Gas prices and imaginary arm-twisting
March 30, 2012
Check out this photo. I found it late one night while poking around on the web. I wasn’t paying really close attention to the text at the time, but the author said something like “If something isn’t done about the price of gasoline, we will be forced to drive things like this.”
My response to the writer would be: “DUDE! Really?”
Let’s get the most ridiculous thing out of the way first.
I don’t think so. It’s all about choice. Yes, gas is high. It will get higher. I want to know who forced him to drive that massive thing (I think it’s a Suburban, but I’m not sure.) How many people do you know who drive really big pickups or SUVs without any demonstrable need for such a gas hog? Plenty, is my guess. The market is as much about image as it is utility. Maybe more.
And no, I don’t have anything against those particular vehicles. I’ve had some of them, and I loved them, except for the part where I pulled up to the pump.
And, for argument, I’ll agree that I’m not sure I’d want a Smart Car, either. I’ve sat in one and it was amazingly roomy, and 40+ mpg is pretty tempting. But there are bigger, arguably safer cars out there that do better on mpg.
One has to wonder about somebody who buys something that gets 10 to 20 mpg (like the behemoth in the photo) and then complain that the gas prices went up. Did they think they would go DOWN? Newt Gingrich has famously promised that if elected president, he will bring the price per gallon down to something like $2.40.
Number one, the president has very little, if anything, to do with the price of oil. It is mostly a function of supply and demand and, if you haven’t been paying attention, a lot of what we used to call “the third world” is now rising. India and China, to name just two, are busily buying cars and trucks and snarling up their highways with traffic. The market is a lot bigger now, and the supply is what it always was. The U.S. is a net exporter of fossil fuels, people. It’s business, and that’s what’s driving the price.
For that matter, what we are paying at the pump is nowhere near what the gasoline costs.
This excerpt from a 2003 report is instructive.
(Read the whole report at
“The majority of people paying just over $1 for a gallon of gasoline at the pump has (sic) no idea that through increased taxes, excessive insurance premiums, and inflated prices in other retail sectors that that same gallon of fuel is actually costing them between $5.60 and $15.14.”
Yes, that was back when gas was a buck per gallon. It’s now at $4. Do the math.
The report came from the International Center for Technology Assessment. (Who describe themselves as “a non-profit, bi-partisan organization committed to providing the public with full assessments and analyses of technological impacts on society,) that begins by stating: ‘Americans deserve freedom. But terrorists, oil corporations and politicians seem determined to keep absorbing citizens’ money in a wide variety of ways.’”
“The report divides the external costs of gasoline usage into five primary areas:
(1) Tax Subsidization of the Oil Industry;
(2) Government Program Subsidies;
(3) Protection Costs Involved in Oil Shipment and Motor Vehicle Services;
(4) Environmental, Health, and Social Costs of Gasoline Usage; and
(5) Other Important Externalities of Motor Vehicle Use. Together, these external costs total $558.7 billion to $1.69 trillion per year…”
“Federal tax breaks that directly benefit oil companies include: the Percentage Depletion Allowance (a subsidy of $784 million to $1 billion per year), the Nonconventional Fuel Production Credit ($769 to $900 million), immediate expensing of exploration and development costs ($200 to $255 million), the Enhanced Oil Recovery Credit ($26.3 to $100 million), foreign tax credits ($1.11 to $3.4 billion), foreign income deferrals ($183 to $318 million), and accelerated depreciation allowances ($1.0 to $4.5 billion),” the report continued. There are a lot more subsidies, but you get the idea.
To hear people in the U.S. talk, you would think we believe we have a Constitutional right to cheap gas. One often hears that sort of talk from people who want the government to butt out of their lives. If pumping huge subsidies into the cost of petroleum products is government interference, I’m thinking that they might want to be careful what they wish for.
© 2012 Marsh Creek Media, Gettysburg, Pa.
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