Monday, 05 July 2010

Rants

“Cheap” gas, part 2

Propaganda? What propaganda?  Dept

In the latest installment of its you’re-not-paying-enough-taxes campaign, Gannett’s July 2-5 USA Today carried a front-page article headlined “Gas taxes give us a break at the pump,” and (in smaller letters) “Half the 1975 cost, factoring inflation.”[1]

Let’s explore:
When drivers hit the road in large numbers for the Fourth of July holiday, they will have something extra to celebrate - the lowest gasoline taxes since the early days of the automobile.
Wait a minute!  Somebody actually cut taxes while I wasn’t looking?  How come I don’t know about this?
Holiday drivers will pay less than ever at the pump for upkeep of the nation’s roads - just $19 in gas taxes for every 1,000 miles driven...  That’s a new low in inflation-adjusted dollars, half what drivers paid in 1975.
Oh, so the taxes haven’t changed any, it’s inflation making them worth less.  I see...
Another measure of the trend: Americans spent just 46 cents on gas taxes for every $100 of income in the first quarter of 2010...
Ahem.  What’s special about the “first quarter of 2010,” class?  (Hint)
By comparison, Americans spent $1.18 in 1970 in gas taxes out of every
slightly less ravaged by inflation
$100 earned...
So?  There’s a lot of stuff that costs less today than it did in the 70s. I guess this is another case of “You selfish Americans, you.  You’re not paying what we think should be your share.  Give us another 72 cents, and make it snappy!”
...Tax collections are down because today’s vehicles go farther on a gallon of gas
And isn’t this exactly what the elitists have been yammering about since the 60s?  And when the yammering didn’t work fast enough, what did they do?  They convinced congress to make “gas-guzzlers” illegal.  Hey, remember “C.A.F.E.”?
cutting tax collections while increasing wear and tear on highways.
Unstated message:  If you selfish Americans were’t doing all that driving, the roads wouldn’t be falling apart.  You should be riding buses- or bicycles!  (As if driving your lighter, more fuel-efficient car a bit farther is going to make that much difference.)
Drivers are on the track to spend
i.e., PAY
$55.7 billion on federal, state, and local gas taxes in 2010’s first quarter...
(there’s that “first quarter of 2010,” again)
...down from $68.5 billion in 2000 after adjusting for inflation
(But not adjusting for the difference between the pre-9/11 economy and 2010’s funemployment.)
The American Trucking Association, motorist club AAA and others favor higher gas taxes to reduce congestion and a backlog of road repairs.
So might I, if I could be sure that’s what the money would be used for.  But unfortunately...
“The money you pay at the pump doesn’t always find its way to potholes,” says gas tax opponent Pete Sepp of the National Taxpayers Union.
Exactly.  And isn’t it interesting that Sepp’s quote is the article’s only allusion to the Democrats’ continual efforts to shift gas tax revenues from road construction and repair to more “progressive” (and union-employing) mass-transit projects?  I wonder why...?  Guess there just wasn’t enough room.
The nation’s roads are increasingly financed by other taxes and borrowing.
Personally, I view roads as a fundamental part of the infrastructure, something we should be spending tax money on.  (Better spent on roads than on the Department of Education.)  And if you’re saying roads should “pay for themselves,” what about mass transit?
The federal stimulus plan set aside $26.7 billion for roads...
(“See, the stimulus DID work!” Right.)

So let’s summarize.  The headline is a lie: There’s no “gas tax break” this summer.  Whatever “break” we get comes from operating more efficient- and more expensive- cars[2] and inflation.  And the public should feel guilty because we resist road tax increases and suspect politicians will use them for all kinds of stuff besides, em, fixing the roads.  Sorry.

Elsewhere, related:
The Register:  RAC prof:  Road charges can end the ripoff of motorists
(Here’s yet another case where the U.K. is “ahead” of us:  British road users pay £46 billion each year in fuel duty and road tax, of which no more than a third is actually spent on roads.  This expert proposes replacing all present taxes with a toll system with the proceeds firewalled from sticky government fingers.  Fat chance.)
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[1]  article by Dennis Cauchon, appeared: USA Today, July 2-5, 2010, page 1.  Not found online, but I have a scan.

