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Countdown to $200 oil (3) - no gas tax needed...erm, right...
Posted by Jerome a Paris on May 8, 2008 - 8:59am in The Oil Drum: Europe
Topic: Demand/Consumption
Tags: $100 oil, $200 oil, gas tax [list all tags]
This story is part of my new Countdown to $200 oil series, which is the successor of my earlier, and now terminated by reality, Countdown to $100 Oil series.
As in previous years, I got my ass whipped in my latest attempt to suggest on Daily Kos that gas taxes should be increased, despite the fact that the place is completly dominated by Obama fans and Obama's solid stance against the gas-tax holiday.. Some commenters kindly called me a "rich elitist f*ck from Europe" (guilty on all counts, of course) for wanting to bankrupt poor Americans who cannot do without gasoline, preferably cheap, and are already struggling mightily.....
And that was despite my acknowledging upfront that a gas tax increase is politically deadly, and highly regressive, and my corresponding suggestion to make it part of a plan to (i) directly support those hardest hit by revenue transfers and (ii) use the money raised to invest in alternatives (public transport, renewable energy)
Of course, the fact that oil prices are reaching new highs almost every day these days might have given them pause for thought. As might this, which further underlines that this is not a short term phenomenon:
The entire WTI futures curve is trading well above the $100-a-barrel level with the longest dated contract for December 2016 up $1.57 to $110.55 a barrel on Monday, signalling the market’s consensus that $100 oil is here to stay.
Oil prices are going in one direction only, and there's a very simple reason for that: market forces.
Market forces say that when demand is growing, prices will go up, which will encourage new supply to be provided, and some demand to be discouraged. But oil is a very atypical market right now:
- demand is growing in China and other places, as lots of people reach the income level that makes it possible for them to afford cars;
- demand is growing in oil-producing countries, as the oil bonanza of the recent few years brings them prosperity and massive growth in car ownership and economic activity;
- a number of countries, including those oil-producing countries that just have to dip in their production to fulfill demand, and many countries that try to support their citizens, further encourage oil demand via price controls or subsidies (their consumers are not subject to market prices and thus are directly unaffacted by them, even if their government are);
- meanwhile, supply growth, which used to be the easiest way to balance the market in the presence of strong demand growth, is no longer happening. Production has been flat for the past 3 years and there are increasing doubts that it can increase in the coming years. Whether this is because of peak oil, because of lack of investment, or because of political games by oil-rich countries is essentially irrelevant: the fact is that supply is not responding to increasing prices.
With growing, and largely price insensitive, demand on one side, and flat supply on the other, something has to give. Price increases are not the only consequence: they have to bring about market equilibrium. And given the above constraints, it can happen only by causing demand to shrink elsewhere, ie in the US, Europe and the non-emerging parts of the Third World.
Oil importing countries in the poorer parts of the world are suffering mightily from higher prices, and limiting their consumption, but the overall volumes are too small to make a big difference. Letting Africa slowly die is not going to be enough,
Thus Europe and the US have to bear the brunt of demand reduction. But here's the problem: our demand is not very elastic either, and we either have to do without our cars, or be willing to pay a lot more than now for the convenience of driving them. But demand must shrink. So what happens?
Well, it's simple: prices have to go high enough to destroy demand. Given that we really don't want to do without our cars, the pain has to be bad enough to actually cause (undesired at lower prices) changes in behavior. Thus, VERY high prices.
One would expect such high prices to also bring online a lot of new supply, including from unexpected sources. It is happening a bit (biofuels being one exemple, coal-to-liquids another), but nowhere near the scale it's needed. It appears that demand destruction in the West is still, at current prices, the easiest way to actually balance the oil market, however unlikely that may seem, and however painful it is for us.
But given that Chinese demand is growing by 5-10% per year, and that Saudi, Iranian or Russian exports are dropping (as their production stagnates and their domestic demand continues to jump), we need to destroy yet more demand each year.
Thus, higher prices will happen. It's inevitable.
Well, there is an alternative, actually: shortages and rationing. Maybe that will create the urgency that the current situation seems unable to create yet.
And maybe we'll start having an energy policy that works, rather than one that does nothing and lets the poor gets slowly squeezed with no hope of any solution in sight.
Reducing demand by increasing taxes is an obvious part of the solution to any thinking person, however suggest it to Joe Shmoe while he is filling up his SUV at the gas station and you may get a black eye. Unfortunately your post does not condense well into a 30 second commercial, so it is political suicide for our polititians to suggest. How do we get chapter one of Econ 101 accross to the masses?
Europe has very high taxes.
The U.S. has very Low taxes.
The U.S. is heading pell-mell toward biofuels, and hybrids.
Europe is dithering around and doing Nothing.
Jes Sayin
kdolliso
Europe doesn't have to do a lot, they have been living without cars for centuries, They have rail and walkable urban areas. Since their energy consumption is 1/2 what a North American uses they have a decent head start, German is building renewables hand over fist, this I would not call dithering, most of the "Hybrids" produced in the US are stock models with beefed up starter motors, a purely cynical move. Europe has legal electric vehicles on the roads, and did I mention rail?
Neven
Germany's working on "renewable," yes, but not in the area of private transportation.
The high taxes masked market signals, and now Europe is locked into diesel engines. Looked good last year; still looks okay; but, give it a couple of years, and the fact that you can get much less diesel from a barrel of oil than you can gasoline, and it's going to start to bite.
You see, with our lower taxes that increase in the cost of oil has translated into a huge "percentage" increase in our price of gasoline. This translates out as "time to do something."
With the enormous taxes on European fuel, the increase in the price of oil has translated into a much smaller "percentage" increase. As a result, it was much easier for the oil companies to kill biofuels. I don't have a clue why hybrids aren't taking off there.
