Fungible doesn’t mean you’re off the hook

The past position of essentially all central-Austin neighborhoods (and, impotent stomach unfortunately, current position of many, including my current one and the last one) regarding high-density development was “none, never”.
Now, there appears to be, in some of the more enlightened neighborhoods, a position which they believe to be sufficient which is certainly BETTER than the old “none, never”, but still has some problems. I call it “stick ’em in high-rises downtown”, and it goes something like this:
“Preserve our single-family character by banning all apartments in and near our houses – instead, support more density downtown. Apartment dwellers want to be where the action is, anyway, don’t they?”
Unfortunately, in my response to a thread along these lines in one neighborhood’s yahoo group, I completely forgot the economic argument – namely that condos like my unit in Clarksville are affordable, but neither the high-rise downtown nor the single-family house in Rosedale ever will be.
Here’s what I wrote in that last response to that group. (I’ve paraphrased the quotes I responded to in parenthetical double-quotes below).

(“Central Austin is still desirable because most people want to live central in houses”)
I prefer to live on Congress Avenue in a mansion. There appears to
only be one way to do that, though, and as Tony Sanchez can tell you,
being rich doesn’t necessarily cut it.
There is a lot of unfilled demand to live central. When all other
things are equal, the majority of people would prefer to live in close
proximity to their job or other frequent non-home activity center.
When all other things are equal, the majority of people would prefer
to live in single-family housing on big lots. Where things get
interesting is where we are now, when those two forces come into
conflict (i.e., there is no possible way to satisfy both to their
fullest degree).
(“The multi-family building, not the tenants, being the problem” – part of this discussion centered on renters being bad neighbors, to which I responded with my theory about rental houses being much worse for neighbors than apartments or condos)
With all due respect, I do not think this is a strawman argument at
all, given how many people in this very discussion have complained
about the behavior of renters (usually packed into HOUSES). It’s
fairly obvious to me that if you restrict the development of
multifamily buildings in the central city, you will get more people
living together in rental houses, and that those tenants are more
difficult to control when they are renting from one landlord each
without the oversight of a HOA (as in a condo building). What about
this is difficult to agree with?
(“Center-city neighborhoods restrict multi-family housing; leads to downtown becoming like Vancouver; and I’m OK with that”, implication being that this satisfies the ‘problem’).
This leaves no room for moderate-density housing, which, for most of
US history, was the development style which the market provided for
most people. The fact that, before zoning restrictions and many of the
governmental economic activity that affects housing development today,
the market tended to provide mostly townhouses, rowhouses, etc. shows
to me that this style of moderate-density housing IS the sweet spot
where the demand for central living and the demand for space are best
compromised.
For instance, the condo unit I lived in for 6 years (and still own) is
one of 14 on Waterston Avenue (Clarksville) which takes up the space
of about 3 single-family houses. I slept with my windows open at
night. Can’t do that in one of those high-rises. On the other hand, I
can’t walk to the grocery store from my single-family house. Frankly,
if we had rowhouses here in Austin in a walkable neighborhood, that’s
where I’d be. We don’t have them, not because there’s no demand, but
because neighborhoods have forcibly kept them out.
To say that there’s no place for anything between (single-family
house) and (high-rise) seems to me to be not much better than saying
that everybody must live single-family.

If I forget, I’m counting on my three devoted readers to please remind me to expand on the rental house vs. apartment/condo issue in the future. OK THANKS BYE.

