Seems to me the supply/demand/price thing is just another lie based on circular reasoning
I read today that China is going to lift it's gasoline subsidies and let the price rise. This is to curb the rapidly increasing demand. Apparently China is buying into this same supply/demand/price ruse that you have so cleverly seen right through.
Part of the problem in the '70s was the government meddling with supplies, price caps, and gas distribution. A real mess.
I think if you look at the situation back in the 1970s, it was totally caused by our government sticking their nose into other countries business. Then trying to get tough with the oil producers worked real well. :sick:
This current is not free from government intervention. The ethanol mandates and the CAFE regulations have all been part of stirring the pot. If oil producer A thinks you are trying to replace him with some alternative. He just cuts the supply as OPEC did last year. Up went the prices. As long as we are in need of someone else to supply our addiction. It would pay to try and get along with them. Or conquer them as in the case of Iraq.
Not as many as we need, which is why congestion has been getting worse with the exception of the last few months. A return back to cheap gas or the development of a cheap alternative will undoubtably restart the trend of increasing congestion. At which point we have the option of not building roads and allowing congestion to worsen or entering into a race to see if road construction can keep up with the increasing demand for road space. Neither approach seems very enlightened.
As far as I can tell not only has expanding highway capacity lagged behind increased highway usage but our ability to maintain existing highways seems to have declined. A lot of people will attribute this to state and local governments using these funds for other purposes. Maybe that's part of the problem but I can't see how an 18.4 cents per gallon federal tax that may have been adequate in 1991 would still be adequate 17 years later. And people buying more fuel efficient cars will only aggravate this situation. If we maintain our philosopy that roads should be paid for by the users we will really need to transition to some sort of per mile rather than per gallon system.
A lot of people will attribute this to state and local governments using these funds for other purposes
That seems to be the case in Minnesota, but this link is a bit stale, and the cause may eventually be found more with a design flaw than funding. Still not too comforting:
"state transportation officials had put off recommendations from experts to make it safer, failed to follow their own inspection policies and at times allowed financing concerns to affect how it was maintained, "
Maybe that's part of the problem but I can't see how an 18.4 cents per gallon federal tax that may have been adequate in 1991 would still be adequate 17 years later.
I think the highway/gas/tolls would be enough, since with increased traffic more is being used. In addition, those of us who live in places where there are tolls, trust me, they keep going up. The real issue? Diversion of funds. Most municipalities see this as a slush fund, to be "borrowed" against. And then, when it's time to pay to repair the bridge that the funds were allegedly earmarked for..... you.... float... a BOND ISSUE!!!
The ethanol mandates and the CAFE regulations have all been part of stirring the pot.
Have the new CAFE standards been enacted yet? I suspect that if these high gas prices stick around we'll meet or exceed the standards well ahead of schedule and would have done so without CAFE. However the CAFE proponents will then pat themselves on the back and say, "look at how effective this legislation has been". The same thing happened in the 70's and 80's. Suddenly a lot of car buyers became interested in fuel efficiency and the Toyotas, Hondas and Datsuns were the best options. These cars already exceeded CAFE standards so obviously their manufacturers weren't being driven by any legislation. When the US fleet average improved during this time the CAFE advocates were quick to take credit.
mmm, we will see in the following weeks if this announcement from China is real or just plain hype. My guess is that they won't totally lift subsidies and just let the price rise a little only.
A price increase was long overdue here, as prices have been roughly the same since the end of last year, in contradiction with the barrel price evolution. This was very acute for diesel. I often come across traffic jams due to long queues of trucks waiting to get their small ration. This is the ridiculous results of retail price controls.
"I can't see how an 18.4 cents per gallon federal tax that may have been adequate in 1991 would still be adequate 17 years later."
Here's how:
The federal tax in 1991 was MORE than adequate then. Presuming that it was just barely enough is false logic. The government NEVER takes just barely enough.
Witness the myriad toll highways throughout our country. The tolls were put in place specifically to pay for the stretches of highway on which they're charged. Yet, when the roads are paid off, the tolls not only remain, but often continue to increase. How can this be? How does the government justify this?
Well, they don't have to, because they're the government.
But that's state gov't, and we were talking federal, so here we go. The federal interstate highway system is complete. Our friends in Congress finished that project years ago. Now, all the federal gas tax money only needs to MAINTAIN the existing roads, not build new ones.
Now, we all know that maintaining an existing structure costs less than building it from scratch, right? I mean, maintaining our current houses costs less than building new ones. Maintaining our current cars costs less than buying new ones. And maintaining a highway costs less than building a new one.
So why didn't federal gas taxes go DOWN when the I.H.S. was complete? The fact that they even remained the same amounts to a massive tax increase, which MORE than covers the cost of maintenance.
BTW, the federal government is not short of cash in any department. Last year, it took in more money than ever in the history of the United States. And part of that record level of revenue came from the tax money that Exxon/Mobil, BP/Amoco, Chevron/Texaco, et al. paid on their "obscene" profits.
