Motion for a Recess » gas

Learn to Love High Gas Prices

cshenoy — Tue, 03 Jun 2008 05:24:06 +0000

In a previous post, I advocated increasing taxes on gasoline to wean our country off oil and start spurring up interest in public transportation or alternative sources of energy. At the time, Hillary Clinton and John McCain were pushing for their own (failed) gas tax holiday plan. Most economists and policy wonks (as well as any person who possesses logic) thought it was a joke. Nonetheless, it seemed that calling for a higher gas tax would incense Americans who are already struggling with higher food costs. But as gas prices are on the rise, more and more people are recognizing the need for higher gas prices.

Economist Greg Mankiw published an article in the NY Times yesterday mostly dealing with the notion to decrease corporate taxes from 35% to 25%. Doing so would, of course, result in lower government revenue and a bigger deficit. So Mankiw conceded:

Indeed, if we increased the tax on gasoline to the level that many experts consider optimal, we could raise enough revenue to eliminate the corporate income tax. And the price at the pump would still be far lower in the United States than in much of Europe.

Don’t laugh. I’m serious.

Then again, think about it. With higher gas prices will come the need to innovate and create sustainable energy sources. Once these are developed, our interest in the Middle East is all but dwindled. Why do we need to be friendly with some of these hostile nations if they have no leverage? The only need for us to deal with them would be to protect Israel’s livelihood. Even Venezuela fits into this scheme.

There are many other reasons to love high gas prices.

$8 a Gallon Gas

cshenoy — Fri, 02 May 2008 07:30:05 +0000

Eight dollars. That’s about the average price of a gallon of gas in Europe. More than double our current prices. I’ve heard this before and now it feels pertinent to talk about when comparing to our current situation. But it seems like Europeans, for the most part, are fine with what they pay (unlike most Americans). It doesn’t cost more to produce gas in Europe than in the US. The reason for the markup is a result of government levied taxes, funding various initiatives such as health care and public transportation. Studies show that taxation has been the primary cause for reduced oil consumption. While US consumption has grown about 21% in the last decade, our European counterparts have seen stagnant or reduced consumption.

As much as I don’t like government intervention with certain policies, I feel this is a pressing matter that needs to be addressed. There are two options to choose from: we can either start passing legislation that increases fuel economy or we can increase the taxes that we pay on gas. Either way, some action is needed to curb our growing hunger for oil so we can fund public transportation projects or invest in alternative energies.

Graphical Representation of Worldwide Fuel Economy

The Gas Tax Repeal

cshenoy — Thu, 01 May 2008 07:35:04 +0000

The federal excise tax on gasoline has been the cause for major buzz in all the presidential campaigns recently. John McCain and Hillary Clinton are proposing a temporary lift on the tax (an 18.4 cent one, mind you) for the summer so that a partial burden is lifted off the American people’s shoulders. Seriously? Barack Obama, who seems like the only candidate to understand the difference between political expediency and forward-thinking policies, has spoken against this repeal saying it does nothing to curtail consumption. And most economists agree.

Thomas Friedman writes:

This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.

Paul Krugman provides us with a quick lesson in economics:

The McCain/Clinton gas tax proposal comes too late for that. So it’s Econ 101: the tax cut really goes to the oil companies.

Lovely. So two of the three potential presidents are supporting a plan that does little to help us, if not hurt us. What I don’t understand is what their economic advisers are actually advising them with. I understand that politicians want quick fixes that seem to help out average Americans while overlooking the long-term effects but when economists and like-minded individuals unanimously agree that its a terrible policy, why keep pushing it?

Me, Myself & Gas Prices

cshenoy — Wed, 30 Apr 2008 06:21:25 +0000

Hulu is great. I just watched Me, Myself & Irene on it for free with only 12-second commercials (about 5) interspersed throughout the movie. One thing though that caught my attention in the movie was a particular scene. See if you can see what I can see…
Yup. A gallon of unleaded gas was $1.13 in the movie which was filmed back in 2000. The national average is now $3.60 (in the Bay Area it’s at $3.90 or so). That’s more than a tripling in price in less than 8 years! What I wouldn’t do for those prices once again.