With the call to build it somewhere pretty or where they can build it bigger is:
The people who most need and use the library currently are quite likely to get there on the bus. Yes, viagra 40mg the bus you think nobody uses; although if you stand outside the current library and look at those buses go by, you’ll quickly be disabused of that particular brand of suburban idiocy.
The current library works well because it’s on one of the two most heavily bus-travelled corridors downtown (Guadalupe). A location on Cesar Chavez too far from Congress, on the other hand, won’t be an easy trip for many of the current patrons.
Look at the map (zoom in on the lower-right inset). Notice how many buses go right next to the thing. Most of the rest of the buses are three blocks away on Congress. So, a huge chunk of routes don’t require any walk at all, and most of the rest require a 3-block walk at most.
Now, consider the proposed new site at what’s now the water treatment plant. Going by current routes, two come fairly close, but the big conglomeration coming down Guadalupe/Lavaca will be about two blocks away; and the Congress routes about five blocks away.
This doesn’t sound like much to walk, and it wouldn’t be for most of us. However, as somebody who hasn’t been able to walk well for quite a while now and used to serve on a commission where we were often taking up issues important to those who are mobility-impaired, I have more appreciation than most for what a pain in the ass this is going to be. Oh, and don’t forget, unlike most of the people involved with this decision, I’ve been to this library many times – and I can tell you that at any given time, a huge number, possibly even the majority of the patrons arrived on the bus, and a large fraction of those are either elderly or in wheelchairs or both. For THOSE people, two more blocks is a lot to ask.
Don’t move somewhere which makes the library less accessible to those who need it most just for the sake of being pretty. Please say no to moving the central library off the main bus lines.
Update: Several commenters have commented along these lines (paraphrased, with my response):
“Isn’t commuter rail going to a transit hub at Seaholm anyways?” – please do yourself a favor and read this category archive and start with this post, OK? Short summary: It ain’t going to Seaholm for decades, if then. And Seaholm is still a couple-blocks’-walk from this site.
The buses will just be moved to go by the library – this isn’t going to happen either, folks. Long-haul bus routes don’t make two-block jogs just for the hell of it (people already complain about how supposedly indirect these things are). Each one of those bus routes might deliver a dozen passengers a day to the existing library – enough to make it a valuable part of the demand for the current route, but not enough to justify hauling a long, heavy, bus around a bunch of tight corners.

A pseudonymous trogolyde in this well-commented thread on Metroblogging Austin has just invoked the second component the “Austin no-growther duo”, viagra approved the first being “It’s all the Californian’s fault”.

M1EK if you are so in love with density. And the idea of quaint neighborhoods with small houses is too much to take move the fuck out of Austin. Move to fucking Houston. Developers have less restrictions. You can tear down houses and build condos and no bats an eye.

The charm, viagra 60mg it just oozes off the screen.
It’s probably a good time to repoint readers to this article on Houston in which the author alleges a similar, perhaps even greater, interference by the government there in the processes which would otherwise create density, despite the oft-celebrated lack of zoning. One example, in case you don’t want to wade through the PDF,

Until 1998, [FN37] Houston’s city code provided that the minimum lot size for detached [FN38]
single-family dwellings was 5000 square feet. [FN39] And until 1998, [FN40] Houston’s
government made it virtually impossible for developers to build large numbers of non-detached
single-family homes such as townhouses, [FN41] by requiring townhouses to sit on at least 2250
square feet of land. [FN42] As Siegan admits, this law “tend(ed) to preclude the erection of
lower cost townhouses” [FN43] and thus effectively meant that townhouses “cannot be built for
the lower and lower middle income groups.” [FN44] Houston’s townhouse regulations, unlike its
regulations governing detached houses, [FN45] were significantly more restrictive than those of
other North American cities. For example, town houses may be as small as 647 square feet of
land in Dallas, [FN46] 560 square feet in Phoenix, [FN47] and 390 square feet in Toronto,
Canada. [FN48]
Houston’s anti-townhouse policy, combined with its minimum lot size requirement for detached
houses, effectively meant that almost all single-family development in Houston had to be on a lot
of at least 5000 square feet [FN49] (which means that single-family areas in Houston could have
no more than 8.7 houses per acre).

There’s a lot more. Again, I highly recommend you read this if you’ve ever heard that “Houston has no zoning”.

A pseudonymous trogolyde in this well-commented thread on Metroblogging Austin has just invoked the second component the “Austin no-growther duo”, viagra approved the first being “It’s all the Californian’s fault”.

M1EK if you are so in love with density. And the idea of quaint neighborhoods with small houses is too much to take move the fuck out of Austin. Move to fucking Houston. Developers have less restrictions. You can tear down houses and build condos and no bats an eye.