Yeah, let's not forget that for all the whining and congressional dog and pony shows our government foists on us, they're never ashamed to take a cut of the increased profits from those greedy corporations.
Maybe some of THAT extra money could cover any .... ummm ...... revenue shortfalls in the cleverly-titled "Highway Trust Fund."
Suddenly a lot of car buyers became interested in fuel efficiency and the Toyotas, Hondas and Datsuns were the best options. These cars already exceeded CAFE standards so obviously their manufacturers weren't being driven by any legislation.
When you say no legistation, do you mean no US legislation? I' don't know if they were subject to home market regs around economy, however I know that Europe and Japan? have been pretty restrictive around engine size, if not necessarily economy directly.
A member of another forum I belong to is in Iran right now visiting family and he said the same thing. The price of fuel that the average consumer pays has more then doubled in very recent past and will probably go up even more very soon. I have to go back and look at the post to see the specifics though I don't remember the details.
China raised retail gasoline and diesel prices on Thursday by up to 18 percent, a move that threatens to stoke domestic angst over decade-high inflation less than two months before Beijing hosts Olympics games.
The increase in regulated fuel prices, China's first hike in eight months and its sharpest ever one-off rise, sent oil prices down by as much as $3 a barrel as dealers bet it might help curb soaring demand.
According to CNNMoney.com, gas is $1.48/gal in Shanghai.
Most states and localities don't even pretend that toll revenue is earmarked for construction and maintenance on that section of road. I don't drive on many toll roads but when I do I feel that I'm being double taxed since I am still burning gasoline so therefore I'm still paying a fuel tax.
The NJ Turnpike is a good example of how some of these tolls seem like such an arbitrary way to collect revenue. You can drive I-95 all the way from FL without paying a toll. Suddenly you hit a stretch in NJ where you have to pay. You'll be left wondering what exactly is it about this section of highway that warrants an additional fee. It certainly isn't nicer in any way.
A lot of places are either privatizing existing toll roads or getting the private sector to build the new ones. That gets infrastructure built without worry about gas taxes. And it gets the government off the hook a bit.
Meanwhile, "Transportation is the second-biggest household expense, after housing, and suburban families face a relatively greater gas burden. At the same time, distant suburbs, or exurbs, where housing growth was predicated on cheap gas, have experienced the biggest declines in home values in the past year.
Several satellite towns around cities continue to lure jobs and are reinventing themselves with their own city centers."
I'm in a satellite town and everything I need is pretty much within 2 or 3 miles. Unfortunately my wife has an 11 mile commute one way. When we lived in midtown up north, she was able to pop home for lunch all the time (no gas savings there I guess, lol, although she did bike to work often in summer months).
The NJ Turnpike is a good example of how some of these tolls seem like such an arbitrary way to collect revenue. You can drive I-95 all the way from FL without paying a toll. Suddenly you hit a stretch in NJ where you have to pay. You'll be left wondering what exactly is it about this section of highway that warrants an additional fee. It certainly isn't nicer in any way.
Hey, don't knock the 'Pike... the concentrations of varied chemical "aromas" as you travel make it worth paying. I know that I pay acouple of other tolls on 95.... through Delaware and into Maryland, but nothing like the turnpike. And you are right, you don't suddenly feel that the roadway is better maintained, landscaped, got dancing girls waiting to feed you grapes etc.
The federal fuel tax revenue is governed by law in how it will be used/distributed. It must go towards transportation purposes.
Now, we all know that maintaining an existing structure costs less than building it from scratch, right? I mean, maintaining our current houses costs less than building new ones. Maintaining our current cars costs less than buying new ones. And maintaining a highway costs less than building a new one.
Your rational about how maintenance cost will be less than construction costs is terribly flawed. Let's say that it took 25 years to construct the interstate system. So the per year construction costs would be 4% of the total cost. Now lets say that maintenance costs on these roadways run 4% a year. Well that 4% is now on the entire system so it would be equal to the amount spent during construction. To use your analogy it would be like buying a new car per year for 25 years. Now you have to maintain those 25 cars. I suspect your vehicle maintenance costs will amount to more than you spent each year to buy one car. And this is assuming a zero inflation rate and no new highways being built or expanded, which obviously isn't the case.
Europe and Japan don't have anything comparable to CAFE. The European Union has recently enacted guidelines for CO2 emissions per kilometer, which would essentially be a CAFE. But as of now these are not mandatory. What Europe and Japan have done is tax gasoline/diesel heavily, which has created market conditions similar to what we are currently experiencing. So these small, efficient cars were being produced because that is what the consumers wanted. Europe and Japan might have registration fees that are determined by engine size but I'm not sure about that and whether or not this existed 30 years ago.
They both had tax/registration fees strongly dependent on vehicle size. That was the reason Japan developed the "Kei" cars (IIRC), super small 600cc cars that had much lower taxes. The same type of tax structures in Europe (before the EU) resulted in displacement classes, with one break, I believe at about 2000 cc, There are some small-displacement Ferraris from that era, I think. I don't know how the EU handles it now.
