary, environmentally, etc.) we would actually be relying on more resource-intensive (and thus costly) energy forms, not less. So, the radical changes in US consumption of oil would neither (1) lower costs nor (2) improve our security. So, what benefit are we supposed to derive from this painful change?

Oh, as a sidenote to 5car's WRI study, there hasn't been an EUR study yet that hasn't been laughed out the window within 10 years. The U.S. was about to run out of oil in 1900, in 1970, in 1980, in 1990, in.... The whole Hubbert's Peak hypothesis has proven to be rubbish. It's true that various parts of the world have hit and passed peak production, but that's not because oil is running out and is too expensive to pump -- it's because there's even cheaper oil elsewhere, so why pump the expensive stuff now (especially when technology keeps finding ways to tap that oil cheaply) when you can pump the cheap stuff?

Come on Tifirey switching to hydrogen is the best thing for America, they don't pollute (the exhaust is water), doesn't put our money into rogue nations (yes I know other countries still can and will but why should we care about them), and doesn't require the US to depend on other countries for fuel.

Um -- you do know how hydrogen is made, right?

Further, what's the problem with depending on other countries for oil? I depend on other countries, other states, other communities for most everything I buy -- food, shelter materials, clothing, durable & non-durable goods. How is oil any different?

I have a problem with this whole argument. First, China has increased its oil requirements in the past year by over 30% and it is expected to continue at this pace..so oil is going up due to demand we have no control over--they are buying vehicle over there faster than they can turn them out...
Second--they have discovered in the past few years that new oil is being created in the gulf of mexico even as we debate...it literally oozes into the ocean--from places there is not supposed to be any oil...
But, all that said--why on earth would we want more TAXES on top of the TAXES we already pay? Heck, no taxes we pay go to what they say they will--I mean what the government says the taxes are for..just ask social security, medicare, airport taxes...liquor taxes..slots..none of it goes anywhere but the big pot at the end...
And yes, no SUV gets about 25mpg....they get 11-20mpg...if they are lucky...

According to this, on average, 18% of US oil imports came
from Saudi Arabia alone in 2003:

http://www.evworld.com/view.cfm?section=co...que&newsid=4766

All I was trying to get across is the fact that despite whatever
study or estimate or whatever, oil is a finite resource, and we
shouldn't waste it like we do now.

And isn't the reason that gasoline prices are so high is because
our refinery capacity hasn't increased and what's there now can't
keep up with demand, not to mention the umpteen billion different
regional gas formulas that are required by EPA mandate in order
to reduce air pollution ?

5car:

I've no idea where EVWorld & Reuters got those numbers. Here are data from the EIA:
OECD Consumption
Imports budget

U.S. consumption 2003: 20,044,000 bb/day (avg)
Selected imports:

Saudi 1,771,000 (avg) 8.83%
Iraq 470,000 (avg) 2.34%
Kuwait 217,000 (avg) 1.08%

Total Arab OPEC = 2,483,000 (avg) 12.37%

I admit that the 12.37% is a little higher than the 10% I gave in an earlier post. But 2003 saw some changes from traditional patterns because of events in Venezuela and Iraq.

You are on to something important with refining. The EPA needs to outright scrap the oxigenating agent requirement because, in this era of fuel-injected engines, such agents aren't necessary (and the requirement has become corporate welfare for MTBE and ethanol makers). That will get rid of a lot of the foolishness with different states requiring different agents.

You also hit on a really important "untold story" in refining. Most oil companies aren't interested in building new refineries because, though it would be nice to have them during oil crunches like now, across time there's not enough money in refining to justify new plants. But, there would be enough money to cover expanding and upgrading current plants to better handle "crunches" like now. Unfortunately, the EPA's New Source Review requirements disincentivize such expansion and upgrading. So what happens is we keep old refineries belching pollution and running 24/7 during crunches. I think we could benefit from a big compromise between the Greens and the oil companies -- partially weaken the NSR clean-air requirement for refinery expansion. That will encourage refineries to upgrade capacity and do some environmental improvements -- which is a significant improvement over the status quo.

The problem is that these countries can control our economy by deciding how much oil they'll produce and how much they'll send over here.

But there are a whole BUNCH of countries that sell oil, all of which need to sell just as badly as (and perhaps worse than) we need to buy it. And there are DOZENS more that are all-too-happy to act as "pass-through" nations -- buying oil from one place and reselling it to us.

That's why oil embargoes don't -- and never have -- worked. They are as impossible as if the people at Del Monte -- and perhaps even their friends at Birds Eye and Jolly Green Giant -- were mad at me and decided to embargo their vegetables from me. There are plenty of other vegetable-packing companies that will sell vegetables to me, and plenty of middlemen who will redirect Del Monte-brand vegetables my way, and plenty of customers who will buy Del Monte vegetables at the retail level and then resell them to me. So what do I care if Del Monte and its friends get pissed at me and threaten to cut off vegetables to me?

