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Saturday, June 7, 2008

How to pay the Arabs less for gas

Here's one idea: Tax the heck out of it.

Comments (28)

Now we've heard for a call for this idea from both the liberal side (Thomas Friedman) and the conservative side(Charles Krauthammer).

Actually, this is an idea which has been floating around for awhile. At least since the beginning of the Clinton administration.

I recall Neil Goldschmidt floating something similar when he was Jimmy Carter's transportation secretary. I think the price point/floor was a buck a gallon.

If you want less of something, tax it.

But don't miss the point and purpose and that to get us out of cars, electric or otherwise.

Here's another novel idea: allow the United States to NOT be the only country that isn't allowed to tap its own resources. Every barrel we extract from our own wells is one less we are paying the Arabs for.

Maybe. More likely it winds up in the global market, which doesn't help us much.

I'm (obviously) no expert, but does anyone know why our government can't establish its own wells and refinery strictly and exclusively to stock the strategic petroleum reserve?

At the current rate (until suspended in May) of 70,000 barrels per day we were putting into it, that - at $130 per barrel - comes to $9,100,000.00 per day, or nearly $3.5 billion per year we are paying to foreign countries for their oil just to stock our reserve. Maybe it wouldn't effect our price at the pump, but at the very least that is a sizable chunk of cash not going into the coffers 'hostile' governments.

But there's good money in refining it here and selling it elsewhere. It doesn't matter how much we produce domestically, the fuels are global commodities, and they're going to end up going where the willing buyers are.

Krauthammer: At $4, it is a world transformed. Americans become rational creatures. Mass transit ridership is at a 50-year high. Driving is down 4 percent. (Any U.S. decline is something close to a miracle.) Hybrids and compacts are flying off the lots. SUV sales numbers are in free fall.
JK: Why is any of this (except, possibly hybrids) a good thing?
* Mass transit merely has the other taxpayers pick up 80% of the cost. It is slow and inconvenient. Why is this good?
* Driving down 4% means, as part of that, people not being able to do things, go places or take the vacation that they wanted to. Why is this good?
* compacts are small and therefore less safe, other things being equal. Why is this good?
* Why are less SUVs a good thing?

What he misses, is the fact that high prices bring in new supply. Coal to oil conversion is now price competitive as is tar sands. At some point these will ramp up supply and provide a price ceiling - probably around $60/bbl. Of course the other cause of high prices is the government’s blocking of drilling.

Krauthammer: Remember that "love affair" with SUVs? Love, it seems, has its price too.
JK: It’s not love, its utility.

Krauthammer: You want more fuel-efficient cars? Don't regulate. Don't mandate. Don't scold. Don't appeal to the better angels of our nature. Do one thing: Hike the cost of gas until you find the price point.
JK: Or, you could choose freedom and let people make their own choices and pay their own costs. Which will give us what the people actually want instead of what the planers (in this case congress’ puppet masters) claim the people want.

Krauthammer: Unfortunately, instead of hiking the price ourselves by means of a gasoline tax that could be instantly refunded to the American people in the form of lower payroll taxes,
Jk: Low income people pay very little payroll tax, so this another progressive screw the poor measure.

Krauthammer: For 25 years and with utter futility, I have been advocating the cure: a U.S. energy tax as a way to curtail consumption and keep the money at home.
JK: Why didn’t you advocate ALLOWING domestic supply to increase?

Krauthammer: Announce a schedule of gas-tax hikes of 50 cents every six months for the next two years. And put a tax floor under $4 gasoline, so that as high gas prices transform the U.S. auto fleet, change driving habits, and thus hugely reduce U.S. demand -- and bring down world crude oil prices -- the American consumer and the American economy reap all of the benefit.
JK: Why didn’t you advocate ALLOWING domestic supply to increase?
However, I’ll concede that a price floor would provide some certainty for new investment in expensive new plants like coal to oil, more tar sands and domestic drilling. But not $4, instead figure out the price/bbl that will allow coal to oil and Montana fields etc to MAKE A KILLING and guarantee that price for a FEW years (5?) with a variable import tax. I would expect gas at around ½ of today’s price with this scheme.


We should have started taxing the heck out of it on September 12, 2001. It's a little late now. The damage has been done.

We should have started taxing the heck out of it on September 12, 2001. It's a little late now. The damage has been done.

So true.

I do wonder though, if setting a bottom for gas at $5.00/gallon might work. Then if oil prices drop, it lets the U.S. increase its revenue and start investing in mass transit or paying off the national debt.

And if oil prices increase, it doesn't affect the public, because we're already accustomed to high gas prices, and the government eats the margins.

And look, as long as we're in Iraq, can't we start commandeering some oil fields. Jesus Christ, this President sucks. If we're going to be A-holes and just invade another country for no reason, then we might as well go the extra step and start taking their cool s*** as well.

Funny that I should stumble upon your blog and read this. My husband was just explaining to me how we need to tax the gas from the Middle East.

There is an email floating around that suggests maybe we should charge the same price for bushels of wheat to the Arabs that they are charging us for a barrel of oil.

Might not be a bad idea. I bet oil would come down.

"But there's good money in refining it here and selling it elsewhere."

