Parties Seeking to Blame Each Other’s Policies for Gas Prices

[Jon Miller]

Whats nonsense, the proposition that businesses don't exist where the costs are such that it is disadvantageous.

If you think that the increase of the cost of gas is going to cause industry, commerce, and services to move from the cities to the suburbs and rural areas, you are crazy.

This disagrees with all intuition, past experience, present experience, and experience in other countries with increasing gas prices.

JM

[Jon Miller]

We expect there to be other costs due to cities being spread out. Costs due to emergency services for example (and fire protection, and so on). Additionally, there are more accidents.

But let's ignore those for now.

Additionally there are costs due to pollution and increase in the number of cars on the road and the lost of productivity due to traffic jams/etc.

Let's ignore those too.

Let's focus just on the costs associated with roads and such infrastructure. Which is what the US taxes are thought of as for, which is unreasonable. But it provides a minimum.

The taxes earlier this year were:
In January 2011, motor gasoline taxes averaged 48.1 cents per gallon and diesel fuel taxes averaged 53.1 cents per gallon. http://en.wikipedia.org/wiki/Fuel_tax http://www.nacsonline.com/NACS/Resou...finitions.aspx

This comes out to be about $115b in taxes, if we use the 2009 number of gallons purchased per month (121k*159k gallons).

The cost that the US spends on roads/bridges/etc should be $130-240b per year. We aren't even taking out enough taxes to pay to upkeep our roads! In fact, we have terrible roads compared to many other first world countries and our cities are down to only having ~75% in acceptable condition.

http://www.infrastructurereportcard.org/fact-sheet/roads

Note that this link contains a huge number of the other costs that come due to our over reliance on the automobile and the costs associated with our current and past low level of infrastructure funding (note they are focused on roads, and don't bring up planes/trains really).

So yeah, the current level of taxation is way too low. Even if you just focus on infrastructure and ignore issues of environment/scarcity/etc, you should still raise the taxes on gas to ~$1 per gallon.

JM

[Ogie Oglethorpe]

If you think that the increase of the cost of gas is going to cause industry, commerce, and services to move from the cities to the suburbs and rural areas, you are crazy.

This disagrees with all intuition, past experience, present experience, and experience in other countries with increasing gas prices.

JM

You still don't get it. It speaks to the survival of businesses full stop. Increased costs mean less business viability. Trade off of costs to look at other locations to do business if possible typically manifesting itself in relocation to more viable domestic locations but also and equally likely foreign destinations, where until now differentially higher fuel costs were not quite offset by other savings.

[Ogie Oglethorpe]

We expect there to be other costs due to cities being spread out. Costs due to emergency services for example (and fire protection, and so on). Additionally, there are more accidents.

But let's ignore those for now.

Additionally there are costs due to pollution and increase in the number of cars on the road and the lost of productivity due to traffic jams/etc.

Let's ignore those too.

Let's focus just on the costs associated with roads and such infrastructure. Which is what the US taxes are thought of as for, which is unreasonable. But it provides a minimum.

The taxes earlier this year were:
In January 2011, motor gasoline taxes averaged 48.1 cents per gallon and diesel fuel taxes averaged 53.1 cents per gallon. http://en.wikipedia.org/wiki/Fuel_tax http://www.nacsonline.com/NACS/Resou...finitions.aspx

This comes out to be about $115b in taxes, if we use the 2009 number of gallons purchased per month (121k*159k gallons).

The cost that the US spends on roads/bridges/etc should be $130-240b per year. We aren't even taking out enough taxes to pay to upkeep our roads! In fact, we have terrible roads compared to many other first world countries and our cities are down to only having ~75% in acceptable condition.

http://www.infrastructurereportcard.org/fact-sheet/roads

Note that this link contains a huge number of the other costs that come due to our over reliance on the automobile and the costs associated with our current and past low level of infrastructure funding (note they are focused on roads, and don't bring up planes/trains really).

So yeah, the current level of taxation is way too low. Even if you just focus on infrastructure and ignore issues of environment/scarcity/etc, you should still raise the taxes on gas to ~$1 per gallon.

JM

Why is the cost of roads born completely by gasoline and or diesel taxes? Was this always the case? Why the change?

[Jon Miller]

When gas prices go up, generally industry moves more into the cities/etc. Same with commerce.

Look at current experience in europe and past experience in the US. You have unreasonable expectations.

You could be right about industry leaving the US, but I think you will find that the gas prices are minimal compared to the labor prices. Companies that are sensitive to fuel prices already moved out of the country if it was possible.