Here's the list of the world's largest oil producing nations in 2002, with the percentage of world production:

(1) Saudi Arabia -- 12.0%
(2) Russia -- 10.7%
(3) United States -- 9.9%
(4) Mexico -- 5.0%
(5) China -- 4.8%
(6) Iran -- 4.7%
(7) Norway -- 4.4%
(8) Venezuela -- 4.3%
(9) Canada -- 3.8%
(10) United Kingdon -- 3.3%

WVU, I know a lot of politicians on the right and the left talk about the "oil weapon" and the need to be energy-independent. But these people are either fools or political opportunists. No one has ever lost votes by blaming "foreign devils" for ominous-sounding problems. But, if you ever become tempted to believe their foolishness, just ask yourself: How would Del Monte effectively cut off vegetables to me?

Actually, the numbers are pretty similar...the article
I posted claimed that Saudi Arabian imports averaged
1.76 million bpd, while your source offers 1.77M bpd.
The source for that data was DOE.

I arrived at the 18% figure by dividing the Saudi oil
by the total imports per day, which was 9.6M bpd,
again, according to my article.

So my number was the percentage of total imports,
while yours was the percentage of total consumption.
(I believe....)

This has been an informative discussion...thanks !!

Wait !!! Here's the answer:

http://story.news.yahoo.com/news?tmpl=stor...i_ge/farm_scene

5car: Great article!! Given the quality of some if the ideas and comments of local politicians, WashCo should have plenty of manure for all sorts of energy uses!!

What's wrong with being energy independent? What's wrong with going from oil to hydrogen?

Well, for starters, hydrogen transportation (technology + fuel) is way more expensive. It's also not the safest energy source (think Hindenberg). And it consumes a lot of resources to produce (hence the expense). The federal government has been funding hydrogen-powered car research for 30 years (as have several other governments around the world). To date, all of that research has yielded little beyond corporate welfare. If hydrogen is the energy source of the future, then the free market will lead us to that source efficiently. The last thing we need is for the the federal government to force us into a hydrogen economy -- as the fed's "alternative energy" track record (e.g., nuclear power) attests.

As for energy independence, the biggest problem with it is the same as the problem with being independent in other matters -- it's extremely inefficient and expensive. I could try to be totally independent of others -- grow my own food, weave my own clothes, pump my own water, fabricate my own household goods -- but that would be a tremendous waste of time and money, and would be horribly inefficient. So I depend on others to provide me with goods and services that they can provide efficiently and inexpensively, and I focus on producing the goods and services (for myself and others) that I can produce efficiently and inexpensively.

Energy dependence for the nation is little different.

Oil is cheap (compare it to milk or bottled water), plentiful (despite what the Greens say), easy to work with, we have extensive experience with it, the economy currently is built around it, and its environmental effects can be mitigated if we're committed to doing so. Hydrogen is expensive, difficult to work with, we have little experience with it, and we'd have to radically retool the entire economy to use it. And hydrogen-manufacturing is dependent on fossil fuel.

That, in a nutshell, is what's wrong with being energy independent, and transitioning from oil to hydrogen.

That's a great question!

New taxes or fees should be a last resort -- a true last resort. Go after waste and inefficinecy first, and set priorities. Like we must do for our households! No one has shown me where the waste has been addressed.

I can't agree more, Snoopy.

In theory, the gas tax should work great -- if the money were dedicated to road improvement, some law enforcement, and car pollution mitigation. In that way, the gas tax would work like a user fee, with the people who a lot having to pay more to maintain and improve the roads.

But gas tax money is now being redistributed to some of the craziest stuff -- including stuff that has nothing to do with roads. As I noted in an earlier post, I believe some of the larger grants for the Roundhouse renovation project in Martinsburg (a project I like, BTW) are funded by the gas tax. And even when the money goes to transportation, too much of it goes to foolish projects like the Big Dig in Boston, impractical "demonstration" projects, or subsidies to such foolish ventures as the commuter air service that used to link Cumberland and Hagerstown to Baltimore. I firmly believe there is plenty of money to reinvigorate the nation's highways -- it's just being siphoned out of the trust fund for dubious uses.

A serious risk in the future is that the U.S. gas tax will increasingly become like European gas taxes -- used to fund broader government spending instead of simply transportation, law enforcement and pollution mitigation. That makes no sense; why should U.S. drivers be more responsible for general government spending than non-drivers?

Concerning "waste": About a year ago, Washington County Commissioner Jim Kercheval had a column in the Herald dismissing the oft-heard claim of "fraud, waste and abuse" at the Board of Education. Several people responded to his column by saying that, of course he didn't find any fraud, waste or abuse at the school board (or any other county agency) because the whole idea behind fraud, waste and abuse is that such expenditures are supposed to be hidden from oversight. In other words, Kercheval should not assume that, just because there is no "Fraud, waste and abuse" line item in the budget of the school system (or any other county agency) doesn't mean that such expenditures don't occur.

