True costs of gasoline

The real question is the best method to get to a sustainable future for transportation and energy use.


I'll ask the fun question here. It looks like you are a gas tax evader. I'm trying to become one as well. So, how should all the transportation infrastructure costs be paid by electric vehicle users? In the meantime, I have no problem with all the monster vehicle drivers partially subsidizing Prius drivers and fully subidizing electric vehicle drivers via whatever gas taxes are in effect.

 

actually gas taxes should be raised for people who choose to burn it. fuel costs for vehicles used for work related activities should be able to get a discount on the gas they use.

as far as an equitable way of charging for road use, etc. rates based on weight is the way it used to be done when gas was much cheaper.

now all this looks like we are unfairly penalizing gas cars, but in reality we have been unfairly supporting them for decades. we truly dont pay the real cost of gas and never have and up until now, our powerful economy was able to bury that inequity. that is no longer the case. we need to make some real hard choices here on where we need to go.

getting off of a half trillion dollar trade imbalance has got to be near the top of the list. we really dont import anything that is as much money (other than money!)

but the telling thing is that if we did a massive shift away from supporting personal oil based transportation, we will be doing what the rest of the World has been doing for decades.

 

Because only one energy technology on that list is directly related to the topic of this thread. Focusing on oil subsidies in this thread is merely staying on topic, not ignoring other energy technologies in a broader context.

 

Which is consistent with the articles I linked. The $21 billion over 10 years (or ~$2.1 billion anually) is specifically related to tax breaks/loopholes. The $4 billion number includes both direct subsidies and tax breaks/loopholes.

 

Corn ethanol mixing is more of a direct subsidy to the corn industry. The effects of corn ethanol mixing on gasoline prices are unclear IMO. On one hand, there is an increase in the supply of mixed ethanol gasoline, but on the other hand less petroleum in the form of both gas for farm equipment and fertilizers would be used for corn farming.

I'm quoting the $4 billion b/c the effect of that subsidy is clear. Increasing that number through the inclusion of subsidies with an unclear impact opens up the number to dispute based on one's own personal speculation on its impact.

 

And why should work related uses for gas be subsidized? Choosing to do so merely adds a different distortion to the market and merely makes it inefficient in a different way.

I understand that subsidies can be useful for nurturing small and fragile developing industries, where the tens of millions to billions of dollars can have huge leverage. But the oil industry is not such an industry and the effect of said subsidies is wasted. Its effect on the price of gasoline would barely even be visible if we got rid of it and oil companies passed the cost directly on to consumers. Americans purchased about 138,496,176,000 gallons of gasoline in 2010. The price would increase by ~$0.029 if we removed the $4 billion subsidy. We wouldn't even notice it beyond the daily change of gas prices.

 

Since the topic is subsidies in gasoline, I would be hard pressed to think that this money put in at the last stage mixing is not a subsidy to gasoline. As I said, removing this subsidy would likely not raise the price of gasoline, but would remove a environmental practice and market distortion, as well as a payment from our income taxes to those feeding off gasoline. I don't think oil companies or ag companies are evil, but we need to say enough, the government should not pay for your profits. Most benifits of ethanol have been shown to be false. It is also not a very effective method to reduce petroleum use, but it is an expensive one.

If you read the forbes editorial I posted, you will see it is just 8 of the subsidies, but yes lets put that list as the start of things on the table.

For the poster that thinks it's $2B not $4B, this is after the demoncrats decided only the big 5 oil companies were evil, and decided not to cut the "purple roses" given to smaller oil companies. The republicans decided, hell, the government has plenty of money and it should make sure to keep giving "purple roses" to all the oil companies and ADM and everyone else, because if you start cutting "purple roses", someone may want to remove subsidies to most of the corporation that give them lots of money. Who really cares if the market dives, both parties loves their corporate welfare.

 

The topic is "True costs of gasoline", which would include, but is not limited to subsidies.

The definition of subsidy is "a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive."

That means the existence of the subsidy does not likely decrease the price of gasoline, which by definition makes it not likely a gasoline subsidy by making the price low. From a gasoline producer standpoint, it increases the supply of ethanol mixed gasoline compared to pure gasoline, which decreases the price making the price less competitive and therefore cannot be a gasoline subsidy in the second case.

