free html hit counter Peak Oil Debunked: 261. "MITIGATION" AND GAS TAXES

Sunday, March 12, 2006

261. "MITIGATION" AND GAS TAXES

The peak oilers make a big deal out of the Hirsch report. In particular, they like to quote this sentence from the executive summary (p. 4):
The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.
This is their justification for believing that it's too late to avoid disaster. Here's a classic statement from Monte Myers, Den Mother of the doom troop over at peakoil.com:
One of the things that has continuously puzzled me is that amongst the optimistic solutions posited to solve hydrocarbon depletion, I see an assumption that we have, or will have, the time to mitigate the consequences of peak oil. Mitigation, of any sort, will take time and a lot of money. And it will have to be applied world-wide, not just in the first world.

The Hirsch Report details that we need a 10-20 year crash mitigation plan in place before the peak.
This is a load of baloney, and it all hinges on the word "mitigation". You see, what the Hirsch report means by "mitigation", is an all-out crash program for producing more liquid fuels, as you can see from the following diagram (p. 57):

This program is a pro-Exxon, pro-GM, pro-pollution, anti-conservation, Dick Cheney inspired load of crap, and the authors of the report frankly admit it (p. 50):
B. Mitigation Options
Our focus is on large-scale, physical mitigation, as opposed to policy actions, e.g. tax credits, rationing, automobile speed restrictions, etc. We define physical mitigation as 1) implementation of technologies that can substantially reduce the consumption of liquid fuels (improved fuel efficiency) while still delivering comparable service and 2) the construction and operation of facilities that yield large quantities of liquid fuels.
If you read the report, you'll quickly see that option 1) (lame as it is) is still just lip service. The crash plan is all about pork for oil/coal/refining companies, so they can quickly ramp up liquids production from coal, gas, oil sands, heavy oil and EOR, which are projected to provide 95% of the mitigation. There isn't a word in the entire report about conservation.

The raw stupidity of this plan is evident in the fact that 30% of the mitigation wedge shown in the above diagram is projected to come from heavy oil in Venezuela, as we've seen earlier. The authors do not explain how the United States is going to operate on Venezuelan soil in implementing its crash program to save braindead American motoring.

Still, these facts do not pose a serious problem, even if peak oil is imminent.

This is because it doesn't take decades to mitigate. It takes about 5 minutes -- time enough for the President to sign off on a big fat gas tax. Bing. You kill 4 birds with one stone:

1) Reduce demand for oil
2) Drive demand for alternatives
3) Generate massive revenues for building rail etc.
4) Kick Iran, Venezuela and the rest of OPEC in the nuts, and watch them squirm as oil prices and their government revenues drop like a rock.

Now, of course the doomers are in bed with Dick Cheney, and think that the American way of life is non-negotiable. There is no way in hell that the U.S. will ever pass a gas tax. It turns out this is wrong too. A majority of Americans actually favor a gas tax, provided you spin and package in the right way:
If you ask people straight out, "do you favor a gas tax," the answers is overwhelmingly (85%) No. Even if you promise to reduce other taxes --payroll and income -- by the same amount, the answer is still (63%) No.

But if the question is, "would you support a gas tax if it reduced U.S. dependence on foreign oil" or "would you support a gas tax if it cut down on energy consumption and reduced global warming," the results reverse pretty dramatically. The "foreign oil" question gets 55% in favor and the "energy consumption and global warming" question gets 59% in favorSource
It is imperative to not let status quo mouthpieces like Hirsch et al., abuse the word "mitigation". Peak oil is -- by definition -- not a problem which can be solved on the supply side.
-- by JD

30 Comments:

At Sunday, March 12, 2006 at 9:17:00 PM PST, Blogger nick said...

