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That little piece of paper that comes out of the pump when you press YES in answer to the question about whether you want a receipt.
That's what the Big Three thought in the 1970's. They kept building big cars and ended up handing a 30% market share to Japanese and German manufacturers. Smart, really smart.
When are some people going to start realizing that oil is too valuable a commodity to be wasting on something so mundane as transportation energy?
Why the hell would you care how much gas you sucked up if it was cheaper than water??? As StoneOne has pointed out we are now in need of alternatives so alternatives are being developed, no one is scrambling either, it has been a fairly smooth transition.
What a naive assertion. Haven't we just proved empirically that "the market" reacts too slowly. If Congress had passed a tougher CAFE standard 10 years ago, we wouldn't be paying $4.00/gallon for gas today. The market taught American this same lesson in the 70s; why didn't the lesson stick?
If gasoline is the cheapest fuel around, what's the problem? Why do we let the market resolve all of our other technological issues but for some reason we expect the government to deal with fuel and energy?
As for the market acting slowly, can you in all seriousness argue that a government bureaucracy needed to rigorously enforce these standards would act any faster? And would the companies, under such regulation, offer something we'd want to buy with the technology available at the time, if they even stayed in business and offered us something at all?
People have been cutting demand rather quickly, gas guzzlers have plummeted in value, the Big Three and Toyota have announced elimination or big cutbacks in SUV production, hybrids and other fuel efficient cars don't lose much value from their sticker price ---- all of this has been a very fast market reaction to higher gasoline prices. It's much, much faster and painless than any Congressional or bureaucratic action out of Washington could ever hope to achieve.
What a naive assertion. Haven't we just proved empirically that "the market" reacts too slowly. If Congress had passed a tougher CAFE standard 10 years ago, we wouldn't be paying $4.00/gallon for gas today. The market taught American this same lesson in the 70s; why didn't the lesson stick?
And if Congress had built in a five-cent per gallon annual increase in the federal excise tax on gasoline back in 1979, we'd be paying about $6.00 for gas today, but we'd be driving cars that got 60 mpg, and there would have been substantial resource pools built up for either much needed infrastructure modernization or additional research into developing alternative fuels. I guess we all like our iPods, Dasani, and Starbucks more than that though...
If gasoline is the cheapest fuel around, what's the problem? Why do we let the market resolve all of our other technological issues but for some reason we expect the government to deal with fuel and energy?
It's called a cartel. Markets only "work" when competition reduces the price to the marginal cost of production. Try Econ 101.
Quote:
Originally Posted by StoneOne
As for the market acting slowly, can you in all seriousness argue that a government bureaucracy needed to rigorously enforce these standards would act any faster? And would the companies, under such regulation, offer something we'd want to buy with the technology available at the time, if they even stayed in business and offered us something at all?
Yes, Yes and Yes. Were you alive in the 70s when exactly that happened?
Quote:
Originally Posted by StoneOne
People have been cutting demand rather quickly, gas guzzlers have plummeted in value, the Big Three and Toyota have announced elimination or big cutbacks in SUV production, hybrids and other fuel efficient cars don't lose much value from their sticker price ---- all of this has been a very fast market reaction to higher gasoline prices. It's much, much faster and painless than any Congressional or bureaucratic action out of Washington could ever hope to achieve.
Shutting the door after the horse has left the barn. Let me know when gas gets below $1.50/gallon, which is where it would be if the market were working efficiently.
And if Congress had built in a five-cent per gallon annual increase in the federal excise tax on gasoline back in 1979, we'd be paying about $6.00 for gas today, but we'd be driving cars that got 60 mpg, and there would have been substantial resource pools built up for either much needed infrastructure modernization or additional research into developing alternative fuels. I guess we all like our iPods, Dasani, and Starbucks more than that though...
You can do this with taxes, like the Europeans, but it's such a regressive tax that hurts the poor. Good governmental policy of ramping up CAFE standards can give us reasonably priced transportation fuel and good mileage vehicles. We have a substantial amount of money in the Federal Highway Trust Fund so more tax revenues in this area aren't really needed, I think.
You can do this with taxes, like the Europeans, but it's such a regressive tax that hurts the poor.