I did read the Forbes article, and it states: "Although the president hopes to eliminate eight specific tax breaks--which cost the Treasury $43.6 billion over 10 years--only three, accounting for $31.9 billion of that total, are particularly important."

The article state there are 8 tax breaks. A tax break may or may not be a subsidy. Furthermore, you imply with "just 8" that there are more, but the article makes no such implication.

 

How does one enforce this?

Actually, I was half expecting you to point out that you do get taxed for electricity. That would be my defense if somebody insisted that I was not paying my share of costs. If utility fuel tax does not get apportioned to help transportation costs, then that is the government's shortcoming (among many other shortcomings).

Isn't China and India shifting to more and more car use?

 

so what do you call, money transfers that distort markets and harm citizens? If you want to call it a "purple rose", that is fine, just don't tell me its good.

So let me get this straight, if the money goes into someones pocket, demand for imported oil increases and we all pay, its not a subsidy. Ok. Fine. To me its a failed subsidy, but increasing the trade deficit, inflation, and polution, is not a good governmental goal. If you don't want to call it a subsidy that's fine.

Sure, the other 5 are amount to only 25%, and are money transferred applied to other industries also. Its important to remove these market distortions and drain to our economy in gasoline and other industries. The 3 are the most important because not only do they reduce tax revenue, but they distort the economy in negative ways. Most of these targeted tax breaks had some reason at one point other than pure pork, but these three and the ethanol subsidy do not have actually cost more than the straight transfer of wealth to the targeted industries. The others have some reason for being, but if it costs a dollar to do two cents of good, can this country really afford to give the dollar.

There are about 35. Most of the others go to other industries as well as oil. I don't find oil companies evil. I do find these sweathart tax deals offensive for all industries. Let me ask you this do you think the US capping penalties for deepwater and bp as they violated safety regulations is good for most americans? Do you think that taxing deepwater less for making at a foreign entity is good for the citizens of the gulf, or making the drilling not subject to epa regulation a "savings. I live on a state that borders the gulf, and these are some of the 35 measures given to those involved in producing gasoline that hurt the rest of the US citizens.

 

austingreen, I generally don't disagree with you in any of the principles in your replies, but you keep quoting me and putting words in my mouth and twisting them around.

I never said it ethanol mixing subsidy is not a subsidy. My very first statement on the subject was that it is not an gasoline subsidy and it is a corn subsidy, I presented my own arguments and then backed them up with conclusions drawn from your own statements. You yourself said we were talking specifically about gasoline subsidies.

Fantastic, a concrete number. But you said if I read the Forbes article you linked, which I did, that the proposed bill was only dealing with 8 subsidies (actually tax breaks) out of more. It is not possible to draw that conclusion from that source and I certainly cannot read your mind.

 

I see how my words have come off as a criticism of you, and for that I apologize. I was trying to explain why my number is much higher than that in obama's bill. I already stipulated that maybe to move forward we should use that $4B number direct subsidies.

This is to the general forum and not target to you, I can not buy gasoline in my city without ethanol in it. The gasoline I buy has subsidized ethanol in it. This should be considered in the cost of gasoline IMHO. Last year Americans purchased over 13 billion gallons of ethanol when they filled up with gas, each gallon subsidized by the American tax payer. Note removing this subsidy would not increase oil consumption as there is already a mandate. Removing the sugar tarrif might actually reduce the cost of food and reduce pollution. Likewise the other subsidy don't go only to oil companies, but go to companies based on products used for gasoline consumption.

IMHO the ethanol mandate should be reduced, and other methods used to reduce gasoline consumption. IMHO gasoline taxes should pay for externalities and road construction instead of income taxes or the printing of money. Reducing oil consumption strengthens our national security and if done properly will benefit the economy.