Fun Fact kids! did you know if you harvested and processed corn using ethanol, that 7 out of every 9 acres would be used just to harvest and process all 9. Also to offset 20% of US gasoline consumption you would have to plant every inch of arable land in the US with corn and then you would still need 30 million acres. Oh my...
Well, that was certainly "Fun;" but, when do we get to the facts?
After allowing for the distillers grains, it takes about 8 gallons of ethanol to farm an acre of corn (about 675 gallons of ethanol.) That's what? 0.012 gallons (1,300 btus) of farm input per gallon?
As you can see from This Link,
http://www.ethanolrfa.org/objects/documents/1652/2007_analysis_of_the_ef...
the total btus used by the mill can be as little as 17,706 (nat gas plus electricity.)
Add in 6,500 btus for fertilizer, and drying the seed corn, and you get, what? 1,300 + 17,706 + 6,500 = 25,506 btus to produce a gallon of ethanol which can, within one percent, replace a 116,000 btu gallong of gasoline.
Looks more like a 4.5:1 deal to me.
And, no, I Don't have any farming, or ethanol company connections. And, I'm Not an Engineer. I just know how to read, and do simple math.
The math does not work out for me, sorry.
It takes 8 gallons of diesel to farm 1 acre, which is equivalent of 13 gallons of ethanol.
http://www.extension.umn.edu/newsletters/ageconomist/components/ag237-69...
the ethanol yield provided per bushel in your link is around 2.8 gallons per bushel.
Average US corn crop yield per acre is around 130 bushels/acre.
http://www.agriculture.com/ag/story.jhtml?storyid=/templatedata/ag/story...
so the average acre of corn yields 364 gallons of ethanol. It takes 13/364 = .036 gallons of ethanol to farm a gallons worth.
According to your info the average dry-mill uses 31,070 btu's per gallon, Thats from table 9 of your link..
I'll go ahead and use your fertilizer cost of 6,500 btus.
76000 btu per gallon of ethanol/ ( 31,070+(.036*76000)+6,500) ) == 1.88 EROI, also I'm sure this corn and ethanol is transported to a filling station somehow.
Also the average fuel economy of a midsize car in the united states is around 21 mpg and the average distance to a gas station is somewhere around 1 mile. so 1/21 * 124,000 Btu so 5904 btus are spent on getting to the gas station...
if you include that the ratio would be something like 1.64 and if you included those transportation cost it would be even lower.
How'd you get 4.5 to 1?
How'd you get 4.5 to 1?
Without auditing your calculations or following the links, it looks like:
(a) kdolliso is using best-in-class process energy efficiency, you are using average. This is legitimately arguable - technology only ever gets better, but not so quickly for a mature process with a large installed capital base, like distillation.
(b) He is blandly asserting that one gallon of ethanol exactly replaces one gallon of gasoline, which is Just Plain Wrong and always will be.
(c) Your driving-to-the-gas-station term is questionable - maybe I just drive past it on the way to work or some other value-adding activity. But it's a relatively small term in your calculation.
Cheers,
PUD
Saildog,
Plucky Underdog (below) has it exactly right. If you will notice my link shows at least one refinery (corn plus, in Winnebago, Mn, I believe it is) uses only 17,706 btus of nat gas, and electricity to produce one gallon of ethanol.
The average yield in the U.S. last year was 151 bushels of corn/acre. Remember, corn is cattle feed; and, anywhere from 33% to 40% of that livestock feeding ability is returned in the form of distillers grains. I used 33% to match the corn plus plant.
This gave me 675 gall/acre. I, also, used this number to calculate the amount of seed, and fertilizer that went into the ethanol.
I don't do Anything blandly. The below link is a test the State of Minnesota did using 40 identical pairs of cars. The bottom line was their cars only lost 1.6% mileage using a 20% blend of ethanol. The DOE states that you will, on average, lose 0.5% mileage using a 10% mixture. The New cars will do even better.
http://www.mda.state.mn.us/news/publications/renewable/ethanol/e20drivab...
Yes, cars get more efficient but that has nothing to do the eroi of corn ethanol. Also keep in mind the average life of a car in the US is about 16 years. Isn't that what they refer to as a red herring?
I don't understand your cattle feed calculation.?
the average yield last year of 151 bushels * 2.8 the gallons of ethanol per bushel = 422.8, far short of 675 gallons.. I don't know how you got this? could you elaborate.
New cars will do better with gasoline too, Also we never included the transportation cost of the ethanol from the farm and too the plant and from the plant to the refinery?
All this considered I still don't get 4.5 to 1?
If you could show me this id be glad to listen
Strewth! If you guys can't agree, what hope do we mere mortals have?
Sure, keep in mind: this is a real-world, for all practical purposes type calculation.
First: I used 2.96 gallons/bu. If you noticed in my link some refineries are reaching this level. I'm sure many, many more will be in the future.
Now, to the "Cattle Feed." Remember, almost 90% of all field corn goes to feed livestock, mostly cattle. This is a very important concept to keep in mind.
When you process a bushel of corn you get back 17.5 lbs of distillers grains. This is, for all practical purposes, corn with the starch, and CO2 removed. All of the vitamins, nutrients, and protein is still there. A ration that's 65% corn, and 30% dgs will actually yield 10% More weight on a cow than a ration with 95% corn.
For that reason, I, normally, figure that we've used 60% of the corn to realize our 2.96 gallons of ethanol, and retained 40% - .30 + .33(.30) of our cattle feeding ability.
*in the above calculation I used 33% instead of 40% because I knew that 17,706 btus signified that it was the Corn Plus Plant, and that they gassified some of their "syrup" thus cutting back, slightly, on the "feed" returned.
Anyway, let's take 3 gal/by (it's easier than using 2.96) and multiply by 3/2 (remember, we only used 2/3 of our corn for the ethanol) to get 4.5 gal/bu. Now, we'll multiply that by 150 bu/acre, and come out with 675 gal/acre.