I think unrefined products are what gets shipped. We barely have enough refining capacaity for our needs.

I could go for a tax, IF it was used for some sort of energy developement. However, we have had god-knows how many presidents and congresses since 1972 and nothing. And I am not hearing anything from Obama or McCain.

Do a Harry Truman, the man republicans so admire. Nationalize the refineries and let the government set the prices.

I was talking about a price floor for oil about six months ago... turns out it's an astonishingly stupid idea.

Let's say pre-tax gas is $3.50, and we set a price floor of $5.00... thus a tax of $1.50.

What happens? The price of pre-tax gas shoots up to $5.00, and the tax drops to zero.

Remember: the world oil supply is controlled by a cartel. The people that Governor Brian Schweitzer (D-MT) calls "a group of sheiks, dictators, rats, and crooks." And he's an Arabic-speaking friend of the Saudi royal family.

Justin: Then if oil prices drop, it lets the U.S. increase its revenue and start investing in mass transit . . .
JK: What would that accomplish?
Mass transit costs more than driving.
Mass transit uses more energy than small cars (small cars are the real hope to save energy.)
Mass transit wastes people’s time.

Light rail is a total waste, The proposed Vancouver extension will cost over $2 for each passenger carried each mile. That is so much more than the cost of driving that gas would have to ger close to $100/gal to match it.

See for the details.


Jeebus...Has anybody paid any attention to Europe?

This is exactly why they are paying the equivalent of up to $8 per gallon of petrol.


I think part of the tax revenues generated in the euro's high price of petrol goes for supporting some of their social programs. I am sure if we had gas taxes like theirs our Democratics would be using it likewise.

And if they had our prices, the Autobahn would be in gridlock.

godfry: Jeebus...Has anybody paid any attention to Europe?
JK:Yeah transit isn’t faring much better there. In the 20 year period from 1980 to 2000, rail was down 23%, Bus&Coach, down 27% and Tram plus Metro was down 21.4%. In that period, auto trips hit 78.3% of travel miles.



Nice mixing of unrelated statistics, JK.

Please express your statistics in the same comparable measure, please.

godfry: Please express your statistics in the same comparable measure, please.
JK: It’s all listed in the source, which you apparently didn’t bother to check:

Over the twenty year period from 1980 to 2000, the following changes in EU15 market shares occurred, as a percentage of total passenger transport in passenger-kilometers:

Rail travel deceased ....................23% ....from...... 8.2 to 6.2% of total.
Bus & Coach travel deceased .......27% ....from.... 11.6 to 8.5% of total.
Tram & Metro travel deceased ......21.4% ..from.... 1.4 to 1.1% of total.
Passenger car travel increased .....23% ....from.... 76.4 to 78.3% of total.

Notice that even, in 1980, auto travel accounted for over 3/4 of total passenger transport. How many planners told us that “everybody” uses transit in Europe? They were wrong yet again. (Are planners right about anything?)


rearranging deck chairs on the Titanic. Give it up. Rightwing bluster ain't going to convince anyone who figured things out using facts, and it hasn't convinced yourselves or you wouldn't be still repeatingly mimicking repeating it.

No oil. Feriod. Live different ... or not at all.

The Oil Drum.COM/

Really, the thread jumped off the logical train of thought and took off into the bushes of nonsense, from the first statement that claims Friedman is liberal. He's so clueless he can't even find his way to the liberal campground, nevermind be in the crowd. Clueless = conservative = obsolete into extinction.

What do you know, when I read that article I saw the freemarket working likes it is suppose to. Why is it liberals see it as proving yet again we need to tax??

Oil is up so now consumers are driving less and demanding more fuel effecient cars from the automakers. No tax was needed for the gov't to spend on more pork barrel projects.

I find myself agreeing with Krauthammer. Hell must have frozen over.

Usually, I wouldn't even sink to using a Krauthammer column as toilet paper.

It is interesting that the debate seems to be reliance on fossil fuel versus peak oil. As JK states, personal mobility is the issue. For uncounted eons, mankind has enjoyed the liberty to transport himself where ever he wanted to go - via walking, riding on an animal, boating, rail, road, whatever; the theme is the same - "I will go where I want, when I want" not where or how the government dictates.

The peak oil / mass transit crowd has it all wrong - people, especially Americans, want the freedom to go where they want to go without the constraints of mass transit. That is why transit account for less than 5% of peak hour trips. Whether
by oil, electricity, hydrogen, or some unforseen fuel, man will find a way.

How to get even with Saudi Arabia (remember., these are the sc****gs that sent the 19 hijackers to our country which brought about 9-11). Tell the bastards they either drop the price per barell down to $1.00 per., or we'll give them a naval blockade and stop every ship trying to enter or leave that god forsaken country. If the scumbags don't like it., then we should use our tomahawk cruise missiles and target one of their refineries per hour until they "come to Jesus". I predict., they will come to 'Jesus" real fast after they lose their 3rd refinery just like the God damn J**s came to Jesus after we dropped the 2nd big one on Nagasaki.

A Loyal American., Unfortunately., there aren't too many of us left nowadays. Nowadays all we have are pussies.



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