But you forget another part of the wording of the survey. The full part would include wording about the rising in prices of everything else since that is shipped, thus a slowdown in the economy. People vote with their pocketbooks. "Would you favor a gas tax that would help reduce dependence on OPEC but also putting a damper on our economy at best?" Run the results and see if you get 55% and 59%.
And it just says 'a gas tax'. It makes no mention of the amount. Current rates are about 50 cents or so, depending on the state. They'd probably expect those to double. 50 cents is no biggie to most. But to have a real effect on demand, you'd have to have price hikes much higher than 50 cents.
It would cost so much political capital and Bush has extremely little to spend right now. The next person voted in will probably make promises to get gas prices 'in order' and would risk major political fallout most likely if proceeded with said gas tax increase.

 
At Sunday, March 12, 2006 at 10:12:00 PM PST, Blogger Paul Ramsey said...

A gas tax sufficiently beefy to bring prices at the pump in the USA in line with those in Europe would be a big cup of hemlock for any politician who supported it. Knowing it is a good idea is one thing. Thinking it will ever happen is another. Let's leave flights of fantasy to the doomers.

 
At Sunday, March 12, 2006 at 10:13:00 PM PST, Blogger Roland said...

It would cost so much political capital and Bush has extremely little to spend right now.

Bush is so unpopular now he doesn't have anything to lose. Pass a gas tax? Sell advertising space on the Statue of Liberty? Deport all women to Liberia? Why not? He can't win another election, and the Republicans' chances don't look good anyway. Political capital doesn't really matter. Of course he won't do it, though.

(Good post, JD)

 
At Sunday, March 12, 2006 at 10:16:00 PM PST, Blogger Roland said...

*Sorry to go off topic here, but following through the links to people's blogs in the comments I can't help noticing that all the "doomers" have blogs about Peak Oil and the more optimistic people have blogs about other things. More proof that Peak Oil doom is a bit of a religion, and takes over your life if you subscribe to it.

 
At Sunday, March 12, 2006 at 10:49:00 PM PST, Blogger Robert Schwartz said...

John Whitehead says:

"My current rule of thumb is that the short run elasticity of demand is about .1 and the long run elasticity is about .5. This means a 50% increase in gas prices leads to a 5% decrease in consumption in the short run and a 25% decrease in consumption in the long run."

(I am not endorsing this, its just the only numbers I have seen)

If we institute a $2.50/gal gas tax, we should get an immediate 10% drop in consumption and a 50% long term decrease. That would solve our import and peak oil problems, let's do it.

As for the politics, let's start to call for it here and now. Eventually politicians will begin to think it is a good idea.

 
At Sunday, March 12, 2006 at 11:34:00 PM PST, Blogger Freak said...

As an American, honestly, If gas was 5 dollars per gallon, it would be a disaster.

The American transportation infrastructure is not set up to cope with a fuel cost that high. That's like imposing a false peak-oil scenario. And in America it would only be a tax on the poor and middle class not the wealthy elites that over-consume more than their fair share anyway. you can't ask someone to pay 70% of their income to get back and forth to their general labor job. and the fat cats that control everything here have no intrest in making that situation better. Education and personal responsibility are the key. market a
need for efficiency and incentivise it and people will shift their consumption or reduce it.
a gas tax is America's current poltical system will result in nothing but widening the gap between the rich and poor. If that's all you want to do then I'll take my chances and face the peak oil monster alone.

 
At Sunday, March 12, 2006 at 11:46:00 PM PST, Blogger JD said...

Let's leave flights of fantasy to the doomers.

Paul, I would agree with you, but for one thing: auto dependence has profound, long-term national security implications for the United States.

National security is an issue which politicians take very seriously, and they'll ram it down the voters' throats if they have to. In fact, it would be great if both parties sat down and hammered out an agreement to jointly support gas taxes in the name of national security. Then they can handle it just like income taxes. Why don't we vote out the bastards who support income taxes? Because every candidate, in every election, supports income taxes. That's where gas taxes need to go.