That point is true enough, I suppose, but I suspect that the fraud, waste and abuse that occurs in Washington County government is small -- so small as to account for little of the county budget. If county taxpayers want real savings, on the other hand, they should demand the elimination of county services and expenditures that are not core government responsibilities. Too often, government grants itself broad responsibilities, and then it tries to fulfill those responsibilities on the cheap with poorly paid and equipt employees. So what we get is a big, expensive government that does a lot of stuff poorly and often is at odds with the public. I'd rather have a small government that does a few things, does them well, and compensates and equipts its employees well.

To borrow from Barry Goldwater: "I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size. I do not undertake to promote welfare, for I propose to extend freedom. My aim is not to pass laws, but to repeal them. It is not to inaugurate new programs, but to cancel old ones that do violence to the Constitution, or that have failed in their purpose, or that impose on the people an unwarranted financial burden."

Maybe you are right, but I have not seen any effort to truly find out. If it is 5% fraud, waste, and abuse, is that okay? And I imagine it is worse at the State level, which is where the gas tax is going. As I said in another thread, who has not seen a state roads crew with 1 guy working and 3-4 watching? It is so ubiquitous it has become a joke and subject of cartoons. But it is not funny. I have spoken with a county roads worker and a city (Hagerstown) roads crew worker and both spoke of lots of wasted time. The city guy and his buddies often did what they call "ride and hide" for hours a day which involved them joyriding in city vehicles to kill time -- what a waste of manpower and material. I have witnessed a state crew where 3-4 guys were watching 1 guy change the oil in a dump truck. I have seen 3-4 guys in one State snowplow truck plowing snow -- why does it take 3-4 guys to drive 1 truck? What do these State Roads crews do during winter when they are not plowing snow? It really irks me to be hit with more taxes and fees when I see such waste. And I blame it primarily on the department managers and politicians. End of rant...

have any of you ever noticed how gov't never gets smaller? just bigger? Whatever service it is, all you hear is: we need more personnel...
well, when you work in the private sector you hear--we're overstaffed....as employees leave this company, we won't be replacing them...so if profit companies can operate w/less personnel, why can't a gov't agency/function? Then there would no need for additional taxes!!!!
Sorry---I am a tax hater!

I guess I should throw in -- Happy April 15!

Good point. Too many government managers want to create, maintain, and enlarge their "kingdoms". There may be a few who want to show how they can improve things and possibly do the same job or better with less money or personnel, but too often those few are told by their superiors, "Are you nuts -- you can't do that!" That would be a threat to the boss's power. The same things can and do happen in private companies but to a much lesser degree than in government -- there is much more focus on cutting waste in the private sector. Until taxpayers demand it it will not happen.

The Smipsons had a April 15th rerun episode last night.

Funny quote...

(Todd Flanders):Daddy what are taxes for?

(Ned Flanders):Well they pay for policemen, sunshine, trees and lets not forget the people who don't want to work...

Let's do a federal tax break down in honor of April 15th...Just for !@#$@ & Giggles...

Wage and Investments (AKA the individual taxpayer, you and me)
Pays the IRS $46 Billion per year and only accounts for 2% of ALL revenues.

Small Business/Self-Employed
Pays the IRS $915 Billion per year, making up 48% of the tax pie.

Large & Mid-size Business
Pays the IRS $712 Billion per year, making up 38% of the tax pie.

Tax Exempt/Government Entities
Pays the IRS $221 Billion per year, making up 12% of the tax pie.

Who's really getting screwed with fedral taxes?? DAMN STATE TAXES! UGH!

Hmmmm.... Interesting numbers.

So then the Federal government could give us all a HUGE income tax break and it would hardly hurt them a bit! Heck, you could offset it by just a relatively tiny increase in taxes on businesses.

I say just have a 20% flat tax on all people with incomes over $20,000, then have a VAT, and then put that on top of the state's sales tax.

That would put too many tax lawyers, and accountants out of business. How can you have a tax that doesn't take 20 volumnes to explain it?

<jeez, my spelling sux tonite>

Well, weren't the Republicans talking about taking away the 2% tax for a while? I seem to remember hearing that some time ago. No, it would not hurt them a bit!

Yeah, thanks Congress for all of those WONDERFUL tax laws! I wonder if they even understand half the tax laws, or if they just sleep through the sessions like the normally do.

I wonder if the IRS really understand the tax laws!

Congress makes the tax laws, the IRS just enforces them, but, honestly, WHO CAN understand all of those tax laws?? It's ridiculous! I don't think Congress OR the IRS understands any of it!

Folks,
T'is true that Congress enacts the legislation. However, these bills are often complex and always subject, in part or whole, to interpretation. The IRS has the un-enviable job of putting thes laws into a workable policy or code. Tough job...