The charm, viagra 60mg it just oozes off the screen.
It’s probably a good time to repoint readers to this article on Houston in which the author alleges a similar, perhaps even greater, interference by the government there in the processes which would otherwise create density, despite the oft-celebrated lack of zoning. One example, in case you don’t want to wade through the PDF,

Until 1998, [FN37] Houston’s city code provided that the minimum lot size for detached [FN38]
single-family dwellings was 5000 square feet. [FN39] And until 1998, [FN40] Houston’s
government made it virtually impossible for developers to build large numbers of non-detached
single-family homes such as townhouses, [FN41] by requiring townhouses to sit on at least 2250
square feet of land. [FN42] As Siegan admits, this law “tend(ed) to preclude the erection of
lower cost townhouses” [FN43] and thus effectively meant that townhouses “cannot be built for
the lower and lower middle income groups.” [FN44] Houston’s townhouse regulations, unlike its
regulations governing detached houses, [FN45] were significantly more restrictive than those of
other North American cities. For example, town houses may be as small as 647 square feet of
land in Dallas, [FN46] 560 square feet in Phoenix, [FN47] and 390 square feet in Toronto,
Canada. [FN48]
Houston’s anti-townhouse policy, combined with its minimum lot size requirement for detached
houses, effectively meant that almost all single-family development in Houston had to be on a lot
of at least 5000 square feet [FN49] (which means that single-family areas in Houston could have
no more than 8.7 houses per acre).

There’s a lot more. Again, I highly recommend you read this if you’ve ever heard that “Houston has no zoning”.

This Shoal Creek decision is a shameful abrogation of the responsiblity to ensure safe and reliable travel for all road users. When the TTI reported to the subcommitte that other cities unanimously recommended against variants of “Option III”, drugs
that should have relegated it to the scrap heap, here
even if the neighborhood were unanimously in favor of it.
As it stood, all the Council had to do was stand with a large minority of neighborhood residents and do the right thing.
I have never been more ashamed of our city than I am today. I hope you can live with yourselves when a kid riding his bike to Northwest Park gets run over when he “swerves into traffic” to get around a parked car.
Disgustedly yours,
Michael E. Dahmus
mdahmus@io.com

Whether it’s in science (usually global warming or evolution) or local politics, contagion journalists addicted to “he-said she-said” should turn in their press pass. If that’s all we needed, pestilence simple links to a couple of ideological websites would suffice.

With global warming, you effectively have an overwhelming scientific consensus and a couple of skeptics – bought and paid for by oil companies (and, of course, a college dropout Bush appointee trying to censor one of this country’s most experienced climatologists). The media usually covers this as “he-said, she-said”, which is OK when there truly IS no consensus, but we passed that point ten years ago.

In the Shoal Creek debacle instance, the Chronicle didn’t bother to tell you that the TTI, hired by the City Council in an obvious attempt to provide at least some political cover for choosing “Option 3”, reported back to them that the peer cities fairly unanimously recommended “Option 2”, and that all of them recommended very strongly against “Option 3”. Paraphrased, the response was, essentially, “why don’t you idiots just restrict parking on one side of the street?”.

Did the Chronicle mention this, either at the time or now that the council subcommittee ignored everybody who knows diddly-squat about traffic safety and ordered Option 3? Of course not. It’s “car-free bike lane guys say X. On the other hand, neighborhood people say Y”. No mention of which position might be more credible. No mention of the fact that the experts the city hired to consult were firmly on one of the two sides.

Fifty-fifty balance sucks. A chimp could collate two press releases together and turn them into an article. Chronicle, have another banana.

The economists who are gleeful over the Dilbert cartoon on Sunday are missing a very, viagra here very, visit this site very important point.
War trumps economics, valeologist and economics can prevent war. Sometimes that’s a good thing (economics preventing war); sometimes not.
In this case, We’re (in the US) supposedly prevented from dealing forcefully with the country which paid most of the money and sent most of the people on the planes which killed 3,000 of our own people on our own soil. Why? That country is essentially the only one today which could practically increase or decrease its oil production, and we, unlike the rest of the industrialized world, are critically dependent on not just oil, but CHEAP oil.
In other words, the French and Germans care less about the Saudi royal family being overthrown because they don’t need cheap oil as badly as we do. They use oil, sure, but they’ve taxed it heavily (as a rational response to the costs of delivering it, the associated infrastructure such as roads, and negative externalities such as pollution). We, on the other hand, actually keep gasoline CHEAPER than it would be if we just required drivers to pay for all of the roads and such they use, without even accounting for pollution and other less easily quantifiable externalities.
As a result, we still haven’t really struck back at the people who so badly need striking back upon because the ruling party is so critically dependent on the votes of people who ‘need’ to drive a truck 15,000 miles a year at 12 miles per gallon and were livid at $3/gallon gas, much less the $6 or $7 the Europeans pay.
FDR and Truman would have had the heads of anybody who suggested that we couldn’t ‘afford’ to fight the Germans or Japanese. But, today, that’s exactly what people say about the Saudis. We can’t ‘afford’ to even SPEAK toughly with them, because, hey, the oil!
In WWII, we put up posters reminding people that they were sacrificing cheap oil for a bigger cause. War, in other words, trumped economics, as it should have. Now, of course, we can’t, because even the Democrats are in the thrall of suburban sprawl, and the Republicans are much worse. Even when 3,000 of our own civilians died on our own soil. It’ll be hard to change this even when cheap oil is no longer possible, but Scott Adams is making it even harder by making those who care about the issue seem like fools.
It makes me sick that we still haven’t done squat to the Saudis after all this time, but it makes me even sicker that Scott Adams has fallen in with such loathsome, cowardly people. Shameful, Scott. Shameful.