 
At Sunday, March 12, 2006 at 11:50:00 PM PST, Blogger JD said...

khebab and westexas at graphoilogy recently posted a nice gas tax proposal. It's located here.

 
At Monday, March 13, 2006 at 12:10:00 AM PST, Blogger JD said...

you can't ask someone to pay 70% of their income to get back and forth to their general labor job. and the fat cats that control everything here have no intrest in making that situation better.

There are so many options for getting to work, that this objection doesn't hold water. Anyone can easily reduce their commuting costs by moving closer to work, riding a scooter, car-pooling, bicycling, trading in for a car with better mileage, taking the bus, sleeping in a flop-house near work, telecommuting etc. etc. You don't need to turn to the fat cats to get the job done. You can do it yourself.

freak, if you think $5 gas will cause a disaster, then you think peak oil will be a disaster. That's the doomer argument, in a nutshell.

Personally, I don't make predictions, and I'm not counting on anything. I'm a hedger. The future can turn out lots of ways, and $5 gas is certainly one of those ways. In fact, if Al Qaeda got lucky tomorrow and took out a substantial chunk of Saudi production, $5 gas would be a bargain. That's an unlikely scenario, but it's possible and should be faced squarely.

Even if gas goes to $5 or $10, we still don't face doom because WE DON'T NEED PRIVATE AUTOMOBILES TO FUNCTION.

 
At Monday, March 13, 2006 at 12:39:00 AM PST, Blogger Freak said...

Sorry JD, didn't mean to sight you in there......
I wasn't shooting down the suggestion, only trying to kinda through in my 2 cents. on paper I agree that it's a good idea...but I feel the need for it to be incremental and that we should give incentives for conservation rather than punishment for consumption as it is positive reinforement. Educating people on the neccesity of conservation should be paramount, the doomers overshoot the mark on this point as the educate in futility.

you do point out some valid means for reducing consumtion, but some people don't have the economic mobilty to trade their car for a scooter, with $5/gallon we would reach peak vespa quite rapidly for a while. they really do ask more for a scooter in the area I live in than a resonable used car...(I don't finance anything.

anyway back to my point, the social inequality, and civic planning in america I believe seriously comprimises our ability to act responsibly in the face of a constrained energy scenario. I believe that at some point even if oil were a perpetually upward curve we would face a quality of life saturation problem in the US, and it may well be manifested as peak oil (so the doomers can say I told you so :)) But honestly I see peak oil as a peripheral symptom of a much larger root cause in hyper-capitalist western nations.

 
At Monday, March 13, 2006 at 12:47:00 AM PST, Blogger JD said...

Speaking of making people drink the hemlock... here's an interesting card of candidates:

Candidate A: pro choice, pro gay marriage, anti gas tax
Candidate B: pro life, anti gay marriage, pro gas tax

Or, alternatively:

Candidate A: pro choice, pro gay marriage, pro gas tax
Candidate B: pro life, anti gay marriage, anti gas tax

 
At Monday, March 13, 2006 at 2:32:00 AM PST, Blogger Roland said...

Incrementally raising the price of oil with a gas tax would be much better than seeing it shoot up overnight because of a terrorist attack or worst-case peak scenario. I see this as happening naturally before the peak anyway, but why not be certain?

$5 gas is not that big a deal. Here in Australia, which is just as car-dependent as the US, it got to just above $4. There was a lot of complaining but society kept on working and the impact on the economy was not great. Frankly, going 500 miles for 30 bucks is an incredible bargain, we just take it for granted. If Americans didn't drive such ridiculously large cars it wouldn't be such a worry.

JD's right. It's not about replacing oil, it's about lowering the portion it occupies in the average person's budget so we're insulated against price rises. This is not hard. If you look at your average street every second person is commuting to the CBD everyday. Why not organize a carpool with the people on your street? The solutions are that simple. We just need a price incentive to work it out. Not a ridiculous price, just something that puts a realistic value on the externalities of oil. Who's going to create that price? Will it be because of the most disruptive terrorist attack yet, or because of the only good thing the Bush administration has ever done? You choose.

