Would Americans Pay Even More For Gas?
By amba | Related entries in Economy, ElectionsEven if they knew that they would be paying less in payroll taxes?
I’m watching “Late Edition” on CNN this morning, and even though Osama has issued a new tape and Iraq has chosen a new PM, the loudest clamor is about the high price of gasoline (now $2.90 for a gallon of unleaded regular on the national average; over $3 in California and several other states). How mad as hell it’s making the voters; how it’s the chief factor driving Bush’s approval ratings into the basement; how the “Democrats are eager to exploit [the] anger.” Ted Kennedy and Colorado Rep. Mark Udall have co-sponsored a bill that would take back tax credits from energy companies. Wolf Blitzer asked Sen. Arlen Specter whether he would favor imposing a windfall profits tax on the oil companies if they refuse to bring down prices.
In the midst of all this, John Hellemann, in his New York Magazine article on the hypothetical no-bull “Purple Party” candidate, proposes:
Tax gas. As Cornell economist Robert Frank has argued, imposing a hefty new tax on gasoline�$2 a gallon, say�would produce manifold benefits: “significant reductions in traffic congestion, major improvements in urban air quality, large reductions in greenhouse gas emissions, and substantially reduced dependence on Middle East oil.� The Washington smart set dismisses this idea as politically impossible. A new tax? God forbid. But, as Frank suggests, the proceeds could be refunded to voters in the form of lower payroll taxes�and with that twist, the idea has even been endorsed by anti-tax zealot Grover Norquist.
Tough-talking candor, or political suicide even before the hypothetical new party is born? Has Hellemann just administered the political equivalent of RU-486? Europeans, of course, have long paid more for a liter of “benzine” than Americans pay for a gallon. But sometime during the 20th century, the Declaration of Independence itself was amended to read, “that we are endowed by our Creator with certain inalienable rights, that among these rights are life, liberty, the pursuit of happiness, and cheap gasoline.”
As road movies and rock’n'roll attest, the automobile IS our declaration of independence, for good and for ill. It has become the embodiment of unfettered liberty and the pursuit of happiness at 75 miles per hour. If only a sinner can preach, I am qualified. I am an addict. I’m never happier than when driving fast with the radio blasting; I feel a surge of power and freedom the moment I get behind the wheel. Yet every once in a while, I look around and realize that this conveyance we so love, like a drug, has ruined our lives.
It has sealed us up, often alone, in lavishly provisioned bubbles of plush, glass, and steel that both embody and reinforce our extreme, isolating individualism. It has destroyed our patience and with it, our charity. Whisking us through miles of featureless landscape brimming with overlooked detail, it’s starved our senses while it fattened our behinds. (Were we trained for the TV and the computer screen by the windshield?) It’s turned many of our roads into desolate strip malls, and our suburbs into sterile bedroom communities without the enlivening influence of local commerce. Worst, because our entire lives are now physically structured around the automobile, most people can’t get to work or to shop without it. It’s this dependency — not chosen, but literally built into American life — that makes high gas prices so financially crippling to millions for whom driving is rarely fun and not remotely discretionary.
We need a 12-step program to wean ourselves from addiction to the automobile (not even to begin to mention petroleum-based agriculture and industry), and we are very far from having one. Slapping a high tax on gasoline would not only be political but economic suicide unless coupled with proportionate and simultaneous payroll tax relief (short-term) and a serious commitment to mass transit, alternative energy, and new kinds of community planning and design (long-term). The alarmists of “Peak Oil” spin scenarios of the massive, traumatic transition to a slower, harder, and simpler American life that will be inescapable if and when oil becomes scarce and/or prohibitively costly. To us, right now, that reads like science fiction — at once scary and oddly appealing, but safely hypothetical. Is it? Right now, the oil pipeline is the aorta of our civilization, and Islam is holding a knife to it. This is only one ironic price of the “independence” we declare every time we climb behind the wheel.
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April 23rd, 2006 at 2:50 pm
I’d be for it, but with a well-thought-out set of safety nets and reliefs. When a lot of us urban East Coast types — me included — think of the oil addiction, the first image that comes to mind is that Hummer with one occupant circling and circling in the mall parking lot to find a space less than 30 feet from one of the doors.
But what about the rural doctor? The farmer? The inner-city family who buys fresh food that has to be trucked in from hundreds of miles away?
