The Oil Drum | Efficiency Policy, Jevon’s Paradox, and the “Shadow” Rebound Effect

172 comments on Efficiency Policy, Jevon’s Paradox, and the “Shadow” Rebound Effect

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westexas on April 26, 2007 - 11:04am

Consider some semi-real life examples.

Let's assume a family of four with more money than brains, and they each have a H2 Hummer, driving 10,000 miles per year. Yahoo puts the total cost per mile at about $1.50/mile (inclusive of depreciation + maintenance + insurance + fuel). Total cost per year about $60,000.

Yahoo also puts the cost of driving a Civic at about 50 cents per mile, at 10,000 miles year year.

These cost estimates were probably made at about $2.50 per gallon.

Let's assume that gasoline goes to $5.00. The combination of vastly higher deprecation on the Hummers and higher fuel prices would probably push the cost per mile to somewhere north of $2.00/mile. The Civic would probably go to about 60 cents per mile.

Assuming that that our family of four magically got rid of the four Hummers and acquired four Civics, a big assumption, their total cost of driving 40,000 miles per year would go from $80,000 to $24,000 (all at $5 gasoline). Even if we compared the annual cost of four Hummers at $2.50 gasoline ($60,000) to the cost of four Civics at $5.00 gasoline ($24,000) they would be way ahead.

IMO, what we need are permanently higher energy consumption taxes, offset by cutting or eliminating the Payroll Tax.

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jeffvail on April 26, 2007 - 11:18am

Westexas: I agree with your recommendation to raise energy taxes and negate the impact on poor and middle class by using them to replace the regressive payroll tax. My point here is this: let's not justify this by arguing that it will save energy. That family of 4 will save $56,000 a year. My guess is that they won't stuff it in a mattress--they'll spend it at Wal-mart, or to go to Hawaii, or other things that will use an equivalent amount of energy when one accounts for the total effect of that spending rippling through the economy. This tax MAY redistribute some of that energy consumption away from liquid fuels and toward other (coal, nuclear) sources, temporarily alleviating the liquid fuels crunch, but the result may actually be greater GHG emissions. At the least, it will give us a false sense that we, as a nation, are really doing something to address our overal energy consumption, and that may prove to be the most damaging effect when it comes to a real, "total energy" crunch--the populace may see this as "the boy who cried wolf."

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bunyonhead on April 26, 2007 - 11:33am

That's why I suggested hypthecation of the tax to be spend on sustainable renewable energy projects (wind, solar, pump storage, Engineer Poet schemes http://ergosphere.blogspot.com/2006/11/sustainability-energy-independenc..., etc)

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westexas on April 26, 2007 - 11:59am

My point here is this: let's not justify this by arguing that it will save energy.

I agree. I have forgotten the exact numbers, but as our fuel efficiency in the US has climbed, total miles driven have climbed even faster.

You can see it with the example I cited. For the $60,000 that the family was spending on four Hummers driven 10,000 miles per year per vehicle (at $2.50 per gallon), they could pay for 10 Civics driving 10,000 miles per year per car, even at $5 gasoline.

I've put it this way: "We have to kill consumption before consumption kills us."

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memmel on April 26, 2007 - 1:26pm

So at the end of the day with our current economic system your only going to really save energy when its not increasing.

This makes sense. My opinion is our current economic system cannot be retrofitted to work in a energy constrained world since the whole system is designed to optimize consumption.

I don't see band aids regardless of their nature is effective.
The only way out is to make holding money more valuable then spending it which mean relentless real monetary deflation and resource price inflation. The price of finished goods and services would be balanced on the two apposing trends.

This means going back to a world with little credit available. If you don't deflate in a resource constrained world you tend towards hyperinflation and currency collapse.

Resource price inflation tends to make holding the resource more valuable while monetary deflation causes the opposite.
The outcome of the two conditions is that efficiency is the real wealth. Since using less resources saves money and monetary deflation makes saving this money a good bet.
The real economy (physical goods) will shrink to probably a tenth of what we have today if that excluding base food production. Food would make a large part of the total economy at that point say 50%. Services based on renewable resources or knowledge would be the growth area along with recycling and production of longer lasting repairable goods.

This is not the world we live in now. My guess is hyperinflation before we flip to a sustainable economic model but we won't be able to transition our current one.

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markincalgary on April 26, 2007 - 6:15pm

Sure what you say is true about a gasoline/diesel tax, but if you want to reduce GHG emissions you might as well just tax GHG emissions. Since TOD is focussed on a looming liquid fuel crisis, we're talking about a liquid fuel tax. (Personally, I'd rather tax liquid fuel use via a GHG emission tax.)

I used to be big on Jevon's Paradox, but then I tried to apply it to a reduction in tobacco use via a tobacco tax.

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btu on April 26, 2007 - 7:49pm

As the price of energy increases along with the cost of all goods and services, the amount of disposable income will decrease. The Hummer family may spend the savings at Wal-Mart, but the average family will consume less energy because they can't afford anything but the necessities.

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CrystalRadio on April 26, 2007 - 11:51pm

And if that (I'm assuming lower working class family of four) in the civic can't pony up that extra 10 cents then they will have the opportunity to do that part of the ride on shanks mare and enjoy that added benefit: robust peasant vigor and thereby reduced health costs. Of course they will likely lose their jobs for tardiness and as well lose those fantastically reduced payroll taxes which I imagine would be a lot along the lines of the last tax 'cuts' for the insolvent. %;-) = 0

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172 comments on Efficiency Policy, Jevon’s Paradox, and the “Shadow” Rebound Effect

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