 
At Monday, March 13, 2006 at 2:34:00 AM PST, Blogger Roland said...

(P.S., I agree that a sudden hike in prices would be disastrous for those with tight funds, hence the benefit of a gradual gas tax that is raised very slowly. It should have been done 10 years ago, but oh well)

 
At Monday, March 13, 2006 at 3:34:00 AM PST, Blogger Freak said...

Americans don't have enough trust in each other to carpool.

They see their cars as an externalization of their own individuality.

marketing on the part of manufacturers has played a part in manipulating the America into making very bad choices.

Bigger cars are part of some kind of vehicle safety-phobic arms race with every other car on the road.

What is between pedaling a bicycle uphill on a 100 degree day or driving solo in a V-8 SUV?

does anyone make a single passenger vehicle, that weighs under 1000 pounds, thats climate controlled and gets 150 mpg? why not?

would you feel safe riding in it during highway traffic with semi-trucks and v-8 suvs all around you?

 
At Monday, March 13, 2006 at 3:59:00 AM PST, Blogger DC said...

JD, so glad you tackled this topic on the Hirsch report, the most abused piece of information on there by the doomer faction. In particular, I applaud your emphasis of the assumptions used in his mitigation arguments and which are either intentionally omitted or ignored in most discussions.

Anyhow, one of the best ideas I've read over a federal gas tax hike is to implement it ~ 3 years ahead of its ratification. Benefits of this structuring include:

1) Providing the auto industry enough lead time to retool and meet the new fleet mix demand.

2) The ability to leverage the anticipated future tax revenues to accomodate the ensuing change in driving habits. Such programs might include increased federal funding for mass transit, bike lanes, small business loans for the telecommuting industry, etc. A more controversial possibility would entail freezing gas guzzler values and subsidizing a buy-back program. From a populist viewpoint, the more equitable appropriation would look something like the former.

3) Providing businesses and individuals sufficient lead time to adjust their reliance on the automobile. For example, a new perk in a company's compensation package might include fee membership in a ride-share program. There could be greater adoption of flex-time scheduling. Heck, it might be the catalyst necessary to get the telecommuting industry going for some portion of the white collar job force.

The key question over any gas tax hike revolves around the opportunity cost of maintaining the status quo (i.e. driving habits at present). Will a gas tax put us at a severe enough economic disadvantage in comparison to other gas-guzzling economies? Or is the supply picture such that the cost of doing nothing more severe? Hirsch actually does a fantastic job of summarizing this point towards the end of his report by casting this whole issue as a risk management problem of gigantic proportions. Pity that the doomers can't appreciate this point as they only consider the risks of inaction and dismiss the risks of early action.

For what it's worth, I think that a managed disruption by way of a gas tax hike is a necessary evil at this point given the way land use patterns and business infrastructure has evolved in the US.

 
At Monday, March 13, 2006 at 4:19:00 AM PST, Blogger Roland said...

Americans don't have enough trust in each other to carpool. They see their cars as an externalization of their own individuality.

Freak, you've obviously hit, um, oil. I guess this is the core of the problem - just like the Australian love of a big suburban block. But we're all going to have to learn, instead of clinging onto old habits because of some silly psychological connotation. These connections evolved with cheap motor fuel and in an era of expensive fuel they may have to change. Adaptability is an american quality too, isn't it?

 
At Monday, March 13, 2006 at 5:40:00 AM PST, Blogger nick said...

"It would cost so much political capital and Bush has extremely little to spend right now.

Bush is so unpopular now he doesn't have anything to lose. Pass a gas tax? Sell advertising space on the Statue of Liberty? Deport all women to Liberia? Why not? He can't win another election, and the Republicans' chances don't look good anyway. Political capital doesn't really matter. Of course he won't do it, though."