April 23rd, 2006 at 4:31 pm
You beat me to it, Cal. Here are a few quick other thoughts off the top of my head.
Offsetting the gas tax with some sort of payroll tax-cut might work, but I still have to wonder if consumers still wouldn’t have more dollars walking out the door overall due to the added costs of transport, etc. It’s possible that there’s no way around that.
I truly believe there’s no cheap or painless way out of our energy problem. Hybrids help, although I think they’re not as helpful overall as sometimes stated because we tend not to take into account energy and other costs associated with their manufacture and battery disposal etc. etc. Ethanol from corn is sort of a joke because it takes so much energy to produce. Sugarcane as a source for making ethanol would be much better in that regard, but of course we don’t have vast tracts of the Midwest planted in that.
The bottom line is that sooner or later, the piper has to be paid. Higher prices may be the only thing that forces us to get serious on a whole lot of levels. Insulating the American public generally from the bite may be counterproductive in terms of the long-haul goal, since it’s the bite itself that’s supposed to bring about change in behavior. (And if it doesn’t, I’m not sure what else will, outside the crisis we’re actually trying to stave off or at least delay.)
Still, there are the issues that Cal raises … how DO we deal with those people?
April 23rd, 2006 at 6:43 pm
reader: You don’t. You let the market do it. Yes, food becomes a bit more expensive, and yes, rural people end up paying more for gas. Any time you muck with taxes, there are winners and losers. Those that drive the most (or otherwise indirectly consume fuel) will have the most reason to change their behavior. Isn’t that the point?
April 23rd, 2006 at 7:16 pm
Tom, my only objection is this: it’s not just rural people paying more, it’s all the middle class metro area residents in Exurbs not being able to afford to drive into the city anymore from their home 50 miles out. Who pays for the unsustainable landscape when public policy practically encourages building further and further away?
If Americans weren’t so braun-over-brains, we’d be putting improvements in engine technology into fuel efficiency rather than more and more power.
I wrote about this recently.
April 23rd, 2006 at 7:45 pm
As the conversation so far intimates, but doesn’t state clearly a big problem is not simply the addiction to oil but the massive systems that have been built with cheap oil in mind. The Kansas City metro area is a perfect example. Mass transit is limited, doesn’t cover the whole area and doesn’t run 24/7. The distribution of jobs virtually requires that you have a car or face limited options in your job hunt. Even at that you still have people with limited economic resources who can’t get a job if they don’t have a vehicle. Whether or not you have a car to get to work is a very common question in a job interview.
April 23rd, 2006 at 9:57 pm
I agree with Jim S. regarding KC, and I suspect there are similar problems in many cities. Two words: urban sprawl – but that’s a whole other show.
Maybe the market will correct this problem over time, but that will not happen without casualties (i.e. – poor, middle class, rural, etc. people are going to suffer).
The other thing is, I think the oil companies made record profits (not just income, but PROFITS) this year, while we are all paying out the butt for gas (see Justin’s post below this one). That is sketcheroo, and it sucks the big one. I am not a fan of the corporation in general, I will admit, but maybe it’s time to do some more regulation and/or change to state-run oil companies (don’t shoot me!). For that matter, what about state-run operations for all energy, instead of it being privatized? (really, don’t shoot.) I do realize that would require efficient, competent and honest government, which is hard to come by these days, but it’s a thought. I do not trust these corporations to be in charge of our energy issues anymore.
April 23rd, 2006 at 11:59 pm
JP: Good post.
April 24th, 2006 at 10:36 am
[...] Donklephant asks if Americans would pay even more for gasoline. [...]
April 24th, 2006 at 12:45 pm
In addition to “rural people,” it’s an issue for everyone who is self-employed (i.e. running a small business) or otherwise not on anybody’s payroll. Or retired and living primarily on the interest from their Savings Bonds.
And if “payroll tax” is just a code for FICA/Social Security and Medicare taxes (I haven’t read all the details yet, obviously), this looks like just a way to make those programs go into financial meltdown faster. Which may be a non-issue, but ought to be explicit in the presentation.
April 26th, 2006 at 1:19 pm
Kudos to Amba! Imagine how much better the country would be today if the nation had started taxing oil and gasoline twenty years ago at progressively higher rates and used the proceeds to reduce payroll taxes. America would be a lot less dependent on oil, our cars would be more fuel efficient, there would be better mass transit systems and more people riding those systems. Average Americans would be far better off. And so would the country.