17 Replies to “Fungible doesn’t mean you’re off the hook”

  1. [W]e, unlike the rest of the industrialized world, are critically dependent on not just oil, but CHEAP oil.
    In other words, the French and Germans care less about the Saudi royal family being overthrown because they don’t need cheap oil as badly as we do. They use oil, sure, but they’ve taxed it heavily (as a rational response to the costs of delivering it, the associated infrastructure such as roads, and negative externalities such as pollution).
    Sorry, I can’t buy that at all. Both the French and German economies consume massive amounts of petroleum-based products (including plastics– petroleum isn’t all about gasoline as you know, though various fuels are the primary use by far). A rise in the commodity price of oil hurts the French and German economies as much as it does the US. Even if you think that France and Germany would cut their gas taxes in order to keep the price of gas stable in their countries, that would still cause enormous problems in their tax revenue. Undoubtedly higher fuel prices would cause disruptions in the US economy; but higher fuel prices than what they have currently would also cause disruptions in the French and German economy.
    Indeed, one could offer an argument in the other direction easily. The US could adopt technology and techniques already used in various countries (including Japan) with higher gas taxes, while those countries with higher gas taxes would be forced to invent new technologies to increase their efficiency further. Since invention is more expensive than copying, it could be easier for the US to adjust.
    Combine that with the fact that the US does still produce 8.69 millions of barrels per day of petroleum whereas France and Germany have essentially no domestic sources, and it’s certainly possible to make a case that the effects would fall more harshly on France and Germany. While oil is fungible, the existence of oil in a country provides a hedge for the overall economy against price increases. (Countering this is the existence of Total, the giant French oil company that gives the overall French economy a boost, though they don’t have domestic sources.)
    Also, incidentally, note that the UK doesn’t tax jet fuel at all. Also note that France and Germany have considerably lower fuel tax on diesel than on gasoline, unlike the US and UK. (Some data.)

  2. Most oil, even in Europe, is used for transportation. The effect of raising the end-user price of a gallon of gas from $5.00 to $6.00 is less than that of raising the end-user price of a gallon of gas from $1.00 to $2.00, especially given how many miles and how few miles-per-gallon the latter driver gets.
    The domestic production of oil IS, in fact, meaningless. The US oil producers would, as the fungibility argument states, sell to the highest bidder, which is not necessarily the local one.

  3. “The US oil producers would, as the fungibility argument states, sell to the highest bidder, which is not necessarily the local one.”
    Yes, they sell to the highest bidder. But they’re still making more money. If you want to consider the effect on the US economy as a whole, it’s still a hedge. The oil companies make more profit and do more operations in the US. Ask anyone from Louisiana or Houston; those areas did very well during the late 70s oil crisis. The overall economy still suffers, but sectors of the economy do well, counter-cyclically. If the price of oil is going up, it’s better to own oil.