[2]   Unless your 1970 car was a VW bug and your 2010 “car” is a SUV - but that’s your own fault, isn’t it, you evil polluter you!

Posted by: Old Grouch in Rants at 21:05:56 GMT | No Comments | Add Comment
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Rants

“Cheap” gas, part 1


A couple of days back, Insty linked a Popular Mechanics story, “Why Is Gas so Cheap Right Now?”

In the week running up to the July 4th weekend, the average price of a regular gallon of gas is $2.75.  The cost of fuel has been on a steady downward slope since May, when the average price was nearly three bucks a gallon.  And if we adjust the price of fuel for inflation, the cost of gas is as cheap as it was five years ago...
The story’s author fumbles for an answer (he cites Paul Krugman, fercryinoutloud), but finally attributes the U.S.’ “low” prices to the current foreign exchange rates:
It has to do with the relative value of the world's currencies, specifically, the euro versus the dollar.  The euro is tied to a host of European nations and, as you have probably heard, some of those countries are in a bit of a debt crisis, and that has led to the value of the euro falling in relation to the dollar.  Crude-oil prices are tied to the dollar so, in simple terms, our stronger currency is simply buying more oil than before.
Well, maybe.  The Euro’s July 2 interbank middle rate was .7968/$, down from .8074/$ on June 25, and down 14% from the first of the year.[1]  But this explanation strikes me as incomplete.  And it specifically fails to account for the lack of volatility of the price at the pump over the last few months.

Because not only has the pump price not increased, it has also been remarkably stable in the face of the sort of external events that used to set it wildly gyrating.  Consider...

We’ve heard rumblings from the middle east (Iran threatens nuclear war on Israel, Turkey (and Iran) stirs up the Palestinians, various “informed sources” raise the possibility of Israel preemptively nuking Iran, etc., etc.).  The oil market? “Ho, hum.”

Then there’s BP’s debacle in the Gulf of Mexico, topped with the president’s on-again-off-again-on-again drilling moratorium.  Reaction? “Z-z-z-z-z-z.”
$2.559/gallon gas in South Carolina on June 30th
In the past, either would have instantly rocketed the price above $3.00 per gallon.

And finally, we’ve seen two holiday weekends go by- Memorial Day and now July 4th- without the typical 5-10¢ “just because we know you’ll need to buy gas this weekend” price blip.  (Particularly noticable to me during last month’s Memorial Weekend trip to South Carolina.)

Meanwhile, what’s been happening upstream?
Oil fell for a fifth straight day Friday...

Crude prices in New York and London settled down about 1%...  On a weekly basis, oil prices were down about 9%.  In the second quarter [April-June], they fell almost 10%.[2]
Can you say “Summer driving season”?  Apparently not this year.

So what’s my explanation?  Simple: Supply and demand.

Gas today in Indianapolis: $2.699.Supply:   I’m prepared to bet that there is more oil floating around out there (ha-ha!) than was typical when we had an expanding world economy.  A lot more.  Enough more that the folks who make their living betting on oil futures aren’t ready to bet that even a months-long shortage would drive the prices up.

Demand:   I’m also prepared to bet that the United States economy is in considerably worse shape than we’re being told, and possibly in even worse shape than the pessimists are saying.  Unemployed people don’t have to drive (as much).  Businesses which are cutting back don’t require as many deliveries. Manufacturing cutbacks reduce the demand for petroleum feedstocks.  All of which pressure prices downward.

Mix them both and presto, we wind up with “unexpectedly” low(er) gasoline prices.  Well, enjoy ’em, if you can pay ’em.

And appreciate the irony:  The mess brought on by our government’s lousy economic policies is shielding it from the consequences of its lousier energy policies.  For the moment, anyway.  After all, there’s always cap-and-trade!

LATER (100707): MaxedOutMama posts an interesting chart of U.S. gasoline deliveries:  1985 levels!

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[1]  source: Reuters, via The Wall Street Journal: “World Value of the Dollar,” July 3-4, 2010, Page B6.

[2]  source: Reuters, via Investor’s Business Daily: “CRB Suffers Big Loss For the Week as Tumbling Crude Weighs On Index,” July 6, 2010, Page B16.

Posted by: Old Grouch in Rants at 18:01:31 GMT | No Comments | Add Comment
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