Wednesday's report also showed a large increase in supplies of distillates, used to make diesel and heating oil, and a surprise decrease in gas supplies.
Will we see diesel go below gas now that I do not have a diesel vehicle?
You can drive I-95 all the way from FL without paying a toll. Suddenly you hit a stretch in NJ where you have to pay.
That's because the NJ Turnpike predates the Interstate Highway System. The Turnpike was completed in the early 1950s, while the legislation that provided for the Interstates wasn't enacted until 1956. So the Turnpike was just incorporated into the Interstate system. (In a similar fashion, the NYS Thruway, also a toll road that was built before the Interstates came along, later became part of I-87 & I-90.)
Actually, you can't drive I-95 all the way from Florida to Jersey without paying a toll. In Maryland, going North, they stop you on the other side of the Susquehanna river and stick you up for 5 bucks. Then a few miles later when you leave Maryland, you see a big sign that says "Welcome to Delaware. The Free State". And almost immediately you have to stop and pay a $3.00 toll. :confuse: Free my [censored] :mad:
The first paragraph form an article on today's Automotive website reads as follows:
"WASHINGTON -- Lawmakers from auto and oil states warned today that climate change legislation would add to household energy costs and make Americans long for the good old days of $4 gasoline.' "
Is this the kind of hysterical prediction that one would see at or near the top of a bubble, or will the increasing demand for gasoline, diesel, and jet fuel continue to push prices over the long term?
I broke my crystal ball a long time ago, and readily acknowledge that I'm no better than he next guy at predicting commodity prices. My best guess, though, is that human ingenuity and the marketplace will prevail to keep the cost of personal transportation affordable.
What are your thoughts on whether we'll look back with nostaligia one day at the time, in 2008, when gasoline was only $4, adjusted for inflation? In other words, if the dollar continues to weaken, plus even modest inflation, gasoline prices could continue to rise in nominal terms, but remain approximately the same, or even go down, in real terms. Therefore, let's assume, for this discussion, that we are talking about prices which are adjusted for inflation.
Both Delaware and New Hampshire are notorious for having 3 inches of I-95 and charging high enough tolls to run the state. No wonder they don't have sales taxes!
I haven't been that far south on 95 in a long time but it used to be in Richmond they'd have toll booths so close together that you barely got up to speed before there'd be another.
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
If we're just throwing out numbers, then I say it's 1/1000%.
I'll admit that I pulled that 4% out of the air but at least it's probably in the ballpark. 1/1000% is obviously a ridiculous figure. The point I was making is still valid in that you cannot conclude yearly maintenance costs on an entire system are going to be less than initial construction costs on a small part of that system. And in addition to inflation, which you don't account for, maintenance costs will go up over time as the roads and bridges age. And as I also mentioned new construction is taking place, which not only involves costs now but increases future maintenance.
I haven't been that far south on 95 in a long time but it used to be in Richmond they'd have toll booths so close together that you barely got up to speed before there'd be another
They got rid of those toll booths through Richmond years ago. I agree that they were ridiculous. You stopped every couple miles to pay a 25 cent toll. Somewhat negating a major reason we take interstates, which is to avoid stop and go driving.
I thought I had heard long ago about the demise of those tolls. Used to be the two really annoying places (other than the Delaware and Maryland tolls) driving to Florida were that stretch in Virginia and the little piece around Savannah that it took them ages to complete. Would dump you onto a scary local bridge and past the notorious tenth of a second yellow light.
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
"you cannot conclude yearly maintenance costs on an entire system are going to be less than initial construction costs on a small part of that system."
Well, sure! The yearly maintenance costs on my entire house greatly exceed the construction costs of my walk-in closet. But that doesn't mean maintaining my house costs more than the house.
"maintenance costs will go up over time as the roads and bridges age."
Guess what else goes up over time? Government tax revenues. And not just because they take taxes as a PERCENTAGE of price, which self-corrects for inflation, but also because they RAISE the taxes every so often. Plus, the population keeps increasing, which means that MORE people are paying all those ever-increasing taxes.
Like I said, the federal gov't can whine all it wants, but the numbers don't lie -- they're taking in more money now than ever in the history of this country. There's PLENTY of money to build and maintain roads.
The gov't has so much, they even try to build bridges to nowhere!
TIJUANA – Truck and bus drivers experienced a day of chaos in Tijuana yesterday, as they chased a dwindling supply of diesel fuel. Today was shaping up to be even worse.
For weeks, drivers from the United States have snapped up Mexican diesel, which is selling for about 50 percent less than in California.
That has resulted in a shortage of the fuel, and gas stations nearest the border crossings started halting or limiting sales last weekend.
By yesterday, diesel had started to run out at outlying stations, provoking delays or cancellations in public and private transportation. New supplies might not arrive until Monday.
Long lines of trucks and buses, their drivers desperate to buy diesel, formed at those stations still selling the fuel.