Roland, you have heard of this thing called 'Congress' right? They can overrule him and if he gets out of line (like with say a massive gas tax that their constituents don't like) they then just might try to impeach him? Even if they don't, he would be labelled even more of a lame duck.

I'm not against this plan. If I were President and had the capital, I'd do it the first week. Raise prices to $5 a gallon and use the revenue (ALL of it) to fund the lower class, food distribution, small businesses, mass transit, etc. But the question is, do you (any of you) REALLY think that politicians in the US would even dare? Here in NC, people are going nuts over a few cent price increase. A few cents. Not two and a half dollars.

Had Bush not been an idiot and he was trustworthy, then he could probably easily push this through. Just say that the American people must come together to fight terrorism and help secure our nation. But at this point, after Katrina, illegal immigration, the ports, Iraq, etc. what are the chances anyone would give a damn about what his views are?

A massive gas/SUV/waste tax is exactly what we need. It could easily help transform our nation and wean ourselves off oil. But I wouldn't be counting on it just yet.

But to be fair, have there been any pushes locally or at the state level to increase the gas tax to 'help our national security'?

 
At Monday, March 13, 2006 at 8:11:00 AM PST, Blogger dub_scratch said...

JD, I think you hit the nail on the Hirsch mitigations-- being that it is not only dependent on us using autos, but it's criteria is that we use them with the typical one occupant/traffic jam mode. GPM had an interview with Dr Hirsch where the interviewer asked why reduced dependance on travel was not considered as a mitigation option. Hirsch said something to the effect that retracting the suburbs is something he thought we should put-off for as long as possible.

I think if we were to put any 10 or 20 year mitigation project together, the first priority would be to reduce the ridiculous amount of distance travel required for mobility in the average American city. It is quite clear that our over dependance on oil is systemic. The average Western European drives 66% of the average American yet uses half the petroleum. If the reason for such a difference in efficiency did not rub up against the traffic jam vested interests, we would have people advocating the "European solution"-- we would have DoE people over in France studying how they do it.

 
At Monday, March 13, 2006 at 8:41:00 AM PST, Blogger DC said...

Dub!!! :-)

Another factor to consider is whether long haul trucking is included in any such tax hike. In something frought with so many challenges, that may be the deal-breaker. It certainly deserves consideration.

 
At Monday, March 13, 2006 at 8:46:00 AM PST, Blogger dub_scratch said...

JD wrote" khebab and westexas at graphoilogy recently posted a nice gas tax proposal. It's located here.

The only problem with this scheme is it would make government revenue as dependent on the National Traffic Jam as the auto makers and sprawl developers. In such a system, not only would our government be responsible as they are for enforcing sprawl-only urban planning policies, our government would be as addicted to over consumption of oil as the average crack-head is to crack.

Any gas tax scheme has to be revenue neutral. I think it would be a good variation of khebab's scheme to issue rebates to all taxable income earners. It could be a system that divides the previous year's revenue equally to each taxed income earner, up to the amount of taxes he or she pays. This would solve the problem with a gax tax being seemingly unfair to the working poor, as they can get a sizable portion of their income tax reduced. even if they still drive or are car dependent. But they will have a great incentive to take the bus or use other means for getting to work. The wealthy will still drive a lot, which will be fine. Middle income people, who make the bulk of clogged traffic, would seek ways to minimize their work commutes.

 
At Monday, March 13, 2006 at 10:01:00 AM PST, Blogger nick said...

DC, I think you have to tax long haul trucking. It's a disgusting and wasteful use of petroleum. It's best to get rid of it as quick as possible and replace it with a much more efficient rail (long distance) and trucking (short range). The prices will go up a good bit, but that's not a real horrible thing, humanitarianly, but economically it would be pretty bad. Think it will happen anytime that will benefit us greatly? Not me.