The same is true today: America would be better off in the future. It’s common sense. Why should we tax work at higher rates and our consumption of gasoline at lower rates? Payroll taxes are not merely regressive, they also serve to discourage employers from hiring and workers from working. Workers would receive offsetting relief in their paychecks. To the extent that retirees would pay more for gasoline or othe products, they would be protected by cost-of-living adjustments.
May 31st, 2006 at 11:55 pm
I don’t think, this is completely on topic. But it may hold an interest to some of you.
Why is it, that people think : that oil is needed to run a combustible engine.
Most Likely – because the American people, have been indoctrinated to think this way.
Why is it : that the formula for gasoline, has always been considered an : Industrial Secret.
Why is it : A government agency doing an investigation. Into the possible illegal activities of the oil industry.
Concluded the investigation saying : ” They had found nothing wrong.”
What they didn’t say was : ” Since the formula for gasoline is an : Industrial Secret.
They could not make a competent, intense and complete investigation.
Therefore : They could not come to a conclusion.”
That government investigation committee : Did nothing more – than to echo.
What they had been instructed, to say.
(Telephone conversation with an oil executive – 2003)
Question : Why are oil prices so high?
Answer : I don’t know. We don’t set, the price of our oil. A committee in Texas, tells us the price, we will charge for our oil.
If we don’t charge the price we are told to. The big guys, will put us out of business.
Question : What is the cost, to refine oil?
Answer : The cost is very minimal.
Question : How much does it cost, to pump oil, out of the ground ?
Answer : Oil is not pumped, out of the ground. They use steam, to force the oil up, out of the ground.
Question : I don’t understand, what do you mean – ” force the oil up, out of the ground?”
Answer : Steam is forced – into the ground. The steam – being as hot as it is. Turns that oil sludge, into a thin liquid.
Because the steam, is heavier than the liquid oil. It forces the oil up out of the ground.
Have you ever seen a news clip. Where a valve is opened and water runs out?
That’s – the steam condensed back into water.
Question : Then what is the real cost, of getting oil, out of the ground.
Answer : The cost is next to nothing. Think of ocean oil riggs – plenty of pressure – plenty of water – plenty of natural gas.
Free for the taking – The cost is next to nothing.
Question : On the news media. Why do we always see, these Texas oil riggs pumping oil?
Answer : That’s just propaganda. Given to the news media. In order to be feed, to the American people.
This makes people think, that there is a high cost, to get oil of the ground.
The real cost is next to nothing.
Question : Is there really an oil shortage?
Answer : There is no oil shortage or crises. They got more oil, than they know – what do with.
The only oil shortage occurs – is – when they turn off the valves.
As far as I’m concerned : There never – has been a oil shortage.
There never will be – an oil shortage.
Question : How much should a gallon – of gasoline cost ?
Answer : Silence ………. (The telephone conversation now turns, to a different subject matter)
——–Read On ————-
In 1917, A man named : John Andrews approached the US Navy with his claim that he could convert fresh or salt water into a fuel with the same power as gasoline. The chemical costs were about 2 cents/gallon.
Andrews was allowed to demonstrate his invention at the Brooklyn N avy Yard, where a motor boat was fitted with a dynamometer for the test. Commander Earl P. Jessup, who was Captain of the yard, said:
“We gave Andrews a bucket of water drawn from the Navy Yard [fresh water] hydrant by one of the yard attaches. He got into his car with a gallon can which we inspected and found to be empty and a little satchel he carried with him. In about a minute he handed out the filled can which I personally carried to the open fuel tank. While pouring the liquid into the tank, Andrews held a lighted cigarette close to the liquid, which did not ignite. That showed it was not gaseous or inflammable at that part of the demonstration, which to me was most important. The engine caught just as quickly as it would have done with gasoline, and after a moment’s adjustment of the carburator, it settled down to its work, developing 75% of its rated horsepower, a remarkable showing with any fuel with so slight a readjustment of the carburator”.
In a second test, Andrews was put in an empty room with no possible way to get rid of the bucket of salt water with which he had been supplied, except to empty it into his one-gallon gas can. Commander Jessup said:
“In a minute he emerged with the can filled, and the engine again used it up, no difference being noted between the salt water and fresh. Besides myself, Rear Admiral G.E. Burd, the Industrial Manager of the yard, was present and with the precautions we had taken — our own Navy engine, tank and carburator and our own men supplying the water — there was no possibility of deception.