Now, I adjust the tilling, planting, harvesting, and fertilizer production, and seed drying inputs accordingly; but I don't mess with the Refinery inputs since that process would never be undertaken absent the need to make ethanol.
Here's where I, really, take a "Liberty." I've given several links of real, honest to goodness, real-world tests that show that ethanol in ten, twenty, or thirty percent blends are basically mileage-neutral compared to gasoline. So, for a little "shock" value I used the 116,000 btu content of gasoline, not the 76,000 btus of ethanol. It's shady, of course; but, it's also "real-world" accurate, inasmuch as ethanol's 30% Higher Octane compensates where it really matters - at the gas pump.
Hi kdolliso,
PUD: He is blandly asserting that one gallon of ethanol exactly replaces one gallon of gasoline, which is Just Plain Wrong...
k: I don't do Anything blandly.
Calorific values at this link. You need to use the lower calorific value, i.e. with water remaining as vapor, to get the heat available to an internal combustion cycle (you're welcome). Multiply by density to get volumetric energy density. Strictly speaking you should adjust to exhaust temperature, but that's not going to make much difference. I don't know the mixing volume loss for gasoline/ethanol blends - anyone?
http://en.wikipedia.org/wiki/Calorific_value#Lower_heating_value_for_som...
Ethanol=28.9, Gasoline=44.4 MJ/kg
I'd be interested in your comments. Hint: "irrelevant" won't cut it. As SwordsOfDamocles says (paraphrasing), there's probably a lot of efficiency improvement to be made in mass-market IC engines, irrespective of fuel type, but those numbers aren't going to change.
Two questions. Is the electricity that is included in the 17.7kBTU energy input that you quote fully-burdened with generation cycle efficiency?
And, just out of curiosity - as a teenager, did you get whacked upside the head with a copy of Atlas Shrugged?
Cheers,
PUD
Hey, PUD
Read it when I was young; don't remember much about it.
I'm just interested in the "Real" World. BTUs don't mean a thang if you can't get the energy out. In the Real World you need Octane. Ethanol has gobs of it. 113 - 116, depending on how you measure.
Throw some compression to it, and you can knock gasoline's socks off. At low to medium blends you don't need too much compression to equal gasoline's performance. Two Links: First one on "Efficiency," Second on on EPA cycle test using midlevel blends.
http://www.methanol.org/pdf/ISAF-XV-EPA.pdf
http://www.mda.state.mn.us/news/publications/renewable/ethanol/e20drivab...
Again, a Hershy Bar has a thousand btus, or so; but you can't burn it in an ICE. BTUs, without considering Octane, is a worthless metric. In the "Real" world you can do as much work with ethanol as with gasoline.
Octane number, and therefore compression ratio, certainly affects thermodynamic efficiency, but if you aren't putting the energy in you aren't going to get it out. So ethanol is starting off at a disadvantage.
(Idle speculation) I bet you could dissolve Hershey Bars in fuel oil and run 'em through a Wartsila-Sulzer RTA-96. Which the manufacturer claims to be the most efficient non-combined-cycle prime mover ever made (almost 50%). Would probably need a total rebuild afterwards though. And it wouldn't fit in a car - 1820 litres per cylinder, up to 14 cylinders.
PUD.
PUD,
To support your argument, I have said elsewhere on this post that the compression ratio/efficiency curve is pretty flat by the time 10:1 is reached. At 10:1 its about 60%, at 14:1 its about 65%. The additional load on the piston rings and the shearing loss in the oil film of the crankshaft bearings, imposed by the the additional load, mean some of this thermal efficiency gain is lost through increased friction. No amount of compression ratio increase will make up for the reduced calorific value of ethanol, period.
If you're going to do ethanol and do it right I think this is how it gets done:
There has to be a practical method to produce ammonia using variable electricity sources. I think enough of Dr. John Holbrook's solid state ammonia synthesis that I filed a $952k grant application to Iowa's Power Fund and that same paperwork is being updated for use with the Massachusetts Technology Collaborative. This process takes in whatever water you've got handy and whatever electricity that can be spared and produces anhydrous ammonia, directly usable as a fertilizer or more likely being evolved to UAN for easier handling.
Boil ground corn in ethanol and what do you get? About six gallons of corn oil from the corn that'll go on to produce a hundred gallons of ethanol - they call this "fractionation". The corn oil biodiesel needs methanol ...
Ethanol production produces nearly perfect carbon dioxide - room temperature, room pressure, and no contaminants. There is a way to make methanol from CO2 and variable sources of electricity ... this I know because I can dial the phone of the inventor of the process from memory. Oh, another grant request to be written here now that May has rolled around - I'm trying to do one per month - drip, drip, drip - IPF has to fund something sooner or later :-)
If you can evolve methanol that is a good fuel in and of itself in addition to its use in biodiesel, but with small changes you can directly make ethanol from CO2 using similar methods to the methanol production. Increased yield is a good thing, goes double if you can use a variable source of electricity in the process.
Not addressed in this post are food security concerns (yikes!) the strong probability that cellulostic ethanol could entirely replace grain based systems, the straight up use of ammonia as a liquid fuel, the need for electrified rail to dramatically cut our overall driving, and the use of grain as livestock feed with the capture of waste and evolution of methane for fuel via biological processes, skipping the slow moving and fragile fermentation process.
It may also be possible to recycle some of the nitrogen, as well as potassium and phosphorus, in the cattle wastes.
CAFOS as currently configured may not be ideal for a return to the old manure pile, but perhaps something could be done, thus reducing the electricity or natural gas necessary to produce that N that corn loves so well. In addition, recycling P & K locally saves transportation and processing energy tied up in yearly shipments of those nutrients.
