The argument against CA fuel economy standards

As the Obama administration appears ready to allow CA to impose its own emissions standards on auto manufacturers, there is a lot of chatter if that is the best solution.  The main argument against state specific fuel standards is that it may force automakers to provide different cars for each market, thereby increasing manufacturing costs.  Opponents of the state specific proposal would rather just raise the gas tax.

I think that both moves are important.  If one state decides that it wants to limit pollution and feels that the federal standard is lacking, it should be able to.  However, I agree that adding $2/gallon to the federal gas tax would probably be the smart move in the long term.  It would not be difficult to add 50 cents a year for 4 years to the gas tax, such that in 2013-2014, a gallon of gas would cost around $4, given today's prices.  This would surely force manufacturers to come out with more efficient models and entice consumers to buy them.  

Tax mileage, not gas?

Oregon may tax drivers based on the miles they rack up on their cars, instead of using gas taxes to fund new roads.  This is a novel approach; one that I had not thought of.  It does make sense, since cars will eventually get to 50mpg or more, and at that point the gas tax will have to be extremely high, or other taxes (like this) will have to bridge the gap.  It is definitely a fair tax, since drivers would pay for the amount that they use the roads.

The one concern that I have (which is also mentioned in the article), is privacy.  However, if detailed tracking information is not stored, I do not see much of a problem.  

Raise the gas tax now!

Thomas Friedman, always the smartest guy in the room, sees a pattern playing out again.  With gas prices going down again, as they did in the 80s, the amount of Americans buying SUV's is going to increase, with the money they spend on gas going right into the pockets of those who fund terrorism.  

One way to prevent this is to raise the gas tax to $2-3 per gallon, making a gallon of gas cost at least $3.50.  At this price, Ford and GM could competitively sell hybrids (even Toyota loses money on hybrids with gas at its current price).  We could use the extra tax revenue to repair roads that badly need it (I was just in a state full of them).  This would also discourage people from buying inefficient cars, and ensure the automakers that it was safe to pursue hybrids; that their research and development money would not go down the toilet if gas crashes in price again.

Oil down to $115, dollar up

As it becomes less and less likely that a Republican will be in the White House, oil continues to fall.  Gas prices may be at the $3.50 or lower range by Labor Day.  

All without offshore drilling.  

What is happening here?  The biggest factor is demand.  Americans have adjusted to high gas prices by driving less, or carpooling.  When supply remains static and demand falls, the price must fall too.  

Also, the Democratic congress passed a law to regulate commodities trading that had previously been exempt (known as the "Enron loophole").  Regulation of the speculation market may just have trigged a fall of $25.

For the record, oil has fallen by 21% over the past few weeks.

And today the dollar is up big time vs. the Euro.

EPA rejects food cost relief

The EPA has rejected a request by the governor of Texas to stop adding ethanol to gasoline, which has the effect of raising food prices.

Ethanol is mostly made from corn.  When 10% of our gasoline is ethanol, that's a whole lot of corn.  Corn is also used to make a lot of food, including sugar (high fructose CORN syrup) and other staples.  

McCain, Obama, and Tire Pressure

Already this week, McCain is bashing Obama for correctly stating that Americans need to check the pressure in their tires.  Underinflated tires are not just a safety hazard.  They lead to wasted gas; a large amount.  

In fact, if everyone checked their tire pressure every other time they filled up with gas and topped it off accordingly, that would save more oil that would be found through off-shore drilling.  By the numbers: we waste 61 million barrels of oil due to low pressure tires.  Offshore drilling may bring us 18 million barrels.  Even George W. Bush could understand this math, but then again, he's not 72 years old, and he's sent an email before.

McCain's ignorance, and his mocking of Obama underscores a deep division between those Americans who refuse to spend 2 minutes doing something that can help us all and save some money.  

Here are some gas saving tips:

1. Make sure your tires are properly inflated.

2. Drive at 55 mph on the highway where possible, any faster than that will impact fuel economy.

3. Accelerate smoothly, do not "floor it".

4. Use cruise control as much as possible.

So, is Obama's argument for tire inflation a "left wing conspiracy"?  Hardly.  What other organizations agree that inflating your tires will lead to real savings?  

Try these:

NASCAR

Edmunds

The US DOE/EPA

Who will benefit from this?  Everyone.  

Who will benefit from McCain's plan of offshore drilling?  Click here.  

Oil prices down 15%

Oil prices have dropped by over 15% in the past 2 weeks.  While this is good for the stock market (my 401k is up by thousands in the past couple days), we can't ignore the fact that oil is still 4 times the price it was just a few years ago.  

Gas my be under $4 now, but its not time to buy a new pickup truck.  

McCain: Worse than Bush?

Hopefully we will never know the answer to the title of this post, but in order to inform the undecided, we need to visit this issue.  Would a McCain presidency be worse than Bush?  

When George W. Bush was first elected president in 2000, we were at the peak of the internet boom.  The business cycles has since been on a downward spin, most likely because we have not had a positive technological shock since the dot.com boom of the late 90's.  Whether we will have another such shock in the next 8 years is anyone's guess, but it is likely as these cycles run over 15-20 years.  

No matter if Bush or Gore was elected president, we would likely have faced a minor recession sometime over the past 8 years.  What would not have been predicted, however, is the massive cost of the Iraq War, which has been a major factor in the spike in oil prices, the fall of the dollar, and the loss of our rights to privacy, jury, and other freedoms.  

How would John McCain or Barack Obama confront such issues?