 

how does one enforce anything? are you claiming that this would be difficult and require us to hire people to perform the task? most of it could be done simply be requiring the business to file monthly reports and get rebated that way based on a mileage discount

certainly you dont think i am implying that a business gets a "get out of jail free" card. that is far from the case. incentives for EVs will be available at all levels. but we also need to understand that certain transportation fields are currently untouched by EV options. it would be unfair to penalize them when a heavy duty EV truck is simply not an option

that would be a bit unfair to someone with electric heat and a gas car now wouldnt it?

of course they are and why do you mention that? what i said was "if we start to tax people to finance the transition away from oil-based personal transportation we would be doing what most of the rest of the world is doing. so that would mean you would have to have a personal transportation system first.

despite huge gains in that area, neither China or India has that for a great majority of their citizens now. less than ¼ of Chinese even own a car much less drive one and India has less drivers by half than China.

but even they are seeing the mistakes we are making and moving away from that as well. they have the advantage of not having to circle jerk every decision they make. but then again, neither do we since a decision would have to be made for that to be true.

we will mostly likely flip flop our policy every 8 years just as we have done since the 70's which is the real reason why we need to take it upon ourselves to force private industry away from oil. my 4 year old son will be dust before they get anything done

 

True cost . Subsidy, tax, tax break...... Most states ethanol. Ethanol = ADM. ADM = Illinois. President Obama = Illinois. True cost extremely complex numerous factors including politics. But what is Gasoline ?? What is left after everything of value or use is extracted from a barrel of oil ? uummm gasoline ? what do the oil companies do with this left over gasoline/ poison ? Pour it into a body of water or into the ground ? Can't, ok get rid of it and make a nice profit sell it to burn and run the ICE. Man what a stroke of genious.

 

Gasoline is but one product from the entire spectrum of petroleum based products. Indeed, at one time gasoline was a byproduct sold for cleaning paint brushes. However, those days disappeared with the development of the gasoline engine. Now gasoline drives the extraction of petroleum, while other parts are byproducts.

The demand for gasoline is so high that petroleum refiners artificially produce more gasoline by employing a cracking process, whereby petroleum molecules are split apart and rejoined as gasoline. It's a complex, expensive process, but commercially viable because of the strong demand for gasoline.

Tom

 

The ultimate point of my question is that different charges for the same stuff (e.g. gas) is pure subsidy. If different tax levels are charged, the amount of gaming of a high volume, high value commodity like gas would be truely unenforcible. It comes down to defining what "work" or "business" is to the whole population. I'm pretty sure babysitters going to work would not get the break that every government employee with a government vehicle would get.

I'm certainly after the same goal your are after, so don't think I'm taking a stance against that critical goal. I just don't see this approach getting much closer to the end goal.

Yes. However, one of the thread points is what clearly defines something as a subsidy? The concept of fairness is probably a significantly different issue.

Now I understand your point. It that case there is a difference between switching from fossil fuel use and suppressing fossil fuel use. This difference is critical to me. One of the best ways to suppress fuel use is using economic hammers intensely. Nothing like a big recession to flatten fuel consumption.....and slow down electric vehicle development.

Likewise I don't want to continue our thoughtless progression of waiting till massive shortages for action. Without going into detail, one of the key critical steps is to eliminate all straightforward subsidies as covered in this thread. Going beyond that and taxing (a lot) extra then becomes a destructive subsidy for some other group.

 

ahh the status quo!! that is the way its always been done. that is the goal of collectiveness (not sure what that is supposed to mean. i kinda made it up because it seems to fit) . we as individuals cannot do for ourselves, at least most of us cant. but we can contribute to a cog in a gear that drives our nations economy and supplies us our basic needs.

problem is. the contributions and rewards are not balanced or equally shared. we put in varying levels of contribution with the same variance in returned goods and services. it is all suppposed to equal out in the end, but i find that to not be true the closer you are to the middle of the contribution scale

we have all the tools to get there. the only thing we lack (and that lack has been going on for over 40 years now) and that is a singular purpose

 

Next Congressional battle: renewing the federal gas tax — Autoblog Green

 

Yet another moroinc idea that will continues the tea parties movement to further destruct the country. Where do these people expect the funds to build and maintain the critical infrastructure that a healthy growing economy needs? Why don't they get that infrastructure spending has one of the largest multiplier effect on any government spending? Why don't understand that the cost of infrastructure spending is very low right now? Between slow heavy construction business, and very cheap bonding interest, it is the single best time to invest in my lifetime?

Jeeze!

Icarus