Companies that have profit that requires low fuel prices (like airlines) shouldn't be subsidized anyway. People will invest in other things if they are a bad investment.

JM

[Jon Miller]

Why is the cost of roads born completely by gasoline and or diesel taxes? Was this always the case? Why the change?

You were talking about costs that were not included in the prices of the gas (without taxation).

The costs for roads is a minimum number of the costs that should be included in the prices of gas. I argued (as have others) that it is actually much much higher. The minimum tax on gas should be in the neighborhood of $1.

You can put the cost on other things like cars (although they have some of their own independent costs that are not included in the price). However, if I buy a car and drive it once a year or if you have a car that you drive 100 miles a day we would pay the same. Gas is highly correlated to how much we use the public goods of roads/etc.

And having a complicated system of tolls is just insane.

The US is almost unique in that we argue that the gas tax is really only for roads (which is incorrect, as I and others have argued). But we don't even take enough gas tax for the roads....

JM

[Ogie Oglethorpe]

Furthermore just as grib before, you do not address why in specificity oil industry is to be singled out as not having similar us tax code treatment as any other us manufacturing industry.

You want to tax gasoline in order to pay for externalities that's one argument. The elimination of tax deduction that are currently applied to oil industry when removed have the double effects of increasing costs to consumer (as would a sales tax) but also reduce future supply.

[Jon Miller]

I don't want to subsidize oil extraction for reasons of scarcity/environment/etc.

The argument for externalities related to roads/infrastructure (and the other things mentioned in that link) is for the gas tax being born by the consumer. Which is where the removal of the subsidy would be felt too.

JM

[Ogie Oglethorpe]

When gas prices go up, generally industry moves more into the cities/etc. Same with commerce.

Look at current experience in europe and past experience in the US. You have unreasonable expectations.

You could be right about industry leaving the US, but I think you will find that the gas prices are minimal compared to the labor prices. Companies that are sensitive to fuel prices already moved out of the country if it was possible.

Companies that have profit that requires low fuel prices (like airlines) shouldn't be subsidized anyway. People will invest in other things if they are a bad investment.

JM

Manufacturing has moved offshore by and large and will and can not move into the city. Too much NIMBY and red tape. The remaining industry is very much tied to transportation costs regardless of locale. Hence moving into the city also unlikely as a refuge, not to mention higher labor costs,local taxation etc.

[Ogie Oglethorpe]

I don't want to subsidize oil extraction for reasons of scarcity/environment/etc.



JM

Then you have missed the entire point of my previous posts that give indication that the so called subsidies are in effect a mirror of deductions applicable to other US industry.

[Ogie Oglethorpe]

The US is almost unique in that we argue that the gas tax is really only for roads (which is incorrect, as I and others have argued). But we don't even take enough gas tax for the roads....

JM

Again the point is roads existed long before the advent of internal combustion engines. Why is gasoline taxes the means to address the issues, especially if the intent is to reduce the consumption of gasoline which in turn lowers the revenues generated to support said roads.

[Jon Miller]

Are you really suggesting that decreasing taxes on gas would decrease consumption of gas?

Quit being an idiot.

JM

[Felch]

Again the point is roads existed long before the advent of internal combustion engines. Why is gasoline taxes the means to address the issues, especially if the intent is to reduce the consumption of gasoline which in turn lowers the revenues generated to support said roads.

Roads were either private toll roads, unpaved dirt trails, or maintained for postal/military purposes. In any event, they were not nearly the expense that we deal with today.

Taxing gas is elegant and effective. There's a causative relationship between gas consumption and the wear and tear on roads. Driving heavy vehicles will do more damage to roads than light vehicles. Some people are paying for a service that they're not using (gas used in lawnmowers for instance), but that is a very small part of the total gas market.

[Ogie Oglethorpe]

Are you really suggesting that decreasing taxes on gas would decrease consumption of gas?

Quit being an idiot.

JM

Course not. What I am suggesting is that the current proposals to ever increase the cost of fuel via taxation result in less usage which in turn result in less tax revenue which in turn causes a readjustment to increase the level of taxation to make up for assumption of inelasticity.... repeat and rinse.

Missing in the equation is from this feedback loop is loss of disposable income resulting in net reduction in demand. The reduced employment opportuinites due to business migration due to strucutral cost increases that either must be absorbed or passed onto the customer thus further reducing sales volume and business revenue.

Now if you are done with ad hominems and want to further discuss in a civilized manner, feel free to respond. You normally are better person than this and worthy of discourse.

[Felch]

Reducing use of gasoline would reduce wear and tear on roads. So even if there's less tax income (which I doubt) there'd be reduced maintenance costs.