Re: Peeved at the pump

From: Dr. Blake Nelson <>
Date: Sat May 15 2004 - 19:22:36 EDT

--- Michael Roberts <>
> > Sorry to have slipped into such vitriolic
> sarcasm. I do get rather
> > tired of 'solutions' which don't solve a thing and
> I still contend,
> > Howard, that the poor can't afford 75 dollars to
> fill up a gas tank once
> > a week and at the same time afford a 12,000 GBP
> car, especially when in
> > Britain the government taxes both items to the
> hilt.
> Come on Glenn, this is sheer exaggeration! I think I
> have lived in Britain
> longer than you have so I can say that you are not
> accurate.
> Who do you mean by the poor? Here there is a high
> level or car ownership and
> where I used to live in N Wales hardly a rich area
> and in inner city
> Liverpool before that, most had cars. Granted they
> were not 12,000 cars
> (that would buy you a one year old Ford
> Contour/Mondeo and a continental
> holiday for a couple) Yes the poor have older cars -
> 8-12 years old but even
> some ASA members don't have new ones!! We have two
> cars a 96 Mondeo (106K on
> the clock) and a midget 2001 Peugeot, which are fine
> for us and we might get
> 5000 if we traded them in.
> For $75 we would get a good 500 miles of motoring
> in, which is a lot over
> here, even living in the country.
> Alos dont forget that in towns many use public
> transport to get to work.
> The thing I find hard is a gas guzzler getting some
> 10 mpg or even a
> moderate 4X4 getting 20. Also think of the fuel
> wasted by automatics.
> We have just done a round trip of 450 miles which
> used less than 45 gas and
> most of that was cruising at 80 mph. Now if we had a
> large US car it would
> have cost us 90 or even a Range Rover, which is a
> ridiculous vehicle
> Michael
Sorry I don't have time to do justice to all the
wonderful discussion back and forth. Just a couple

1. Many countries and states in the U.S. have tried
to reflect the cost of replacing oil with an
extraction tax, this applies to other mineral wealth
as well, but the extraction taxes never really
approximate the true long-term cost of replacement.

2. The doom and gloom of Glenn re cars and the cost
of driving for the poor is a bit over the top. Many
poor cannot afford cars to begin with regardless of
gas prices, especially in high density urban centers.

3. Quite frankly, the problem seems to be one of
urban planning and population density. When I moved
into urban Washington DC we got rid of both our cars.
There is no practical need for them. I intentionally
don't live in a gigantic house way out in the suburbs
because 1) I dont want the commute, 2) it is
environmentally problematic to do so for a host of
reasons I won't go into about suburbs and exoburbs,
and 3) I have no desire to equate social status with
square footage.

4. Once urban density reaches a certain level of mass
transit is close enough to anywhere you might
reasonably need to go and economical. The problem is
urban planning and massive urban sprawl. Glenn's
point may be true in rural areas with low population
density such as I used to live in before DC and in
some cities in the US -- mainly Midwest and West --
that have lousy urban planning and are so sprawling
and have such lousy public transit that one needs a
car. Punitive gas taxes may not be a one size fits
all answer, but (the lack of) urban planning is simply
out of hand and some high population density cities
could simply do without personal cars within a certain
distance/population density from their core.

5. In that sense, although I do not know the details
of it, something like London's recent congestion tax
re car use seems very appropriate. Not knowing the
details, I dont know if they did a good job on the
economic side of things in making it make sense, but
there is no need for cars in the heart of cities like
London, DC, New York, etc.

6. Re what I recall was one of Howard's points re
legislating against high gas consuming cars or SUVs or
whatever is not possible in a global market. If
people want to buy SUVs they will buy foreign SUVs, it
is bad economic policy in the sense that it neither
solves the problem it tries to do and puts domestic
industry at a disadvantage and you can't, under world
trade laws, tax such cars from oversees without
getting slapped with trade sanctions, etc.

In other words, these issues are complex and involve a
host of other variables that are affected when one
tries to tamper with one variable and unless one
thinks these things through thoroughly, most solutions
are worse than the original problem.

It seems to me, from my barely educated perspective,
that the real problem driving much of this is urban
planning, at least in the US and accurately pricing
resources based on replacement costs (note paying
taxes to the government does NOTHING to actually
replace those resources, even if the money goes into
R&D programs) and environmental impact. Just as an
aside, if coal plants had to pay for the environmental
costs of their burning coal, they would be wildly
expensive to run and people wouldn't burn coal. But,
again, paying taxes to the government does not
necessarily clean up the environmental damage caused
by coal or pay the medical bills of those who have
cancers, etc. caused by fly ash, etc., nor does it
make coal burners pay the real cost (especially given
the difficulty in pinpointing that cost).

As a last little NIMBY issue lots or urban planning,
power generation planning, etc. is now getting hoisted
on the converse petard of things like sugar subsidies.
 For example, congestion costs in power transmission
are HUGE. The rational solution would be to build
more transmission capacity. In fact, the cost to
build more transmission capacity in congested places
like the US NorthEast is a fraction of the congestion
costs paid EACH YEAR. However, those congestion costs
are minimal to each end user. Somewhere around $5.
When confronted with $5 on their monthly electricity
bill for congestion, the average person will say, I
will pay $5 rather than have a new power line sited
anywhere near me. So, you have a massively
macroeconomically inefficient problem driven by the
microeconomic preference to eat $5 a month rather than
risk a transmission line through their back yard.

It is a complex, multivariate world in which we live.
We may indeed be the reindeer on St. Matthew's
Island, but probably not for the reasons Glenn thinks
we are.

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Received on Sat May 15 19:23:00 2004

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