Mexican government subsidies keep the fuel price lower than in the United States. A gallon of regular unleaded gas sells for $2.54, diesel for $2.20.
Ay, Chihuahua! That's like hopping in a time maching back to 2005! .
And how long do you think Mexico can afford to offer those kind of subsidies? Pretty soon they are going to have to scale them back just like China, India, Indonesia, Taiwan and according to at least one person I know even Iran is reducing their fuel subsidies.
But that doesn't mean maintaining my house costs more than the house.
I suspect that you are intentionally missing the point because nobody could be that dense.
The cost of building and maintaining a single home is in no way analogous to building homes for 35 years and then comparing the yearly cost of maintaining all these aging homes with how much was spent each year to build a small percentage of them. I use 35 years because that's how long we spent building the interstate system.
The feds don't collect fuel taxes as a percentage. The 18.4 cents per gallon we pay today is 12.6 cents in 1991 value. So this tax has actually been going down in terms of buying power. Sure fuel consumption has increased 28% in this period but that doesn't offset inflation and also doesn't account for the fact that more miles being driven increases wear on existing roads and requires that more roads be built or expanded then maintained. Common sense would indicate that this tax should be indexed to inflation and highway usage. Or we could turn the roads over to the private sector. If we did this does anyone believe we'd be paying the same usage fee that we paid in 1991?
With asphalt being petroleum based I think it's a safe bet that fuel taxes will have to go up in the near future both on the federal and state level. It won't be popular but it will be unavoidable. This will give new fodder to all the conspiracy theorists.
"Lawmakers from auto and oil states warned today that climate change legislation would add to household energy costs and make Americans long for the good old days of $4 gasoline"
That relates not to rising energy prices, but to the added costs that 'cap and trade' CO2 reduction legislation may add to prices. :surprise: :sick:
Governments that subsidize fuel prices for their citizens are wasting value. In Venezuela I believe a gallon of gas is around 12 cents, which means you could fill a 15 gallon tank for $1.80, essentially free. Now if you asked the typical Venezuelan if you could buy this 15 gallons off them for $60 I suspect that most of them would take you up on this offer. The reason being is that Venezuelans are poor and gas is not worth $4/gallon to them. So if you're a socialist leader who's primary goal is to help the poor people in your country wouldn't it make more sense to sell this oil on the open market and distribute the proceeds to these poor people? With this extra cash in hand the poor person can now decide whether he wants to pay market price for gasoline or whether he'd rather buy food, clothes, shelter, etc.. They will choose to spend their money on what they feel offers the most value for them and it probably won't be gasoline. Imagine you were a rancher and had a poor community living nearby. So you chose to slaughter some of your herd and distribute filet mignons and ribeye steaks to these people. An obvious waste of value.
In addition to the wasted value of a cheap gas policy you are encouraging a society that becomes oil and personal vehicle dependent. Does anyone believe that's wise path to follow?
I really do see the point you are trying to make, but I have to admit, I hope that maintenance costs never exceed initial acquisition or construction costs of just about anything, at least not within similar time frames. Those up front costs are short term or even one time deals. Maintenance gets spread over a much longer term. I could go out and buy 10 houses tomorrow. It could cost me maybe a couple of million bucks. If I held onto all ten for even thirty years, I hope my maintenance costs never even scares $2 million.
Regarding roads, I have to guess that revenue generated by one road after that road is completely paid for, goes to fund projects that have nothing to do with the maintenance of that road.
LOL.... Hey, on that note, saw an episode of "Police Videos" which Land Rover should use as an ad... this guy literally drove the front tires off a Range Rover, then the front wheels, then the running boards, all the while the thing kept churning away. Poor owner got to see the chase on TV.
"The cost of building and maintaining a single home is in no way analogous to building homes for 35 years and then comparing the yearly cost of maintaining all these aging homes with how much was spent each year to build a small percentage of them."
And we don't have 35 federal governments that built 35 interstate highway systems. We have one of each, and the former receives MORE than enough money each year to maintain the latter. The price in the 1960s or 1970s to build one stretch of that system is irrelevant.
And, yes the end-user tax on gasoline (the one WE pay at the pump) remains a fixed amount. But the federal government taxes oil and gasoline at several stages on its trip from miles below the earth's surface to the inside of our gas tanks. And the gov't makes MORE money off oil and gas than the oil companies do. Again, no shortage of money for roads (or anything else).
"Common sense would indicate that this tax should be indexed to inflation"
Hey, fine! But will that be the actual rate of inflation (currently at 7.2%), or the fictional rate known as "core inflation" (currently 2.6%) that our government dreams up every year as a propoganda tool and a guideline to increase Social Security payments?
In case the sarcasm isn't thick enough -- I don't trust the gov't to manage expenses any more than I trust their fraudulent economic numbers.
"Or we could turn the roads over to the private sector."
State gov'ts have already beat you to that idea. Here in Texas, our governor wants to sell several public highways to a European corporation, which will then turn them into toll roads.