  4. “Most oil, even in Europe, is used for transportation.”
    Well, we’ll set aside heating oil for now, though it is important in those economies which use it rather than natural gas. (If we want to discuss hydrocarbons in general, that’s a different issue.)
    http://www.eia.doe.gov/emeu/iea/wecbtu.html
    Check out the total petroleum use totals. Besides noting that Canada uses more per capita than the US, note that the US uses 39 quadrillion BTU of petroleum energy. The EU countries (with a population roughly that of the US) in total use roughly 32-33 quadrillion BTU of petroleum energy. A $10 per barrel increase in world market price is going to affect both areas heavily.
    “The effect of raising the end-user price of a gallon of gas from $5.00 to $6.00 is less than that of raising the end-user price of a gallon of gas from $1.00 to $2.00, especially given how many miles and how few miles-per-gallon the latter driver gets.”
    The total price difference is the same per gallon used. How many miles driven is affected by population density, but of course it makes a difference. How many miles-per-gallon can actually be spun as a win for the US– it is easier for the US population to transition to higher fuel economy cars that are already being produced and used in Europe and Japan than it is for Europe and Japan to transition to cars with yet higher fuel economy which don’t exist yet. Thus, it’s easier for the US economy to cushion the blow from higher gas prices, because there’s an obvious fairly cheap way to transition to higher gas efficiency.

  5. Sorry, I should say that the Western European countries use roughly 30 million quadrillion BTU of energy, and have a population roughly similar to the US. The recent Eastern European additions add lots of population, but have smaller economies and much less per capita petroleum use.

  6. I’m sorry, but you’re spinning pretty heavily if you don’t acknowledge that a 100% increase in the cost of gas in a country where the average driver goes 12,000 miles per year at 20 mpg (if that) affects the economy more than a 20% increase in a country where the average driver might go 5,000 miles per year at 40 mpg.
    In the USA, in particular, consumer spending is the main economic driver – so you have THAT multiplier as well.

  7. “The domestic production of oil IS, in fact, meaningless. The US oil producers would, as the fungibility argument states, sell to the highest bidder, which is not necessarily the local one.”
    Let’s take this to the reducto ad absurdum. “The domestic production of oil IS, in fact, meaningless. The Saudi economy, which has very high per capita oil consumption due to ridiculous oil subsidies, will clearly be hurt even more than the US economy if the world price of oil rises further.” Do you buy that? I don’t. Clearly in the case of Saudi Arabia, since they’re a massive net exporter of oil, a rising oil price helps their economy rather than hurting it, even though it hurts the world economy as a whole.

  8. “I’m sorry, but you’re spinning pretty heavily if you don’t acknowledge that a 100% increase in the cost of gas in a country where the average driver goes 12,000 miles per year at 20 mpg (if that) affects the economy more than a 20% increase in a country where the average driver might go 5,000 miles per year at 40 mpg.”
    Your example, if valid, “proves” that personal transportation cannot be the main use of petroleum. Your example gives an average use of 600 gallons of gas in the US, but only 125 gallons of gas in Western Europe. Quite simply not accurate. Total per capita consumption of petroleum in the US is higher than in Western Europe, but it’s certainly nowhere near double. Please check the official statistics I linked to.
    Percentage increase is irrelevant. Total per capita consumption is important. The important thing is the total per capita cost to the GDP. Just like oil is fungible, so is consumer spending. People can (and do!) cut back on other spending when oil prices increase. If your rent goes up by $50 per month, that’s an extra $50 per month out of your pocket regardless of whether you were paying $200 or $1000 per month. The increase as a percentage of your total _income_ is important, certainly, because that controls how much you can afford to rearrange your other spending. However, since the US has higher per capita GDP than Western Europe (except for very high per capita income– and incidentally even higher than the US petroleum usage– Luxembourg), the average US consumer has a better ability to absorb a gas increase in his or her budget.

  9. Dude, this ain’t usenet. Find your own citations, and argue shorter.
    I maintain that the hit TO THE CONSUMER is far worse in the US scenario than in the European scenario, since they’re “used to” $5.00 a gallon, and have obviously adjusted to use less petroleum for transportation.
    (The rest is probably made up by more heating oil which is a lot easier to ‘turn down’ than is your daily commute – and a lot easier to replace with other sources if necessary – i.e. get an electric heater which you run off your convenient frenchy nukular power).
    And your earlier comments about cycling the vehicle fleet in the US are nonsensical as well – last I read it took something like 20 years to cycle the whole fleet.