Very interesting point. It seems that states (governments) may be more prone to "get it wrong", and with wider consequences, with their top-down policies (e.g., US govt. subsidizing of ethanol, German govt. pushing solar given their relatively poor insolation), than bottom-up, grassroots efforts with tighter feedback loops on what works or doesn't locally. Europe's much higher gas taxes mean solutions are more in the hands of states; if they get it right, great. If not, wider problems.
Regardless of what Germany is doing with respect to "renewable" fuels, it does not matter a great deal because they have a decent public transportation system to fall back on. So, they are in a much better position than the U.S. to soldier on in the face of declining use of the automobile.
In the U.S., we are basically screwed as we are almost completely dependent upon the automobile.
When I lived in Germany, the car was, in certain circumstances, a convenience, but in no circumstances, a necessity. I spent my last two years there without a car and prospered mobility wise and financially.
Jes - biofuels are route one to self destruction. And in Europe we drive turbo diesels - I don't know what % - which do about 50 mpgs, 0 to 60 in 8 secs, and are already more efficient than hybrids.
And we pay huge tax on fuel - which personally I'd increase even more, but which in all probability will be reduced to combat escalating fuel costs.
I remember seeing somewhere that the majority of new cars are diesels, which probably means somewhere in the 30-50% region for diesels in the EU fleet.
Most seem to be able to do at least 50mpg on the combined cycle. Still waiting to see serial diesel hybrids which are probably the sweet spot in acceptability, if not price.
Is the move to diesel scalable? Isn't the ratio of diesel to gasoline from refining a barrel of crude more or less fixed? We are already getting diesel fuel much more expensive than gasoline. We may find that only a fixed percentage of transportation energy can be supplied by diesel. We have probably already reached that percentage.
Its a good point. I think that with oil production moving to heavier grades it might be possible to tune the crackers to produce more diesel relative to gasoline. Need to check with RR on this point.
Shell are promoting heavily their GTL technology that makes diesel from nat gas. Only problem is they do this in Qatar - and there as so many calls on that wee puff of gas it just won't last.
You could tune your cracker, but you are still pretty limited on the diesel. There are a number of steps you can take to increase diesel yields, but in a small range. The biggest factor in making diesel is in the crudes you choose to run through your refinery; some make a lot of diesel and some make a lot of gasoline.
In theory, you could build a refinery that produced a lot more diesel - at the expense of gasoline. You could run all the ligher molecules throught an FT reactor and build the chains. It wouldn't be very efficient, and it would be expensive, but in theory it's doable.
53% and rising, compared with less than 3% hybrids in the U.S.
Hybrids have benefitted from monumental hype in recent years (and don't get me wrong, I love hybrids and they're important step to PHEVs and EVs) but they have had next to zero impact on reducing oil consumption or reducing CO2 emissions. Diesels on the other hand, have made a huge impact in Europe.
"And we pay huge tax on fuel - which personally I'd increase even more, but which in all probability will be reduced to combat escalating fuel costs."
So Europe will lower taxes in an attempt to avoid destroying demand. Good luck with that.
We drove turbo diesels... Now common rail is doing the trick. Efficiency depends on driving patterns. In general hybrids make more sense with lower speeds & lots of congestion and comfort is better. Emission control for Diesel engines quite complex at Euro 5 / 6 level.
Full hybrids are a very complex and expensive in production. Scalability of production is a siginificant issue. Even Toyota is beginning to switch to mild hybrids (less weight and still reap most of the gains). Diesel-hybrids are not on the road (yet) and their efficiency in real world driving remains to be seen. (Diesel heavier than Otto & better performance at low rpms not necessary with hybrid). The Prius uses a Stirling engine running at optimal efficiency level and the electrical component ensures that the petrol engine is working at that level.
Good to have several options - but unless we bring weight down by at least 50% we will not be making significant headway.
Yerk
I think you are a little confused. Common rail refers to the fuel injection method ie a high pressure (2000 bar) fuel line with electronic injectors. The conventional method was a distributor pump running at about 900 bar for the bosch VP30 pump. Turbo charging can be (and these days usually is) applied to any diesel engine, regardless of the injection system. The advantage of the diesel engine is high part load efficiency due to no throttling losses and very high air fuel ratios. I don't think the stirling engine is used in the Prius. The Stirling engine uses expensive helium as the working fluid and reqires expensive nimonic alloys for its construction.
efficiency of diesel is caused by the higher compression ratio.
To some degree true. The higher compression ratio contributes but the efficiency curve is pretty flat even at 10:1 compression ratio. Spark ignition engines have to operate close to stoichiometric so have to throttle the intake. This causes a significant loss in part load efficiency. At full load, viz wide open throttle, the efficiency of a petrol and diesel are not that far apart.
Indirect injection engines such as the Peugeot XUD series have a compression ratio of 24:1. The Austin Rover Direct injection engine had a compression ratio of 17:1 in the turbo version and was 20% more efficient. The reason, thermal and pumping loss in the Peugeot's indirect injection engine versus the Austin Rover's direct injection. All modern diesels are now direct injection and operate at about 19.5:1 compression ratio. All are more efficient than Indirect injection engines operating at 24:1. The reason is direct injection has less pumping and heat loss. Inceasing the compression ratio also increases friction between the top piston ring and the bore, which is claimed to be about 70% of the mechanical loss within an engine.
Euan, I agree that biofuels - except sugarcane ethanol - have the potential of starving at least hundreds of millions. However, you should not equate using diesel with no biofuels: remember biodiesel. I give the following points certainly not to encourage the move to biodiesel but to show that the incentives to produce it are there.
- Soybean biodiesel has a more robust EROEI than corn ethanol.