He's having a problem convincing taxpayers that the roads they already paid for can legally be "sold" to anyone. He's also struggling with enlightening our minds to the concept that we should pay gas taxes to build roads, then let the politicians "sell" them (meaning all that money goes into the general fund), then we should pay more money every time we actually USE the roads we've already paid for, and THEN, we should keep paying the same gas taxes.
I guess some of us just aren't "progressive" thinkers.
Here's one point that you haven't touched on, but that I think you'll agree with; The motoring public of the U.S. has shown a willingness to pay up to $4 per gallon for gasoline. That means that the government COULD have raised gas taxes up to $2 per gallon, if they had started in 2003.
We'd still be buying it. We wouldn't like it, but we'd still buy it, as evidenced by today's consumption.
But the fed. gov't missed the boat! Instead, OPEC is charging us a $2 per gallon gas tax. They're the ones benefitting from all the extra money coming out of our pockets. Think of all the roads THAT money could have built over the last 5 years!
Oh well. Like they say down on the ranch, "If you snooze, you lose!" .
Really? Here in NY/NJ it sometimes feels like an annual exercise. In reality it's more like every 3-4 years or so - just long enough for the paint to start fading on the signs.
And how long do you think Mexico can afford to offer those kind of subsidies?
In Mexico as in Venezuela, they are net exporters of oil. That means they can sell for any price down to the cost of production and refining without subsidizing. Where as India and China are buying oil on the open market and selling the gas and diesel for less than it costs them. So at $2 per gallon Mexico is still making a little money on their oil. They could be making more by selling to US.
I have a contractor friend that has been going down and filling his Ford 1 ton and the 100 gallon tank in the bed at half the cost. He was wishing he had a bigger tank back there. With construction in the toilet here it gives him a slight edge bidding the few jobs. If you hit the border at the right time it is only about an hour and a half round trip.
If we do go to cars that produce water vapor we will end up with another huge problem.....FOG.........Thick Fog will grip the downtowns of major cities... :sick:
You hinted at the real problem the world faces..too many bipeds. What do you propose? Soylent Green?
I could go out and buy 10 houses tomorrow. It could cost me maybe a couple of million bucks. If I held onto all ten for even thirty years, I hope my maintenance costs never even scares $2 million.
What if you spread out the purchase of these 10 homes over a period of 52 years, which is how old some sections of our interstate system are. That would be a little under $40k per year. Don't you think that yearly maintenance on these 10 homes that average 26 years old would be getting close to $40k per year?
We didn't build and pay for our interstate system all at once. If we did I'd agree that yearly maintenance would never approach this construction cost. But if you build something over an extended period of time your construction costs will remain relatively static while your maintenance costs will continue to increase over time. If you do this for long enough at some point maintenance will exceed construction. It's inevitable. When it happens is a function of how maintenance intensive the product you're building is. I'm not sure that US roads were built to the highest standard and I don't think we have the money to keep pace with their deterioration.
Comments
I read today that China is going to lift it's gasoline subsidies and let the price rise. This is to curb the rapidly increasing demand. Apparently China is buying into this same supply/demand/price ruse that you have so cleverly seen right through.
http://money.cnn.com/2008/06/19/markets/oil/index.htm?postversion=2008061911
I think if you look at the situation back in the 1970s, it was totally caused by our government sticking their nose into other countries business. Then trying to get tough with the oil producers worked real well. :sick:
This current is not free from government intervention. The ethanol mandates and the CAFE regulations have all been part of stirring the pot. If oil producer A thinks you are trying to replace him with some alternative. He just cuts the supply as OPEC did last year. Up went the prices. As long as we are in need of someone else to supply our addiction. It would pay to try and get along with them. Or conquer them as in the case of Iraq.
Not as many as we need, which is why congestion has been getting worse with the exception of the last few months. A return back to cheap gas or the development of a cheap alternative will undoubtably restart the trend of increasing congestion. At which point we have the option of not building roads and allowing congestion to worsen or entering into a race to see if road construction can keep up with the increasing demand for road space. Neither approach seems very enlightened.
As far as I can tell not only has expanding highway capacity lagged behind increased highway usage but our ability to maintain existing highways seems to have declined. A lot of people will attribute this to state and local governments using these funds for other purposes. Maybe that's part of the problem but I can't see how an 18.4 cents per gallon federal tax that may have been adequate in 1991 would still be adequate 17 years later. And people buying more fuel efficient cars will only aggravate this situation. If we maintain our philosopy that roads should be paid for by the users we will really need to transition to some sort of per mile rather than per gallon system.
That seems to be the case in Minnesota, but this link is a bit stale, and the cause may eventually be found more with a design flaw than funding. Still not too comforting:
"state transportation officials had put off recommendations from experts to make it safer, failed to follow their own inspection policies and at times allowed financing concerns to affect how it was maintained, "
Minnesota Agency Faulted on Bridge Upkeep (NY Times)
I think the highway/gas/tolls would be enough, since with increased traffic more is being used. In addition, those of us who live in places where there are tolls, trust me, they keep going up. The real issue? Diversion of funds. Most municipalities see this as a slush fund, to be "borrowed" against. And then, when it's time to pay to repair the bridge that the funds were allegedly earmarked for..... you.... float... a BOND ISSUE!!!