“From a military viewpoint, it is almost impossible to visual”ze that such an invention means. It is so important that we have hurried an officer to Washington to make a report to the navy Department. It is obvious that Andrews has discovered a combination of chemicals which breaks down water to a form that is inert until mechanically vaporized by the carburator, when the spark causes it to burn as gasoline burns”.
Walter Meriwether, the Navy editor of the New York World, met with Andrews at his home in McKeesport, PA. Andrews was extremely paranoid. He said:
“Somebody poisoned my watchdog last week. The only reason my dog was poisoned was so somebody could get at me more easily. I am being followed everywhere, day and night. A lot of people know about my invention — how it will put every oil company in the world out of business. Two cents a gallon for a substitute as good as the best they can refine? I tell you, my life is not worth that [snapping his fingers]! Think of what my invention means to nations at war”.
Meriwether offered to arrange for a thorough test of his invention with the Navy Department in Washington DC, and Andrews accepted his help. Meriwether managed to arouse the interest of Secretary Josephus Daniels, who said:
“Tell the man to come on at once; I will have a submarine and airplane detailed and ready for him on his arrival”.
Meriwether telegraphed Andrews, but received no reply. He returned to McKeesport, but Andrews could not be found. Meriwether then accompanied the police to Andrews’ home, where they found signs of a violent struggle in the ransacked house. No trace was found of Andrews.
But Andrews had not been kidnapped or murdered; he had simply reported back to his seaman’s post in the Canadian Navy. He returned to the USA in the 1930s. In 1942, a reporter named James Kilgallen found Andrews living on a farm near Library, Pennsylvania. Andrews said that he had forgotten the formula.
Another version of the Andrews mystery states that he was found murdered in his home in 1937, and all of his notes and supply of green powder were missing. His sister allegedly took the notes and fled to Scotland, where she too was murdered only a year later. The eminent journalist Tom Valentine, who has written numerous articles about suppressed technologies, once received a phone call from a man who claimed to be John Andrews, Jr. His innuendos could not be proven, of course:
“My aunt was killed and then some of my relatives suddenly got rich and I believe the process for making the powder is known and the people who know are the Phillips Petroleum Company”.
The next person to demonstrate the conversion of water to fuel was Guido Franch, a former coal miner who tried for nearly 50 years to find financiers for his product. He too used a green powder to turn water into 105-octane fuel. He called it “Mota”, which is atom spelled backwards.
Franch demonstrated Mota hundreds of times, but never produced it commercially. He did, however, sell about 3000% of his rights to interested investors. In 1973, Franch was subpoenaed to appear in Chicago’s Federal Circuit Court “with any records relating to the purchase or the proposed purchase of any fuel, fuel powder, or fuel formula in your possession”. He demonstrated his Mota transmutation in the presence of judges William Bauer and Philip Romiti, who believed what they saw, and Franch was acquitted of charges of fraud.
The fuel is produced with one pound of the reagent in 50 gallons of water. It burns clean and leaves no residue. In one demonstration with a lawnmower, it ran for about 15 minutes on a small amount of Mota-treated water. An equal amount of gasoline lasted only 3 minutes. Mota fuel is very sensitive to sunlight, which will turn it back to water with a white powder residue.
Gary Bolz, a consultant on carburetion and fuel engineering, was able to test Mota with the help of chemists at Michigan State University and Havoline Chemical Laboratories. Bolz stated:
“The granules are dark olive green. As they enter water, they dissolve in a string of green, which begins to spread fiber-like throughout the water. As the water begins to react, there is a swirling effect. Reaction is complete in a few minutes. If the crystals are mixed in 1:1 ratio with water, the resulting fluid is highly explosive and can be detonated by a small shock. But it isn’t shock-sensitive when mixed at a normal ratio of one ounce of powder per half gallon of water. The finished fuel is lighter than water”.
Franch claimed that the manufacture of Mota was taught to him and others in 1925 by a German scientist named Alexander Kraft, who died in 1941.
Franch received about $100,000 from small investors over a period of 40 years. He used that money to live on, and never manufactured any Mota. He received several serious offers from major investors, but his financial demands were unreasonable and nothing practical ever came of his demonstrations and negotiations.
It appears that we are obliged to continue burning gasoline until some genius rediscovers the secret of extracting green crystals from coal.