The more important factor might have been the very low cost of administration, what with there being an almost zero marginal cost to increasing a tax that is already being collected. There were and still are a variety of ways in which to offset the regressive effects of an excise tax.
Quote:
Originally Posted by rlchurch
Good governmental policy of ramping up CAFE standards can give us reasonably priced transportation fuel and good mileage vehicles.
Nothing against the CAFE standards here, and glad to see them given a boost at last. But they too have some regressive effects, as in a free market, auto companies will raise prices, not just to recoup the costs of their investment in higher mileage vehicles, but also to cut themselves a share of the projected fuel cost savings. Those on low and/or fixed incomes will have a harder time covering such price increases, and thus may be restricted to the market for older, less efficient vehicles where they are denied many of the benefits that a higher mileage vehicle would provide.
Quote:
Originally Posted by rlchurch
We have a substantial amount of money in the Federal Highway Trust Fund so more tax revenues in this area aren't really needed, I think.
No, there is currently a substantial shortfall in the Highway Trust Fund for FY 2009 that if not fixed, will leave states about a third short of the money they thought they had coming next year. Declining revenues due to decreased gas consumption have been one reason for this. Americans are on pace to drive about 40 billion fewer miles this year than last. The House has passed an $8 billion transfer from general revenues to continue the funding of existing and some new projects in the coming year. The same plan is included on the Senate side in a package of tax extenders that the Republicans have been holding up. We'll see what happens to all that in September. The long-range picture, meanwhile, is even more bleak. The administration's plan at this point is simply to get rid of the gas tax. They haven't come up yet with any proposals for where highway funds should come from instead. Perhaps they believe we should just borrow more money from China to cover it all...
The more important factor might have been the very low cost of administration, what with there being an almost zero marginal cost to increasing a tax that is already being collected. There were and still are a variety of ways in which to offset the regressive effects of an excise tax.
The same is true of the CAFE standards. The government is just administering a high CAFE requirement. I can't imagine it takes many people to administer the program. It's based upon self reporting by the manufacturers. You need a little enforcement to keep them from cheating, but you could actually probably outsource that.
Quote:
Originally Posted by saganista
Nothing against the CAFE standards here, and glad to see them given a boost at last. But they too have some regressive effects, as in a free market, auto companies will raise prices, not just to recoup the costs of their investment in higher mileage vehicles, but also to cut themselves a share of the projected fuel cost savings. Those on low and/or fixed incomes will have a harder time covering such price increases, and thus may be restricted to the market for older, less efficient vehicles where they are denied many of the benefits that a higher mileage vehicle would provide.
I suspect the auto industry is competitive enough to prevent that from happening.
Quote:
Originally Posted by saganista
No, there is currently a substantial shortfall in the Highway Trust Fund for FY 2009 that if not fixed, will leave states about a third short of the money they thought they had coming next year. Declining revenues due to decreased gas consumption have been one reason for this. Americans are on pace to drive about 40 billion fewer miles this year than last. The House has passed an $8 billion transfer from general revenues to continue the funding of existing and some new projects in the coming year. The same plan is included on the Senate side in a package of tax extenders that the Republicans have been holding up. We'll see what happens to all that in September. The long-range picture, meanwhile, is even more bleak. The administration's plan at this point is simply to get rid of the gas tax. They haven't come up yet with any proposals for where highway funds should come from instead. Perhaps they believe we should just borrow more money from China to cover it all...
Yes, it is. And I'm not saying that we should have just one or the other. Just that modes of such a gas tax program were under consideration in 1979-80 as part of proposals surrounding an emerging national energy policy and as one response to the Arab oil embargo. The outcome of the 1980 elections put the whole kit-and-kaboodle of those sorts of ideas into the ash can.
Quote:
Originally Posted by rlchurch
I suspect the auto industry is competitive enough to prevent that from happening.
The auto industry hasn't been competitive since before WWII, and with the shape that the lot of them is currently in, they have a strong incentive to make a grab for every last penny that they can.
Quote:
Originally Posted by rlchurch
Didn't know that. Thanks for the info.
At your service. Just one, I fear, of many problems that that the next President and Congress will have to deal with. That of course comes with the territory, but this particular change will certainly be one of the sternest in recent memory...
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