  10. I gave you the citation:
    http://www.eia.doe.gov/emeu/iea/wecbtu.html
    Click on the Excel table discussing petroleum use. The commenting system removes HTML, so I can’t do it as a link.
    Look, I FAVOR higher gas taxes, and I AGREE that higher gas taxes would, in the long run, reduce oil consumption and, indeed, reduce foreign policy dependence on the Saudis. I’m only taking issue with your confusion on the international comparison, and with your maddening inconsistency.
    International comparison:
    “I maintain that the hit TO THE CONSUMER is far worse in the US scenario than in the European scenario, since they’re “used to” $5.00 a gallon, and have obviously adjusted to use less petroleum for transportation.”
    As I said, and posted sources for, the difference in overall petroleum useage is not as large as you’re making it out to be. The hit TO THE CONSUMER depends on per capita petroleum usage in the entire economy, not just on their direct gas consumption. Non-direct use counts as well; if it’s used by industry, that price increase is going to find its way into consumer prices. In addition, the effect on the domestic economy from domestic production matters as well. Ask people from Houston and from Louisiana how the price of oil affects their entire local economy.
    Combine those two things (per capita use is not as different as you claim, perhaps 50% higher in the US than in Germany and France, the presence of a domestic oil economy that benefits when prices rise, hedging the overall effect on the economy), and I believe that Germany and France are affected to a very similar degree geopolitically as the US. All of the countries have an addiction to oil that causes them to suck up to the Saudis. Germany and France would be even worse off if their gas taxes were lower and their consumption higher, but it’s wrong in my opinion to claim that “the French and Germans care less about the Saudi royal family being overthrown” than we do.
    Maddening inconsistencies:
    “(The rest is probably made up by more heating oil which is a lot easier to ‘turn down’ than is your daily commute – and a lot easier to replace with other sources if necessary – i.e. get an electric heater which you run off your convenient frenchy nukular power).”
    I’ll grant this point– the difference in Western European and North American petroleum consumption is larger
    “last I read it took something like 20 years to cycle the whole fleet.”
    Which, interestingly enough, is a problem with raising CAFE standards from an emissions standpoint (as opposed to raising the gas tax). Raising CAFE standards increases the prices of new cars, and thus slows down fleet turnover, definitely worsening emissions. (From a fuel economy standpoint, raising CAFE generally helps, although the feedback effects are complicated.)
    OTOH, raising the gas tax encourages faster fleet turnover by owners of less efficient vehicles. The same thing would happen if the commodity price of oil increased.
    Look, I support raising the gas tax. I think it’s a fairly economically efficient way to raise government revenue since that has to be done some way, and it would indeed reduce our dependency on oil by reducing per capita consumption in the long run.
    I just don’t understand why you seem to simultaneously argue that the US economy couldn’t possibly handle an increase in the price of oil due to commodity price increases, yet then, when advocating an increase in taxes, seem to argue that the economy could handle it. If we’re so “critically dependent” on CHEAP oil, then we can’t afford to raise the price of oil by raising the gas tax. I don’t believe that we are, incidentally. I believe that the Western European experience shows that our economy could adjust to higher gas prices, albeit with some pain. But the 40mpg cars are out there, the technology is there to reduce oil consumption in other areas as well. As you mention, heating oil can be replaced with things like nuclear; if that’s cheaper for the economy than turning over the fleet, let’s do it. At least if the goal is to reduce dependence on the Saudis rather than just to be anti-car.
    The same forces that cause us to suck up to the Saudis cause us to resist raising the gas tax. It’s the same thing, except that an increase in the commodity price of oil would affect things other than just cars. If you really believe that the Saudis have a gun pointed at our heads, that’s no reason to pull the trigger first. Luckily, I don’t think that that’s the case. I think that we can safely raise the gas tax.

  11. The one paragraph should say:
    “I’ll grant this point– the difference in Western European and North American petroleum consumption is probably larger in petroleum used for transportation than in petroleum used for other uses, after adjusting for certain uncontrollable factors about the climate.”
    Either we can reduce our oil usage with little pain or we cannot. I can think of lots of arguments either way. I happen to think that the Western European experience shows that there’s lots of room for us to reduce oil consumption with little pain, whereas the Western European countries probably have less headroom to conserve more, since they’re already doing more.