 
At Monday, March 13, 2006 at 10:03:00 AM PST, Blogger bc said...

Doomers treat Hirsch like Moses. Behold, the Prophet hath spoken. But Hirsch takes the most intensive sector of oil use, in the most intensive country in the world, and not only tries to mitigate decline in supply but also increased future demand. Pretty much a worst case scenario, and a strawman. (But don't say that at peakoil.com, you will likely get banned).

As for a gas tax, I would say don't do what we did in the UK. Effectively, the addiction of the consumer is transferred to the government. Our government spends the proceeds on health and welfare. Because the oil industry generates so much tax revenue, oil is supported, and renewables (which don't generate so much tax) are only supported in a token way. This is the reverse of what we wanted! Not only do we now have an expensive health/welfare system, but have little in the way of renewables.

I don't like to speak for the US, but I would have less confidence that in the US increased taxes go to the right place instead of to pork barrel projects than I do here.

So if you institute a gas tax, make damn sure the revenues go to the right place.

 
At Monday, March 13, 2006 at 1:21:00 PM PST, Blogger Roland said...

Hirsch takes the most intensive sector of oil use, in the most intensive country in the world, and not only tries to mitigate decline in supply but also increased future demand. Pretty much a worst case scenario, and a strawman.

Exactly. Might be tough luck for American car owners, but this doesn't mean the whole world is doomed, or even America itself. Just like we transfer our eco-worries to the Easter Islanders, we blow up a transport logistics problem into a global disaster.

 
At Monday, March 13, 2006 at 2:56:00 PM PST, Blogger Omnitir said...

I suspect a simple upgrade of the mass transit programs in the U.S. would make the world of difference. And it’s not something that need’s to cost the world – a small gas tax could cover it, or even some readjustment of the budget could cover it without increasing taxes.

Improving mass transit in the U.S. would not require immediate massive infrastructure development or tearing down suburbia. Instead it would be a gradual development process that would immediately begin to make a difference.

Perhaps the most important aspect of the success of a mass transit initiative in the U.S. would be the public awareness and advertising campaign. It seems Americans need to be sold on the notion that public transport is actually a superior way to travel. Perhaps they need to see advertisements of people riding to work in stress-free climate controlled comfort while flying past traffic jams, and paying a fraction of the price to do it.

Also, selling the point of reducing dependence on foreign oil sounds like a good idea.

The U.S. should take a look at how mass transit has benefited other cities around the world. The U.S. is being left behind. Having a large city without adequate mass transport is simply insane. A sexy and efficient mass transport system in a city is something to be proud of. This is a concept that America urgently needs to understand.

 
At Monday, March 13, 2006 at 6:28:00 PM PST, Blogger DC said...

Forgive the non-sequitor, but it seems that Kunstler has finally dove off the deep end:

http://kunstler.com/mags_diary16.html

 
At Monday, March 13, 2006 at 6:50:00 PM PST, Blogger dub_scratch said...

Omnitir said...
Improving mass transit in the U.S. would not require immediate massive infrastructure development or tearing down suburbia.

As much as I agree with you on this, I think you are somewhat missing the point when it comes to how mass transit works.

Whenever people in the US create these alt transit concepts they think in terms of changing out modes without reducing distances traveled. Fact of the matter is mass transit can never be like the auto in terms of giving the same type of wasteful hyper-distance mobility. Nothing can.

Here's a fact to go along with my previous Western European comparison: even though they drive 66% of the miles we do in the US, the auto still accommodates 72% of all passenger mileage over there. Does this make all the great mass transit ineffective for mobility? No. What it means is that mass transit enables people to work and live in dense urban areas without all the streets devoted to cars, with spread-out distances and long commutes from place to place. Notice that stat I gave refers to mileage or distance traveled by car—which happens to be a whole lot more then by train. But how do you compare a long 15 mile work commute across Paris to a short three block walk in the hart of town? Each one goes from point A to point B. The problem with the American mindset is that too many see the 15 mile as much more important. You can't even get a statistic measuring my 3 block walk to work. In short, we really need to measure mobility by another standard other than miles traveled.