Have the new CAFE standards been enacted yet? I suspect that if these high gas prices stick around we'll meet or exceed the standards well ahead of schedule and would have done so without CAFE. However the CAFE proponents will then pat themselves on the back and say, "look at how effective this legislation has been". The same thing happened in the 70's and 80's. Suddenly a lot of car buyers became interested in fuel efficiency and the Toyotas, Hondas and Datsuns were the best options. These cars already exceeded CAFE standards so obviously their manufacturers weren't being driven by any legislation. When the US fleet average improved during this time the CAFE advocates were quick to take credit.
My guess is that they won't totally lift subsidies and just let the price rise a little only.
A price increase was long overdue here, as prices have been roughly the same since the end of last year, in contradiction with the barrel price evolution.
This was very acute for diesel. I often come across traffic jams due to long queues of trucks waiting to get their small ration. This is the ridiculous results of retail price controls.
Here's how:
The federal tax in 1991 was MORE than adequate then. Presuming that it was just barely enough is false logic. The government NEVER takes just barely enough.
Witness the myriad toll highways throughout our country. The tolls were put in place specifically to pay for the stretches of highway on which they're charged. Yet, when the roads are paid off, the tolls not only remain, but often continue to increase. How can this be? How does the government justify this?
Well, they don't have to, because they're the government.
But that's state gov't, and we were talking federal, so here we go. The federal interstate highway system is complete. Our friends in Congress finished that project years ago. Now, all the federal gas tax money only needs to MAINTAIN the existing roads, not build new ones.
Now, we all know that maintaining an existing structure costs less than building it from scratch, right? I mean, maintaining our current houses costs less than building new ones. Maintaining our current cars costs less than buying new ones. And maintaining a highway costs less than building a new one.
So why didn't federal gas taxes go DOWN when the I.H.S. was complete? The fact that they even remained the same amounts to a massive tax increase, which MORE than covers the cost of maintenance.
BTW, the federal government is not short of cash in any department. Last year, it took in more money than ever in the history of the United States. And part of that record level of revenue came from the tax money that Exxon/Mobil, BP/Amoco, Chevron/Texaco, et al. paid on their "obscene" profits.
Yeah, let's not forget that for all the whining and congressional dog and pony shows our government foists on us, they're never ashamed to take a cut of the increased profits from those greedy corporations.
Maybe some of THAT extra money could cover any .... ummm ...... revenue shortfalls in the cleverly-titled "Highway Trust Fund."
When you say no legistation, do you mean no US legislation? I' don't know if they were subject to home market regs around economy, however I know that Europe and Japan? have been pretty restrictive around engine size, if not necessarily economy directly.
China raised retail gasoline and diesel prices on Thursday by up to 18 percent, a move that threatens to stoke domestic angst over decade-high inflation less than two months before Beijing hosts Olympics games.
The increase in regulated fuel prices, China's first hike in eight months and its sharpest ever one-off rise, sent oil prices down by as much as $3 a barrel as dealers bet it might help curb soaring demand.
According to CNNMoney.com, gas is $1.48/gal in Shanghai.
The NJ Turnpike is a good example of how some of these tolls seem like such an arbitrary way to collect revenue. You can drive I-95 all the way from FL without paying a toll. Suddenly you hit a stretch in NJ where you have to pay. You'll be left wondering what exactly is it about this section of highway that warrants an additional fee. It certainly isn't nicer in any way.
Meanwhile, "Transportation is the second-biggest household expense, after housing, and suburban families face a relatively greater gas burden. At the same time, distant suburbs, or exurbs, where housing growth was predicated on cheap gas, have experienced the biggest declines in home values in the past year.
Several satellite towns around cities continue to lure jobs and are reinventing themselves with their own city centers."
Suburbs a Mile Too Far for Some (Yahoo).
I'm in a satellite town and everything I need is pretty much within 2 or 3 miles. Unfortunately my wife has an 11 mile commute one way. When we lived in midtown up north, she was able to pop home for lunch all the time (no gas savings there I guess, lol, although she did bike to work often in summer months).
Hey, don't knock the 'Pike... the concentrations of varied chemical "aromas" as you travel make it worth paying. I know that I pay acouple of other tolls on 95.... through Delaware and into Maryland, but nothing like the turnpike. And you are right, you don't suddenly feel that the roadway is better maintained, landscaped, got dancing girls waiting to feed you grapes etc.
Now, we all know that maintaining an existing structure costs less than building it from scratch, right? I mean, maintaining our current houses costs less than building new ones. Maintaining our current cars costs less than buying new ones. And maintaining a highway costs less than building a new one.