When it comes to the Iraq War, currently McCain is more gung-ho about it than even George Bush.  While the White House has recently flirted with the idea of setting a vague timetable for withdrawal, McCain remains steadfast that we should maintain permanent bases in Iraq, against the wishes of the Iraqis and more than 50% of Americans.  McCain's wishes would likely lead to at least a $1,000,000,000 level of spending over his presidency, from this issue alone.  

When it comes to oil prices, McCain favors "offshore drilling" and not much else.  Offshore drilling was already allowed, oil companies did not choose to partake in it.  All Bush just did was open up some more areas.  That point is moot, since we do not have enough refineries to keep up with this, so even if we did strike oil (this would take 5-10 years), we would have to have it made into gasoline by another country and then re-import it.  Even conservative oil-man T Boone Pickens does not see oil as the future.  Instead, he proposes we use a combination of wind power and natural gas.  I also think that geothermal power, nuclear power, and solar power have to be added to the first two to be our new backbone of electricity, which could power a new generation of vehicles.  McCain talks about alternative energies, but seems to be continuing Bush's legacy of paying lip service to alternatives while just drilling for more oil to further fuck up our planet.

McCain worse than Bush?  Maybe, but hopefully we will never know the answer.

Offshore Drilling is not the answer

Today George W Bush lifted the mortatorium on offshore drilling put into place by his father.  Oil companies cannot yet begin drilling offshore until Congress passes a similar law.  As always, the whole issue of offshore drilling is BS.  Here is why:

1. More oil will not lead to cheaper gas.  Our oil refineries, which turn oil into gas, are maxed out.  Oil companies have been closing them, and none have been opening.  Even if we had a lot more oil, we could not product much more gasoline and this is why the prices of gasoline are so high.

2. Even if oil companies choose to drill offshore (and most won't) the oil won't be produced for at least 5-10 years, so there is no short-term fix.

3. We are now hearing about shale rock in the Rocky Mountains, which could outproduce Saudi Arabia.  

Oil shale, offshore drilling, and arctic wildlife refuge drilling are not the answers.  Everytime we burn some type of fossil fuel, we are slowly fucking over the world.  We have seen changes in our lifetimes, which are comparatively small to the 5 billion years that our Earth has been here.  We've done so much damage that ice in both the Arctic and Antarctic is melting at a rate that has never been seen.  While I disagree that our coastal cities will be flooded soon, it is not outside of the realm of possibilities.  

We need to harness cleaner form of energies such as wind power, an idea advocated by an oil man, T Boone Pickens.  See www.pickensplan.com

Memorial Day

Despite high gas prices, I will be driving over 1200 miles over the next 3 days to the worst city in America.  Sound like fun?

John McCain's not the only idiot on the economy

Several months ago, John McCain famously said that he "doesn't really understand economics."  

At least he was open to getting some good advisors.

Today, Hillary Clinton was asked if her "gas tax holiday" proposal had the support of any economists.  She could not name a single one.  

This is the same gas tax that McCain has proposed in the past, but he's not pushing it quite so hard these days, probably because it has already failed to pass in the senate, and he's leaving it up to the dems to fight it out.

Economists have pointed out the same things that I have:

Consumers will likely drive more if the tax isn't there, due to psychological reasons, which will make prices go back up, likely higher than they were before.  So the tax would likely raise gas prices.

Why the "gax tax holiday" won't help you

Hillary Clinton and John McCain are both preposing a "gax tax holiday" in which the federal gas tax, 18.4 cents per gallon, would be eliminated during the summer.  

This is a complete farce, designed to make those without a background in economics actually feel that the candidates are helping them.  They are not.

There are several issues involved, and I will try to break them down one by one.

1. The average person drives 12-15,000 miles per year.  Let's be generous and say you drive 15,000 miles per year, and that you drive an SUV that gets an average of 17 miles per gallon (the average car gets more than that).  During a 3 month period, you would drive 3750 miles and consume 220 gallons of gas.  The "savings" the gas tax would give you in this not-too-realistic circumstance?  $40.59 cents.  About the price of 1 tank of gas.  

2. But wait, that's just the amount of federal tax you'd save.  Let's say that this 18.4 cent tax is removed and people suddenly start driving more.  There is a psychological effect of a tax break: people will use it to buy things they weren't planning on.  In this case, it may be taking a vacation by car.  Demand will almost certainly go up.  Due to good old supply and demand, given a constant supply, the price of gas will go up like wiping out any savings.

3. Where is this money coming from to pay this?  There are 2 possibilities.  Either we get a cash advance on our Central People's Republic Bank of China credit card, or we take the money from where the gas tax goes to: roads.  That's right, get ready for longer waits on potholes being fixed, jobless construction workers, and maybe even a falling bridge.

Hillary and McCain have both seized on this idea and keep running around screaming that it will help out average Americans.  Will $40 really help out the average American, especially if the price goes up to compensate and it turns into a $10 savings that you much more than lose when you need a new tire after you hit the pothole that wasn't fixed because the federal highway administration didn't have enough money?  Sheesh!

The only candidate who is correct about this issue is Obama.  From the beginning, he cited many of the economic reasons above and called it what it is: a gimmick.  Said Obama, "This isn't an idea designed to get you through the summer, it's an idea designed to get them through an election."

Many prominent economists have also chimed in and they all agree that this would not do a damn thing.  

If the government wants to do away with the gas tax, then take my advice from several years ago and just get rid of the tax permanently.  Of course, that would require cutting spending in something... hmm... what are we wasting money on these days...?  Iraq?

Here's a calculator to help you figure out how much you'll "save"