- Soybean has lower fertilizer and pesticide requirements than corn, in absolute terms and even more when taking EROEI into account. "Per unit of energy gained, biodiesel requires just 2 percent of the N and 8 percent of the P needed for corn ethanol. Pesticide use per NEB differs similarly." (Quoted from the National Academy of Sciences recent report titled "Water Implications of Biofuel Production in the United States" at http://www.nap.edu/catalog.php?record_id=12039 .)
- Anywhere, diesel's availability is more critical than gasoline's. No gasoline means it will be a pain to get to the supermarket, but no diesel means there will be no goods in the supermarket.
- I remember reading that the investment costs for a corn ethanol distillation plant are three times higher than those for a biodiesel plant of similar capacity (no reference at hand).
Europe has higher taxes on gasoline than diesel. As a result the US exports diesel to Europe and Europe's excess gasoline gets exported to the United States. So the US now ends up having much cheaper gasoline than diesel.
China's demand for diesel is also driving up diesel prices in the US.
The problem with a shift of the US toward diesel: Where is the diesel supposed to come from? It is my impression that there are limits on how much of a barrel of oil can go toward creating diesel fuel. The US has to drive gasoline powered cars so Europeans can drive diesels.
If someone can correct me with authoritative information to the contrary I'd like to hear about it.
It doesnt matter what Obama / Clinton /McCain will try to do regarding tax holidays.
The tax is so little that, even if permanently reduced to zero, the raw cost burden will be directly passed on to US drivers to such an extent that the the price at the pump will swamp the tax reduction within months.
There is no way around this fact. The only thing US citizens can do is alter vehicle types , driving patterns and commutes as best they can while they still can afford to. Assuming that some can still afford to.
In certain respects, America is in fact more flexible and can switch quite quickley - look how unfashionable second hand SUVs have become.
In Europe, the tax is significant and so at least in theory, modulated reductions in tax take could be used as a tool to lessen the shock and after pressure from the UKpop on UKGov as seen last week this may happen. - If not outright reductions, then freezing the tax take as it stands.
Our respective societies will try our own different methods in our own different ways.
The question is: Will any attempts at mitigation be timely enough? Two years ago, we were just discussing this as if it were 'some time in the future'.
Now we are upt to our knees in the future...
The UK government and all European governments are utterly dependent on fuel and vehicle tax.
There is no way they can reduce rates, even as a proportion of total price, without going bankrupt or having to make absolutely huge increases elsewhere.
US taxes are different, and a cessation of them would mean that the already very poor condition of the highways would deteriorate further, as that is what pays for maintenance.
In any case, since the taxes are I believe in absolute dollar terms rather than proportional, falling mileage due to rising prices will mean that there is even less money to spend on maintenance.
You can guess how a tax increase to pay for adequate maintenance would go down.
Of the 40 billions raised from UK Motorists, only between 8 and 10 billion go onto road maintenance.
The tax is not hypothecated and just goes into the general coffers.
The problem is as always : wriggle room.
There is not enough because we are pretty good at blowing tax revenues on wasteful things. Mostly public sector types who are a client of this government and other things and people as well.
So, the ability to tweak pump prices is there in theory, but this will impinge on general taxation and the ability to fund the Client payroll of the UKGov.
So. Yes, you a right, but it will be to the UK's overall detriment in the medium term.
Now, if Fuel Duty and Road Fund Licence were to be hypothecated into a national rail and bus infrastucture revival, then life may be different. But pigs will sprout wings first.
But we have blown it all.
And
The addiction to prosperity crosses party lines. Malik, the Common Ground Collective, those rebuilding NOLA from the ground up speak of how it seems to be the biggest obstacle. The want to restore the wetlands - environmental restoration is part of their community rebuilding effort. Very sharp. The typical rank and file Democrat on dKos isn't there - not even anywhere close. I wonder sometimes if they are even on the same planet. 3/4 of them will turn fascist torturer when they can't find gas for their Outback.
Cutting the gas tax interests me because of the social effects. Cutting the tax isn't going to stop the degradation of bridges, roads and transportation infrastructure. In Maine, the funding has been shifted to some bonding and fees - primarily increased license and registration fees - but only on personal vehicles, not on the commercial vehicles where weight limits keep getting increased. Heavier trucks, less people driving them, less goods to move, wrong people paying the price, increase inequality, etc.... Everything makes that damned prosperity addiction worse.
And bonding/borrowing - ooops. Anyone reading Automatic Earth of late? It's like we've spent the capital on our balance sheet and now to maintain our current operations we are going to borrow. How far into negative equity can we go personally, collectively and environmentally? The dKos readership thinks we merely need to shuffle the CEO to get our prosperity back.
cfm in Gray, ME
I support higher gas taxes. And always have. That includes prior to any knowledge about peak oil. What I most am interested in today is the 'stick' applied to motorist to drive less (reducing ghg's and congestion) and the new revenue possible to support infrastructure improvements for alternative transportation.
As an SUV owner... a fill up for me is 15-17 gallons. Assuming an additional 10 cents per gallon over existing... the financial impact to me is $1.50 to $1.70 per fill up. That is nothing.
Based on how much I drive, which is approximately 6,000 miles per year of city driving... okay, I am getting only 12 mpg or so... the financial impact is only $50 per year. Or, about $4 per month (rounded). Even if someone drove x3 as many miles at the same level of fuel mileage... $150 per year or $15 per month is still very very small.
I wish there were politicians out there with the cahoonies to forward such an idea... a media not starving for sound bites from the public... and a public that was no so adverse to the smallest change.
I greatly fear rationing is in our future. Perhaps rationing could be introduced in concert with taxes. People could be alloted x amount of fuel, and that ration would decrease every year (I would base the reduction on twice the amount supplies decreased). However they could buy more if they paid some very high taxes (say 100%). I am very much in favor of giving the taxes back to those who invest in the infrastructure (say solar panels) needed to end our reliance on oil [as previously suggested here on the oil drum]. While not palatable, this would ease into taxes (especially if the initial ration was pretty high).
