Govt has to do something!!

[EuroWheenie]

FNFAL

Indeed, there is more to it than just taxing the gas. I do belive I also mentioned slapping a heavy tax on trucks to lesson the demand. Quite honestly, I've no idea how much of the cost of a car in the US is down to taxes, federal or state. In Belgium where I'm currently living, all private cars are subject to 21% VAT. Then you'll pay an annual tax depending on the size of the engine vs fuel consumption (terribly complicated, I've yet to figure out how they do it) and the weight of the car. Generally speaking, the heavier and more fuel inefficent a vehicle is, the more you'll bleed in taxes.

In my home country, Denmark, taxation on cars is one of the reasons I decided to leave for pastures greener. First you'll pay 25% VAT. Then you'll pay 180% tax (yes, you also pay tax on the VAT) and eventually end up getting one but paying for three! For your information, the previously mentioned A3, which was 26.2K USD stateside, will set you back roughly 77.5K USD if you bought it in Denmark! Yes, seventyseven and a half thousand Dollars.

As for roadpricing I'm not quite convinced it'll do much but make it more expensive to drive for those who need to, and it certainly does nothing to improve fuel efficiency - a Toyota hybrid will presumeably be taxed the same as a 4.8 litre Range Rover ...

To my mind cars should be taxed depending on fuel economy, and while I don't particularly fancy paying almost EUR 1.0 for a litre of Diesel, it sure beats paying 1.2 for petrol, especially when Diesel offers vastly superior fuel efficiency. I used to own a Mini Cooper with a 115BHP petrol engine. I'd consume roughly 80 litres of fuel driving between BRU and CPH, a trip of around 1070km, driving economically with an average speed of 110 km/h and spending around 10 hours completing the trip. In the Audi I'll usually set the cruise control to 200 km/h and clock an average speed around 150 km/h burning the same amount of fuel, but I'll get there in around 7 hours. Diesel; it's the only way to go!

 

[EuroWheenie]

Snakum

Well, I've put benzine in a phalanx of automobiles in Germany over the years, and never paid that kind of money! I drove CPH-BRU a couple of weeks ago and paid 1.05 for a litre of Diesel; I belive the cost for petrol was around 1.25ish. 1EUR = 2DM and I don't think the price have fallen that much! I've tried to Google for the definitive answer, but have sadly come up short.

The only thing I can come to think of is Denmark vs Germany. Back in the late 80's we were paying around 7DKK/Litre. Germany has always (in recent history that is) been cheaper than Denmark, petrol included. 7DKK was rougly 2.3DM. Are you quite sure about the 5-6DM/Litre?

 

[EuroWheenie]

Milehigh

Yes, I do belive that car taxes should be determined by how inefficient and polluting they are. One could argue that taxation is just another way of regulating market forces, much as the cost of petrol is. However, I suppose that you place more trust in the markets to regulate themselves than I do. I frankly belive that the "markets" is just another word for corporate profits, and whilst there is nothing wrong with a corporation making a profit, and profits are ultimately the only thing they live to make, I do belive we have seen what corporations will do - Enron, Parmalat, WorldCom to mention a few - if not regulated and controlled.

 

[MAJIC9]

Snakum, 6 DEM sounds about right.. but for a gallon, definitely NOT liter..
back in those days, DEM was roughly 1.5 to USD.. so that math would say you were paying about 14 bucks a gallon.. it's never been that expensive..

 

[mzaharis]

There is already a tax on those ridiculously stupid trucks that a lot of Americans are buying- it's a tax in the form of 15 mpg rather than 30 mpg that they could get from a car. That's pretty taxing if you ask me. Why have more government meddling when the free market will do it all by itself. Sure there are still people buying trucks, but I know a lot of people with trucks who are already trading them in for more fuel efficient cars.