The point I’m trying to make here is that we cannot just slap a bunch of trains in suburbia and expect that to work. What we really need to do is retrofit suburbia and retrofit a low travel lifestyle within it. That means we will have to pay the economic consequences of making such a horrible previous investment, in many cases. I imagine some— mostly exurban and new outer belt suburbs— will have to get abandoned altogether, with many who have to eat their investments. This would not be the first time a lot of people lost out when collectively making stupid investments.

 
At Monday, March 13, 2006 at 6:51:00 PM PST, Blogger JD said...

The only problem with this scheme is it would make government revenue as dependent on the National Traffic Jam as the auto makers and sprawl developers. In such a system, not only would our government be responsible as they are for enforcing sprawl-only urban planning policies, our government would be as addicted to over consumption of oil as the average crack-head is to crack.

dub_scratch, that's a really good point. Thanks for bringing it up. We've got to be very alert for such perverse incentives.

Any proposal also has to be really careful about creating loopholes for low income people, people living in the "country", people with handicaps etc. If you go that route, we're going to end up with a country full of fakers and frauds, still living in the exurbs and driving one to a car.

Even if oil prices rise steeply due to a supply/demand mismatch (rather than a tax), everybody is going to be demanding subsidies, loopholes, bailouts, assistance and other social compensation for their own personal losses. That's where the real peak oil battle is going to have to be fought.

 
At Monday, March 13, 2006 at 11:51:00 PM PST, Blogger EnergySpin said...

A gas tax is not such a bad deal provided that
a) is implemented slowly (over 3-5 years)
b) exceptions are made for legit uses of fuel (e.g. do not tax fuel ambulances, buses used for mass transit, police cars)
c)leave small local business out of the loop but make the big guys pay

Long haul trucking should not be left out of this: they are responsible for a significant % of emissions and it is the stupidest way of transporting stuff I could think of (short of flying strawberries from Chile). Even though this will be a big hit in the short term, one could conceivably :
1) enforce the tax in a way that gives more years to prepare
2) distribute the revenue in a "long-haul trucking" friendly way (see below).

A gas tax is not just a "necessary evil" to effect a change in use in land patterns, but it can also provide the means to implement such a change provided the revenues are handled appropriately. For starters, do not even consider using the money to subsidize the sprawl (cause that will be a self defeating situation), and ensure that it does not become the next big crack source for government (they way that cigarette sale taxes are). Therefore the revenues should be distributed in the following manner:
a) public transit infrastructure
b) upgrade of the rail network (go TGVs!!!)
c) use a sizeable portion for the revenues for government backed "restructuring" loans i.e. low interest or no interest loans for business that do need assistance to change their modus operandi. The criteria for allocating the revenues are pretty straightforward:
a) prioritize loans to businesses that are heavily dependent on oil first
b) a plausible plan for restructuring should exist (e.g. a company that needs to invest on servers/SW to implement telecommuting)
c)investment plants are not excluded (e.g. a trucking company that wants to buy into railroads)

What do you guys think about the last idea? (gas tax revenue going into business restructuring)

 
At Tuesday, March 14, 2006 at 12:43:00 AM PST, Blogger Roland said...

Great idea.

 
At Saturday, March 18, 2006 at 2:48:00 PM PST, Blogger Rob said...

High gas taxes are a bad, bad, bad idea. Once the money starts rolling in, government will find a way to spend it, making the state dependent on that revenue. The situation is not unlike that in France, where they fund health care partially on the back of cigarette taxes. That is, high gasoline taxes create perverse incentives on the part of the state. And don't get all "we'll refund part of it back to the payers" on me. How much do you pay in income tax? How big are your refunds? The prosecution rests.

 

Post a Comment

<< Home