Your rational about how maintenance cost will be less than construction costs is terribly flawed. Let's say that it took 25 years to construct the interstate system. So the per year construction costs would be 4% of the total cost. Now lets say that maintenance costs on these roadways run 4% a year. Well that 4% is now on the entire system so it would be equal to the amount spent during construction. To use your analogy it would be like buying a new car per year for 25 years. Now you have to maintain those 25 cars. I suspect your vehicle maintenance costs will amount to more than you spent each year to buy one car. And this is assuming a zero inflation rate and no new highways being built or expanded, which obviously isn't the case.
Wednesday's report also showed a large increase in supplies of distillates, used to make diesel and heating oil, and a surprise decrease in gas supplies.
Will we see diesel go below gas now that I do not have a diesel vehicle?
I'm really enjoying the directions everyone is going with this.
Now, there's an innovative way to ease the pain. Only works for about half our population though. :P
So Sorry, that money is already earmarked. Gotta pay off the ones that got us elected.
The other half doesn't like grapes? :P
Where did 4% come from?
If we're just throwing out numbers, then I say it's 1/1000%.
That's because the NJ Turnpike predates the Interstate Highway System. The Turnpike was completed in the early 1950s, while the legislation that provided for the Interstates wasn't enacted until 1956. So the Turnpike was just incorporated into the Interstate system. (In a similar fashion, the NYS Thruway, also a toll road that was built before the Interstates came along, later became part of I-87 & I-90.)
"WASHINGTON -- Lawmakers from auto and oil states warned today that climate change legislation would add to household energy costs and make Americans long for the good old days of $4 gasoline.' "
Is this the kind of hysterical prediction that one would see at or near the top of a bubble, or will the increasing demand for gasoline, diesel, and jet fuel continue to push prices over the long term?
I broke my crystal ball a long time ago, and readily acknowledge that I'm no better than he next guy at predicting commodity prices. My best guess, though, is that human ingenuity and the marketplace will prevail to keep the cost of personal transportation affordable.
What are your thoughts on whether we'll look back with nostaligia one day at the time, in 2008, when gasoline was only $4, adjusted for inflation? In other words, if the dollar continues to weaken, plus even modest inflation, gasoline prices could continue to rise in nominal terms, but remain approximately the same, or even go down, in real terms. Therefore, let's assume, for this discussion, that we are talking about prices which are adjusted for inflation.
I haven't been that far south on 95 in a long time but it used to be in Richmond they'd have toll booths so close together that you barely got up to speed before there'd be another.
I'll admit that I pulled that 4% out of the air but at least it's probably in the ballpark. 1/1000% is obviously a ridiculous figure. The point I was making is still valid in that you cannot conclude yearly maintenance costs on an entire system are going to be less than initial construction costs on a small part of that system. And in addition to inflation, which you don't account for, maintenance costs will go up over time as the roads and bridges age. And as I also mentioned new construction is taking place, which not only involves costs now but increases future maintenance.
I haven't been that far south on 95 in a long time but it used to be in Richmond they'd have toll booths so close together that you barely got up to speed before there'd be another
They got rid of those toll booths through Richmond years ago. I agree that they were ridiculous. You stopped every couple miles to pay a 25 cent toll. Somewhat negating a major reason we take interstates, which is to avoid stop and go driving.
Another big cost 'driver' (sorry) - much higher semi traffic, with heavier loads. They really chew up the roads.
Well, sure! The yearly maintenance costs on my entire house greatly exceed the construction costs of my walk-in closet. But that doesn't mean maintaining my house costs more than the house.
"maintenance costs will go up over time as the roads and bridges age."
Guess what else goes up over time? Government tax revenues. And not just because they take taxes as a PERCENTAGE of price, which self-corrects for inflation, but also because they RAISE the taxes every so often. Plus, the population keeps increasing, which means that MORE people are paying all those ever-increasing taxes.
Like I said, the federal gov't can whine all it wants, but the numbers don't lie -- they're taking in more money now than ever in the history of this country. There's PLENTY of money to build and maintain roads.
The gov't has so much, they even try to build bridges to nowhere!
TIJUANA – Truck and bus drivers experienced a day of chaos in Tijuana yesterday, as they chased a dwindling supply of diesel fuel. Today was shaping up to be even worse.
For weeks, drivers from the United States have snapped up Mexican diesel, which is selling for about 50 percent less than in California.
That has resulted in a shortage of the fuel, and gas stations nearest the border crossings started halting or limiting sales last weekend.
By yesterday, diesel had started to run out at outlying stations, provoking delays or cancellations in public and private transportation. New supplies might not arrive until Monday.
Long lines of trucks and buses, their drivers desperate to buy diesel, formed at those stations still selling the fuel.
Mexican government subsidies keep the fuel price lower than in the United States. A gallon of regular unleaded gas sells for $2.54, diesel for $2.20.
Ay, Chihuahua! That's like hopping in a time maching back to 2005!
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I suspect that you are intentionally missing the point because nobody could be that dense.
The cost of building and maintaining a single home is in no way analogous to building homes for 35 years and then comparing the yearly cost of maintaining all these aging homes with how much was spent each year to build a small percentage of them. I use 35 years because that's how long we spent building the interstate system.