"I greatly fear rationing is in our future. "
I agree. If higher prices do not curb demand/consumption then shortages and rationing are next.
Todd
It's going to get ugly in the US. For over a century professional politicians have made careers out of pandering to the populace and telling them what they want to hear. Many good ideas have been stillborn because they represented political suicide to any politician who might espouse them.
The "politics as usual" infrastructure is not prepared for what happens when the old ways pass away due to reality's incursion into the status quo. It's going to get big-time ugly because there are no palatable solutions. What's needed is leadership and elected officials willing to tell the truth and present the alternatives honestly, with the country's best interests at heart and not their own careers. The chances of those kinds of leaders emerging are somewhere between zero and none. Sometimes I think I'm not cynical enough. The next 10 years should take care of that.
The US political system is dysfunctional, irreparable, and not up to the challenges that will be facing us. I dread thinking about it, but I see an authoritarian govt as the inevitable outcome of this very sorry story.
The US is increasingly becomming just another, corrupt, misgoverned 3rd world country. And the jingle keeps playing in the back of my mind: "Sooner or later, you'll have Generals"
WNC Observer "...I see an authoritarian govt as the inevitable outcome..."
Authoritarian governments require huge amounts of capital. Who was it that said: "Deficits don't matter"? I believe they do.
National Politicians are going to make a lot of noise but in the long run they will matter less and less. We need to quit looking to Big Brother for answers.
The question I'm asking is: How will we live in an economy that quits growing?
Actually, authoritarian governments dont always need huge amounts of capital.
Sudan, Zimbabwe, Burmah are good examples of low cost genocide and repression.
To make sure that low cost authoritarianism is possible:
1. 'Tribalise' - us vs them , black vs white, proles vs toffs (insert preferred enemy here)
2. Disarm enemy: Right to carry arms? -gone. Gun clubs / rifle ranges ? Gone. Ciizen Militia/ State or National Guard? - gone.
3. Kill enemy.
When asked why Japan did not invade California after Pearl Harbour, the prime minister of Japan retorted We would have been mad to invade a country where every man was armed with a rifle.
You can do low cost Authoritarianism. You just need to disarm your population in easy steps like the UK.
Mudlogger "You can do low cost Authoritarianism."
True but the U.S model of Global hegemony is expensive. All of the countries you talked about are local in the nature of their repressive activities. The U.S. likes to do things in a global way. Overthrowing and invading other sovereign countries is a big deal. Occupation is even pricier. Can't do that on the cheap.
We thought invading Iraq would be cheap.
Gee whiz? Who'd a figured!
If you are really lucky, you might get someone as good as Fidel Castro to run the place for the next 50 years. You might just learn to stay at home, look after your own people, and stop f**king with the rest of the world.
Cryptex- It might seem like a century, but I believe Ronald Reagan took office on January 20, 1981.
Thanks for the reasonable editorial, Jerome!
I have been called "rich elitist 'merican f*ck" for displaying a carbon tax auto decal http://www.cafepress.com/buy/carbon+tax/-/pv_design_prod/p_2815040.19126...
In the face of impeccable logic; and not a little tenacity from TOD and host of lesser organs, CERA have thrown in the towel and admitted all the stuff they have published to date is garbage.
'Paid for' garbage at that.
Have you got a link foir that quote?
I'd love to see it.
Reuters via Energy Bulletin today: http://www.reuters.com/article/idUSN0729188220080507
The rest of what he said is BS though.......
It's looking better and better for Simmons every day in his bet with Mr. Tierney.
I remember a lot of speculation from friends, acquaintences, etc. on how high gas prices would have to get before things would change. Most people said $3 or $4 a gallon. But I now believe people will buy oil as long as they can afford it, even if it is significantly painful. It's simply going to have to be unaffordable to destroy demand, and that means the price of oil is going up a lot more. You could easily have labeled the post countdown to $500 oil, or $1000 oil.
It's freaking me out - soothing myself with assurances that the rise in oil prices will be gradual is getting harder to sustain.
I agree that people will just go on paying for the moment. Remember we in the UK already pay over 8 dollars per US gallon. There may be some fall in demand elsewhere in the world but the price will have to go up a lot more before we in the west curb our driving based on the price. One of my work colleagues said yesterday, it is costing him 15 pounds a day to drive to work - but he is not going to stop.
There was a news item on the local TV news about petrol and diesel prices as bus fares are going up. One woman interviewed said she would stop using the bus and drive into Reading as the car park cost was now less than the bus fare - no understanding of the extra it is costing her to drive, she just did not make the connection.
At least I am no longer scorned as a Jeremiah when I say that I think prices are going to keep rising until there is a global recession.
But how many miles? Seems that the total expenditure would be about equal. I.e., if Europeans drive half of what Americans do, the effect on budget is equal. Any rise in the US would then actually be a larger net drain in the US.
So, what's the mileage differential?
Cheers
Well UK average mileage per private car in 2006 was 8190 miles, from Transport Statistics 2007:
http://www.dft.gov.uk/pgr/statistics/datatablespublications/tsgb/2007edi...
AA usually quotes 9000 miles per car average mileage.
Best I can do for US is 2001 EIA statistics where private car mileage is given as 11400:
http://www.eia.doe.gov/emeu/rtecs/nhts_survey/2001/tablefiles/table-a03....
Maybe a bit higher including minivans etc but cars are far the largest number.
UK mileage per car has actually been falling, as the total number has increased, total is now about 25 million (statistics show higher than this but some of these are company owned)
Average UK fuel consumption is usually taken as 30 mpg (25 mpg US) by the AA motoring trust, US average about 20 mpg US?
