Hurricanes and Gas Taxes (cont.)

With more than a month left of the hurricane season and layer of extra-warm water stubbornly hanging out in the Gulf of Mexico, it would be unwise to rule out the possibility of another monstrous hurricane attacking the Gulf Coast. As we discussed in the previous post, the Gulf Coast is chock full of oil refineries, and thanks in part to damage some of those refineries have already experienced fuel costs have jumped over the past month.

In an effort to ease the burden of $3-a-gallon gasoline, lawmakers across the country have been considering measures to suspend gas taxes. Cynthia Tucker, of the Atlanta Journal Constitution, thinks this approach ignores the fundamental problem. A rise in gas prices would likely encourage some much-needed conservation, she says, and free market conservatives in particular should support the market's upward pressure on the cost of oil, right? Apparently not. "Rather than confront the hard truth -- that a sustained campaign against terrorists will demand sacrifices from all of us," Tucker writes, "our leaders pretend that we can keep doing things the way we've always done them."

A Sacramento Bee editorial echoes the call for sacrifice at this time when the nation is involved in so many expensive endeavors. The Bee mentions the idea of a instituting an additional energy tax (to encourage conservation) and an "excess oil profits tax" -- but it does not expressly say whether the editorial board favors or opposes these ideas.

Rising prices might help wean Americans off this dangerous dependence on foreign oil -- which Thomas Friedman pointed out on Meet the Press yesterday has left us "funding both sides of the war on terror" by purchasing fuel from "some of the worst regimes in the world." A $1 per gallon gas tax could be used to fund education and other national priorities, he said, and would have the likely effect of lowering the profit margin for the oil suppliers.

Really, though, it's not just foreign oil that is the problem; it's also the concentration of refineries along the vulnerable Gulf Coast. The New York Daily News editorialized shortly after Katrina hit: "As the Gulf Coast limps toward recovery, it would behoove a rethinking of this concentration of facilities as not in the national interest."

By Emily Messner |  September 26, 2005; 10:37 AM ET  | Category:  Looking Ahead
Previous: Hurricanes, Refineries and How Oil Prices Could Afftect Post-Katrina Reconstruction | Next: Operation Offset: Best Way to Pay for Rebuilding the Gulf Coast?


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Tax Energy. The world economy won't fall apart, and might even end up in a better place. Imagine if the gas tax had been raised by a penny, nickle, or dime, every year, starting in say, 1975 during the last gas crisis. Imagine if the revenue had been split with a portion going to transportation infrastructure, some to mass transit, some to alternate fuels, some to new engine technology, a bit to relief of those individuals and industries most likely to be hurt by higher prices, and even some to pork barrel and tax cuts, and we still would be paying less per gallon than we are now. Only the excess would have gone to the benefit of the economy for everyone, and not a few, foreign and domestic. No need to open the Alaska Wilderness, no pressure from overseas suppliers, etc. etc. etc.

When gas prices were one or two dollars, the world as we know it did not fall apart. But something interesting happened at $3, still significantly below the rates in most of the rest of the developed world. Ford, maker of big SUVs and pickups, and muscle cars, suddenly sees a light, and decides that in five years, they will produce 250,000 hybrids annually. Think where the technology could have been...

And let us remember, the dinosaurs are gone, we don't have another 100 million years for more oil to be produced. Burn it out the tailpipe, or use it for the manufacture of plastics, medicines, and thousands of products? We all choose.

Posted by: Steve | September 26, 2005 03:15 PM

Steve - that was an amazing comment. However, the people in this country continue to empower administrations that collude with companies vested in keeping energy costs low.

Posted by: Tina A. | September 26, 2005 06:56 PM

Let me see, Bush says we should all conserve while he
-jets to the Gulf for the 7th time in Air Force One.
-goes biking with multiple security in SUVs following.
-has not ordered the continually idling limos outside the white house to be turned off to conserve gas.

Just to set something straight...dinosaurs did not make the oil you burn in your car. It was huge lakes that contained algae, that grew, died, settled to the bottom and covered up by sediment over many millions of years. But you point that there is a limited supply is correct.

Lets face it, the USA lives on energy. We cannot conserve too much without reducing our ability to produce. No one wants farmers to use less energy. No matter how much we conserve the clock still ticks, maybe slower, but continues to tick away the time until the oil is gone. And the panic will set in when we realize we're near the bottom of the well.

Other sources of energy are everywhere. But the problem is economics. If it takes $2 to make $1 of energy, we do not make that energy. Now that oil is becomming costlier, other forms of energy are now within range of competing with oil. Canada's oil sands, which is oil but hard to extract, is now feasible since the high cost to mine the oil will be offset by high oil prices. But this is still a limited resource. Ethanol may now be feasible but we have not geared up to procude ethanol in any major way.

There is an unlimited resource, the sun. We have the technologies to convert sunlight into electricity and the electric grid to distribute that electricity. Every household has a roof that could be fitted with existing solar panels or solar shingles that could be connected to the electrical grid and reduce the need to burn more fuels at power plants. Lots of people are doing this today. Hybrid cars have been converted to hook into a household outlet to charge the batteries. One person who did this with his Toyota Prius claims 200mpg.

So the question is when we as a society are going to begin working on our post-fossil-fuel future. Republicans are market oriented and will wait until companies find it profitable. That will not occur until gas is well above $3/gallon and oil well above $100/barrel. Democrats tend to invest in the future by subsidizing investment so the technologies are developed before the profits are to be made. The problem with waiting until it is profitable is that the USA will be in an energy crisis as we wait for industry to build the needed infrastructure. Investing makes much more sense. Investing will develop the technologies in advance and have them ready to implement when the crunch begins. North Carolina has a 1 million roof project that hopes to fit 1 million home roof with solar panels and shingles. So some states are beginning the investment. Its time the feds created an umbrella plan via the Energy Dept. to coordinate these efforts and provide tax incentives and grants to build the future non-fossil energy technologies. Drilling in Alaska is not the answer. Building more refineries is a good short term goal. But the real problem is 25 years away and I don't see the republicans doing much as the train wreck approaches.

Posted by: Sully | September 27, 2005 12:21 PM

Without a doubt, the very last thing we need now is to have the government meddling with gas prices. It always means trouble. Forcing gas prices artificially low will result in continued demand in the face of diminished supply. Look at the store shelves in the USSR in the eighties to see the effect of that. I'd rather pay $6 a gallon for gas than not have any gas available at any price. As for consumers hurting over gas prices, I hope they enjoy their Navigators and Hummers.

Posted by: Ed | September 30, 2005 11:51 PM

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