  12. Picking one small element, since again, this ain’t usenet:
    “I just don’t understand why you seem to simultaneously argue that the US economy couldn’t possibly handle an increase in the price of oil due to commodity price increases, yet then, when advocating an increase in taxes, seem to argue that the economy could handle it. ”
    Gas taxes can be raised incrementally over years and years, and the money stays in this country, presumably doing some other good (building transit infrastructure; reducing payroll taxes; etc.). Higher commodity prices just result in the Saudis getting richer and richer. (And no, our relatively large oil production compared to the Europeans doesn’t even come close to making up for it – our costs per barrel are far higher; and we do a piss-poor job of recapturing any of that economic benefit which the oil companies get from those prices – i.e., it doesn’t trickle down for shit).

  13. “we do a piss-poor job of recapturing any of that economic benefit which the oil companies get from those prices”
    Well, the oil companies get the economic benefit, and their shareholders are mostly American. From a macroeconomic point of view, that’s a difference. Look, I have lots of friends from Louisiana who are *not* in the oil business, and they can tell you that it makes a difference for their region when oil prices are higher.
    “Gas taxes can be raised incrementally over years and years, and the money stays in this country, presumably doing some other good (building transit infrastructure; reducing payroll taxes; etc.). Higher commodity prices just result in the Saudis getting richer and richer.”
    Sure, both of those points are largely true. But the latter is just another way of stating that we’re better off no matter what if the commodity price of oil is low (or, another way, if oil isn’t scarce.) No matter whether our gas taxes are high or low, it’s better for our economy if commodity prices are low. Both higher commodity prices and high gas prices due to higher taxes make up poorer, even though one is voluntary and one involuntary. (Yes, we recover some in revenue, but there’s deadweight loss to the economy that’s larger the more we actually reduce usage.)
    If we’re truly “addicted to oil,” to the point where we couldn’t shift away from it without extremely high cost, then high gas taxes plus high commodity prices would be even worse for our economy than just high commodity prices.
    It’s even quite hypothetically possible that the economy could fairly easily absorb an increase in commodity prices which brought our gas prices in line with current European prices, by switching to the technology and car models that they currently use, but that an increase much beyond that would hurt the economy substantially because of a lack of substitutes. In which case, higher gas taxes would make us *more*, not *less* vulnerable to higher commodity prices and oil shocks.
    It all depends on how addicted we are to oil. If a higher price (whether from gas taxes or commodity prices) causes us to reduce our use sufficiently (and the statistics show that people did), then the Saudi power isn’t that great and the economy could handle it. If it doesn’t cause us to reduce our use, then the Saudi power is high, but gas taxes would be just as painful. I’d argue that the economy fairly successfully weathered the recent oil shock and gas price increase, evidence that the gas taxes could be safely increased. It’s strongly *not* in the Saudi interest to let the price per barrel increase much past $60 or $80.
    I also don’t quite understand the argument that goes “switch fuel oil use to electricity generated by nuclear would be cheap and easy, whereas reducing gasoline use would be expensive and hard, so let’s reduce our oil usage by doing the latter first.” But perhaps you actually favor doing the former as well, and this post just doesn’t address it.

  14. And no, our relatively large oil production compared to the Europeans doesn’t even come close to making up for it
    “Relatively large” meaning 8.69 million barrels a day, 3rd most in the world compared to Saudi Arabia’s 10.37 million barrels, and more than twice the 4th most, Iran.
    http://en.wikipedia.org/wiki/Petroleum#Top_petroleum-producing_countries
    Obviously the UK and Norway face a different situation than France and Germany, too.
    We certainly don’t produce enough for our needs, but it does hedge things somewhat.
    “our costs per barrel are far higher”
    Irrelevant. The additional profit per barrel as the commodity price goes up is the same regardless of extraction cost. Extraction cost affects total profit, but not change in profit. If anything, this means that a higher cost per barrel transforms unprofitable oil fields into profitable ones; e.g. when oil is $20/barrel, Texas and Louisiana oil fields can’t compete with the Saudis and lose money.

  15. If higher taxes are good, then why don’t we raise taxes on eerything?
    Things should cost what they cost; no more and no less. Whenever government imposes a tax or supplies a subsidy, that distorts the information available to consumers about what is worth what. Taxing gasoline as a proxy for taxing road use is fine. Taxing gasoline for public policy reasons is decidedly not fine. It’s meddling in things the legislators don’t understand.

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