The feds don't collect fuel taxes as a percentage. The 18.4 cents per gallon we pay today is 12.6 cents in 1991 value. So this tax has actually been going down in terms of buying power. Sure fuel consumption has increased 28% in this period but that doesn't offset inflation and also doesn't account for the fact that more miles being driven increases wear on existing roads and requires that more roads be built or expanded then maintained. Common sense would indicate that this tax should be indexed to inflation and highway usage. Or we could turn the roads over to the private sector. If we did this does anyone believe we'd be paying the same usage fee that we paid in 1991?
With asphalt being petroleum based I think it's a safe bet that fuel taxes will have to go up in the near future both on the federal and state level. It won't be popular but it will be unavoidable. This will give new fodder to all the conspiracy theorists.
That relates not to rising energy prices, but to the added costs that 'cap and trade' CO2 reduction legislation may add to prices. :surprise: :sick:
In addition to the wasted value of a cheap gas policy you are encouraging a society that becomes oil and personal vehicle dependent. Does anyone believe that's wise path to follow?
Regarding roads, I have to guess that revenue generated by one road after that road is completely paid for, goes to fund projects that have nothing to do with the maintenance of that road.
Haven't seen any noticeable drop in the volume of traffic around here. If anything its gotten a bit worse.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
And we don't have 35 federal governments that built 35 interstate highway systems. We have one of each, and the former receives MORE than enough money each year to maintain the latter. The price in the 1960s or 1970s to build one stretch of that system is irrelevant.
And, yes the end-user tax on gasoline (the one WE pay at the pump) remains a fixed amount. But the federal government taxes oil and gasoline at several stages on its trip from miles below the earth's surface to the inside of our gas tanks. And the gov't makes MORE money off oil and gas than the oil companies do. Again, no shortage of money for roads (or anything else).
"Common sense would indicate that this tax should be indexed to inflation"
Hey, fine! But will that be the actual rate of inflation (currently at 7.2%), or the fictional rate known as "core inflation" (currently 2.6%) that our government dreams up every year as a propoganda tool and a guideline to increase Social Security payments?
In case the sarcasm isn't thick enough -- I don't trust the gov't to manage expenses any more than I trust their fraudulent economic numbers.
"Or we could turn the roads over to the private sector."
State gov'ts have already beat you to that idea. Here in Texas, our governor wants to sell several public highways to a European corporation, which will then turn them into toll roads.
He's having a problem convincing taxpayers that the roads they already paid for can legally be "sold" to anyone. He's also struggling with enlightening our minds to the concept that we should pay gas taxes to build roads, then let the politicians "sell" them (meaning all that money goes into the general fund), then we should pay more money every time we actually USE the roads we've already paid for, and THEN, we should keep paying the same gas taxes.
I guess some of us just aren't "progressive" thinkers.
Here's one point that you haven't touched on, but that I think you'll agree with; The motoring public of the U.S. has shown a willingness to pay up to $4 per gallon for gasoline. That means that the government COULD have raised gas taxes up to $2 per gallon, if they had started in 2003.
We'd still be buying it. We wouldn't like it, but we'd still buy it, as evidenced by today's consumption.
But the fed. gov't missed the boat! Instead, OPEC is charging us a $2 per gallon gas tax. They're the ones benefitting from all the extra money coming out of our pockets. Think of all the roads THAT money could have built over the last 5 years!
Oh well. Like they say down on the ranch, "If you snooze, you lose!"
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Not sure where you're at but here in IL the tolls went up once in 50 years. (OK twice if you don't use a transponder)
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
In Mexico as in Venezuela, they are net exporters of oil. That means they can sell for any price down to the cost of production and refining without subsidizing. Where as India and China are buying oil on the open market and selling the gas and diesel for less than it costs them. So at $2 per gallon Mexico is still making a little money on their oil. They could be making more by selling to US.
I have a contractor friend that has been going down and filling his Ford 1 ton and the 100 gallon tank in the bed at half the cost. He was wishing he had a bigger tank back there. With construction in the toilet here it gives him a slight edge bidding the few jobs. If you hit the border at the right time it is only about an hour and a half round trip.
You hinted at the real problem the world faces..too many bipeds. What do you propose? Soylent Green?
What if you spread out the purchase of these 10 homes over a period of 52 years, which is how old some sections of our interstate system are. That would be a little under $40k per year. Don't you think that yearly maintenance on these 10 homes that average 26 years old would be getting close to $40k per year?
We didn't build and pay for our interstate system all at once. If we did I'd agree that yearly maintenance would never approach this construction cost. But if you build something over an extended period of time your construction costs will remain relatively static while your maintenance costs will continue to increase over time. If you do this for long enough at some point maintenance will exceed construction. It's inevitable. When it happens is a function of how maintenance intensive the product you're building is. I'm not sure that US roads were built to the highest standard and I don't think we have the money to keep pace with their deterioration.