So not a huge mileage differential, 35-40% higher in the US say? Also higher per capita ownership in the US, but lower average income in the UK. I reckon this still means fuel is quite a bit higher as percentage of household income in the UK.
Its seems gradual from my point of view in Sweden:
http://www.spi.se/statistik.asp?omr=1&kat=1
The statistics is in year 2007 inflation adjusted SEK, top bar is tax, middle bar is petrol production cost and bottom bar is manned gas station revenue. The litre price recently passed 13 SEK / litre, a little more then $8 per gallon. (If I used the right gallon, I hate those funny units. )
The US and Europe, at the end of the Second World War, took radically different courses on energy prices. US, low taxes, Europe, high taxes. As a consequence, total energy consumption per capita in the US is twice what it is in the EU, and the EU, IMO, is better equipped to outbid the US for oil exports. It is interesting to see how crowded the roads are in Italy, with prices for fuel in the $10 per gallon range.
The logical trade in the US is an energy consumption tax, to be used for Social Security and Medicare, and some mass transit, offset by eliminating the highly regressive Payroll Tax. Both Boone Pickens and Al Gore have come out in support of some form of this idea (Pickens supported it before Gore).
WT
I find it interesting that the main "bullish" indicator is the shortage of diesel, I have a gut feeling that the Chinese might stocking up for the Olympics. This is not to say that the supply is so tight that the merest event seems to have large price consequences.
I also reckon if you chucked an Economist of a forty story building and interviewed them when they passing the fifth it would go like this "Nice petunia's on the 4th balcony I passed, almost clipped a railing ten balconies back but other than that there are no indications that we won't be fine for another 10"
Neven
WT
From where I am in the UK, the US customer can easily outbid the EU customer for oil products. This is where low taxes help you.
The 'disadvantage' of the US is the low pop density/distances.
You guys need these sort of transition cars:
http://en.wikipedia.org/wiki/Suzuki_Wagon_R
These are high [upright like an SUV/truckdriver], tiny [smaller than the photo appears], cheap.
Probably handle like a shopping cart though..
Nah, it's gonna be more like this.
http://www.n55.dk/MANUALS/SMALLTRUCK/smalltruck.html
This is also an advantage when you look at it. With lower pop density per arable acre than Europe we are much less dependent on long distance transportation to eat.
The flip side is that a lot of people will be working in agriculture in 10 years that wouldn't know which end of a cow to milk today.
r4, I believe we've reached PEAK BOVINE at the moment, better to know in 10 years how to plant soy with a no till drill 1/2" deep
The US and Europe aren´t that different. For instance Germany uses per capita roughly the same amount of IMPORTED oil as the US.
Germany imports the whole of its consumption, the US has its sizable domestic production capacity.
So I'd say they are quite different.
The main (sound) objection to replacing the FICA tax with a carbon tax (tax shifting) is that once fossil fuel use is reduced, the revenue goes away and the stability of social security is endangered. Since social security is under constant political attack from the right, it would be better to leave it alone.
To me, rationing makes much more sense. If the rations are tradable, it is also anti-regressive. If one is concerned about FICA being regressive, it is always possible to increase the earned income credit. You need to look at the whole income tax to decide if it is regressive or not.
Chris
mdsolar "...the stability of social security is endangered..."
Are you serious? If you think that the only thing Peak Oil is going to hamstring is our ability to continue the American Suburban Drive-in Utopia then you need to take a long hard look at the National Debt. The U.S. with the loss of the economic growth paradigm is insolvent. Like any other Pyramid Scheme - When the players at the bottom of the Pyramid stop joining it is:
Game Over! Tilt! Thanks for playing! Better Luck Next Time!
If you take the premise that Social Security will not survive* Peak Oil (among most other social programs) what do we do in the absence of Social Security and Medicare?
*Of course you have the option of being optimistic and keep putting quarters in the machine just on the chance that it could pay off. I worked in the gaming industry long enough to realize that without a steady supply of fools we would have been out of business in a week.
Social Security + Medicare, as well as any other pension program in the world, mean basically that the working generations give part of the goods and services they produce to the retired generations. Because these programs do not create wealth, just move it around.
And since the working generations are the children and grandchildren of the retired generations, you can look at the underlying fundamentals just by thinking that there is no Social Security and Medicare and that retired people live from what their children and grandchildren provide them with, and asking, in that context, what you and your wife will be able to provide for your parents and grandparents after Peak Oil.
This is a generic problem with governments and taxation.
There is a built-in conflict of interest - minimising the "bad" behaviour that they are taxing vs maximising the tax revenue.
To my cynical eye it appears that the latter always takes precedence.
Phil
Sin taxes do have that difficulty. One way to do it is to be sure that whatever the revenue is needed for is no longer needed when the revenue dries up. So, if a tax on drinkable ethanol is put towards free health care for liver disease then there might be a balance.
Taxes to support things like the common defense, social security, infrastructure held in common and such should not be sin taxes since it leads to the conflict you raise.
Chris
WT "eliminating the highly regressive Payroll Tax"
Energy consumption tax. If you are a low wage worker getting to work and around town is a large percentage of your income already. If you raise taxes on gasopline useage rich people don't care because even at $10 per gallon it is a small percentage of their income. But someone of modest means who is forced to drive an older inefficent car (because they con't afford a Prius) and live farther away from employment becuase of economics will be devastated.
In LA in an effort to raise capital they are converting ride sharing lanes to toll lanes. I can already see all of the BMW's passing up the schmucks in Explorers who have to sit there breathing $10.00 a gallon fumes because they can't afford the toll.
IMO any attempt to mitigate the problems will only make the problems worse. Whatever elitist F**ks like Gore and Pickens have to offer is total BullS**t!