I agree with you about trucks by the way. I love them for their utility factor, but would never drive one on a daily basis, they drive like crap and cost too much money to operate. Just because I don't desire to drive one every day, doesn't mean that I want to tax and punish someone that does. I think the hit at the pump is punishment enough. The market works if you don't mess with it too much.

In effect, this is what a carbon tax does. It basically "amplifies" the consumer decision making process by increasing gas prices, and the "hurt" at the pump. The economic theory is that the tax accommodates for an "externality", or a public cost (say, in the form of the cost pollution causes society), that the price of gas does not capture. Now, we could argue until blood is spilled on what that societal cost should or should not be (and a lot of it depends on whether you accept anthropogenic global warming as something that science has proved is happening, or you believe that it is bunk), but a carbon tax would be a more efficient way to provide an incentive than a vehicle tax, which only indirectly taxes the behavior you're trying to change. Then, people could make their own decisions as to whether they're willing to accept the excess cost.

In effect, that's what existing gas taxes do, in theory - tax people for the creation and maintenance of roads, which is a public cost. Whether they do a good job or not is up to debate.

As for taxing to decrease gas consumption purely to decrease consumption (independent of pollution/global warming considerations), why would you want to? The natural pricing mechanisms already do an excellent job of matching supply and demand.

The only problem is that gas, over the short term, has remarkably inelastic demand. You could double the price (as we have over the last year or so), and consumption only drops by a few percent. It only becomes more elastic over longer time periods, such as years (as people make decisions on vehicle purchases, how far they live away from work and play, how they travel, etc.).

 

[jetflyer]

Mzaharis,

You're right about demand not changing easily. Demand has historically always gone up about 2% per year. Currently demand has been increasing about 3% per year with the help of China and India. It's going to be very difficult to simply stop demand increases, let alone begin using less per year.

Many argue that the only way to reduce our demand after peak oil by 5% per year is going to be through a demand destruction.

First people will try to carpool. They'll change their vehicle type. Public transportation will take off like crazy.

But high gas prices will not be the only problem. Natural gas prices will go up. Food prices will go up. The prices of every good imaginable will go up.

Fertilizers and pesticides are made from fossil fuels. Plastics are too. We can't shift away from using fossil fuels for these things overnight either.

Trains will have to be used to transport our food and goods long distances much, much more instead of tractor trailers. Many other parts of our society will have to change as well.

Economists are now talking about just from Katrina and Rita the chances of STAGFLATION in the economy. Rising energy costs would definitely cause this.

Stagflation= Shrinking economy with rising inflation.

This would be very bad. People's wallets are going to be pinched so much they're gonna close them. People are going to eat out less. They're going to go to the movies less. They won't take that vacation to Disney World this year.

A shrinking economy is the main problem with peak oil and natural gas problems.

When you have a shrinking economy OIL usage WILL go down. More people will be unemployed and they won't be DRIVING to work.

This is going to be a crappy experiment to watch get played out. Can alternatives be ramped up and other methods of transportation make a big enough difference to keep the economy from shrinking year over year? Let's hope so. A stationary economy would be then seen as a good economy. It's all going to depend on HOW FAST the decline in oil occurs.

If oil production declines at only 3% per year we might be OK and everyone will say, "wow that wasn't that big of a deal" because alternatives may be enough.

But if world oil production declines almost like the Red Sea or Australia at around 12% per year then this would almost be impossible to overcome without a shrinking economy and probably a depression.

Let's hope for a slow decline and a fasttrack to alternatives,

Jet

 

[Snakum]

Are you quite sure about the 5-6DM/Litre?

Well ... I did used to drink a lot, back then. In fact, I quit drinking alcohol soon after I got back, cuz my liver was as big as a football. :laugh:

Minhbergenheimer

 

[FN FAL]

What's really cool is that car dealerships are loaded with these gas guzzling SUV's and monster Pickups and they are going to be blowing them out at a discount because sales are down. Which means they'll be around in numbers for the better part of a decade and a half.