You need to check your payroll statement and see how much in payroll taxes (FICA) that you pay. Your employer pays the same amount (up to the cap for Social Security, unlimited for Medicare). In any case, higher energy prices are coming no matter what.
Jerome
It's a tough gig. Trying to sell higher taxes. We have a fuel tax here in Australia (about US$0.36 per litre) however there is continuous pressure on government to have it reduced. With the pain families are currently experiencing from a number of fronts, I fear that some "bright" politician may attempt to make a name for themselves by publicly advocating the removal of the tax. Such lunacy is the bread and butter of politics.
Family First Senator Fielding has been doing it for a couple of years. I have written to him, but I do not get the courtesy of a reply.
Canberra, by design (like DC in the US) is divorced from reality. Apart from a couple of Greens, nobody, in either of the major parties at a Federal level, has demonstrated a grasp of PO and what it means.
The 2020 BS session didn't even mention energy in the context of constraints - in fact the "sustainability" group was loaded with shills from the coal industry arguing that Australia must increase CO2 emissions!
Nothing will happen until it hits them in the face. Then they will run around like a the bunch of headless chickens cooking up plans to convert cars to LNG and other useless initiatives like Howard did. As we like to copy the US we are also governed only in two modes: complacency and panic.
SailDog "Family First Senator Fielding has been doing it for a couple of years. I have written to him, but I do not get the courtesy of a reply."
Do yourself a huge favor and ignore politicians. When we listen to them it only empowers them. Trust me, those self-serving dead-from-the-neck-up parasites don't have any answers and any notion that they've got a fix for the fix we're in is a huge part of the problem.
The faster the current system collapses the sooner we can get on with the real business of living in a shrinking world.
Living Large In A Nation Of Nitwits
Demand will be destroyed at some point, one way or another. Many of us chose to do our own personal demand destruction years ago. For me, it started in 2002, when I bought my first hybrid. Anyway, as long as demand is going to be destroyed, we can choose to send our dollars to the government or choose to send our dollars to foreign countries, including those in OPEC and others. Instead, we get these insane schemes to lower taxes and, thus, send even more money overseas.
We're almost there. The Kaiser Family Foundation poll that came out at the end of April listed gas prices as the number one economic concern for people living below the median household income in the U.S.:
Problems Experienced as a Result of Changes in the Economy,
by Household Income
Percent saying each was a “serious problem”
Problems paying for gas:
<$30k, 63%
$30-$75k, 43%
>$75k, 27%
The number one use of George Bush's stimulus check for people living at or below the median is going to be filling the gas tank. The stimulus check will fill up people's gas tanks through the summer, with the caveat that it will also drive up gas prices even further.
Basically, the stimulus check is going right to the oil industry.
You say the stimulus check is going right to the oil companies. That wouldn't be too bad if they were our local investor owned IOCs. But with about 2/3rds of our oil imported, much of the stimulus goes overseas. But I suppose with the continuing collapse of the dollar, and of housing, it will come back in the form of Arabs buying up our realestate at rock bottom prices. Soon we will be paying rent to them.
tstreet Gee...somebody gets it!
This seems like one of the GEICO commercial moments when we need a celebrity to interpret what this actually means.
I have despaired of the current system being reformable. It's not. All of this relentless activity to stave off collapse is only going to make the paradigm shift that much harder.
The sooner the collapse occurs the better for all concerned.
I am hoping for shortages. Rationing can price increase can be manged by decision makers to avoid hitting their needs. Shortages hit everyone.
The problem with the price increases of the last 3 years is that policy makers have avoided consequences.
I am recommending that everyone plant a garden. Shortages might escalate beyond control.
We'll have neither.
We Will have quite a bit of price escalation over the next few years. However, we're bringing a new ethanol refinery online every couple of weeks; and, there must be more than a dozen "serious" cellulosic startups going from financing, to pilot, to demonstration plants, as we speak. Also, quite a few outfits are getting closer, and closer to some sort of "workable" Algae/biodiesel process.
Hybrids, with a, what, $3,500.00 tax credit, are now 3% of new auto sales (with a bullet.)
The new "flexfuels" that start coming out this year will be revolutionary in their ability to deliver great mileage, and good fuel economy from very small engines.
Nah, it's not going to work out like some "doomers" think. It's going to work out pretty good, really.
Ethanol in all its forms is deeply unsustainable. It is really just a method to strip mine the top soil. Anyway its energy contribution is very low.
Algae is the only theoretically possible solution, most likely through a BTL process (not biodiesel), however it will not scale very quickly.
Not sure what you mean by flex fuels. Hybrids - life cycle energy costs are too high.
Nah. I think there is a problem.
Saildog, I'm going to try to figure out how to be polite, here; but, if you don't even know what flexfuels are, well . . . dang, man, you've got some reading to do.
See my comment, above, regarding energy inputs, and outputs.
Flexfuels - refers to vehicles, not a type of fuel (I thought that is what you might mean). Red herring.
Not a Red Herring, at all, Saildog.
The new generation coming out with Variable Valve Timing, Direct Injection, and Variable Ratio Turbos will not only not only give more hp when running ethanol, but should be able to suck a little exhaust gas back into the cylinder during the 3rd stroke (thus allowing for higher compression w/o squirting in more fuel) and deliver better mileage with alky vs gas.
This does away with the primary objection to ethanol (ie. that to get good mileage you had to downsize to the point that the engine didn't have sufficient power when running gasoline.
We'll be replacing Over 10% of our gasoline with ethanol in just a couple of years. That will make a Big Difference in our Magnitude of Pain at the Pump.
It's, already, estimated by Iowa State University that we're saving between $0.29, and $0.40/gallon on our fillups.
http://www.card.iastate.edu/publications/DBS/PDFFiles/08wp467.pdf
That's probably between $435.00, and $600.00/Yr for me.