Guest Post by Willis Eschenbach
Inspired (as I often am) by either the insights or the foolishness of a guest post at Judith Curry’s always-provocative blog, I decided to take a look at the relationship between fuel price and miles driven. My inspiration came from my amusement at the guest author’s use of the following graph to establish a relationship between fuel cost and how much people use their cars. I think a relationship exists, but the graph used by the author doesn’t show it. Figure 1 shows that graph:
Figure 1. Per capita fuel use, compared to the fuel price, for the OECD countries. SOURCE
Now, it certainly looks like there’s a clear relationship there, but that’s an illusion. My objection to the graph was, the countries divide into two groups. On the bottom right you have the European OECD countries, plus Japan. Plus one fish.
On the top left, you have the US, Australia, Canada, and New Zealand. What’s not to like?
Well, ignoring fuel price for the moment, who would you think would drive more miles—a citizen of the US, or a citizen of Japan? An Aussie, or a Belgian? A Canadian, or an Italian? So all the guest author has shown in that graph is that the folks in large countries, with miles and miles between cities, drive more than Europeans and Japanese.
But of course, I couldn’t leave it there, so I linked to the following lovely graph of automobile use in the US that I ran across during my research. It shows, year by year since 1956, how many miles Americans have driven, and what the gas price was during that year.
Figure 2. Miles driven compared to the fuel price. Click to embiggen. SOURCE
Now that shows some very interesting patterns. The main oddity I noticed is that there is what might be termed a price shock effect—in the year of a big jump in prices, for example 1974, the mileage driven drops compared to the previous year. But then look what happens from 1974 to 1978 … the price stays stable, but the number of miles driven each year goes up steadily, without reversal.
But of course, I couldn’t leave it there. I digitized the data, to see what kind of relationships I could understand and reveal through further analysis. And as usual, I was surprised by what I found.
First, taking the data as it is given, there is no statistically significant relationship between the two variables, pump price and miles driven. The R2 is only 0.03. (“R2” is a measure of the relationship between two datasets, where an R2 of 1.0 indicates a perfectly linear relationship between the two, and an R2 of 0.00 indicates no relationship. So an R2 of 0.03 is … well … pathetic. So as far as a direct relationship between prices and miles driven, not happening.
Once I saw that, I wondered, well, what if I include a temporal trend in the linear regression? The way that I usually do that is simply to include the date as a variable. And to my surprise, the R2 went from 0.03 up to 0.98 … Figure 3 shows an emulation (multiple linear regression result) of the number of miles that Americans drive, versus the value estimated based on year and pump price.
Figure 3. The emulation is a multiple linear regression, using the year and the pump price as independent variables, and the actual average miles driven by Americans as the dependent variable. R2 = 0.98
Dang, sez I … that’s pretty impressive.
But of course, I couldn’t leave it there. A fixed annual increment, a simple trend like I used, is just a way to understand the data. It’s not an explanation involving some plausible mechanism. And more to the point, I also didn’t like those two years up at the top right of Figure 3, which are 2009 and 2010. In those years, Americans drove about a thousand miles less than expected. So I though about why that might be, and even a bear of little brain would go “global financial meltdown, duh”. And that made sense overall as well, because how far I drive doesn’t just depend on the pump price. It also depends in part on how much money I have in my jeans. When I’m flush I drive more, and when times get hard, I drive less regardless of the price of gas.
So I thought that instead of using the year, I’d try using the per-capita GDP as the second independent variable. Figure 4 shows those results.
Figure 4. The emulation is a multiple linear regression, using the real per capita GDP and the pump price as independent variables, and the actual average miles driven by Americans as the dependent variable. R^2 = 0.98 GDP SOURCE
Yowzah! Now that’s what I call shaving with Occam’s razor. It turns out that pump price and per capita GDP do an excellent job of estimating the number of miles driven, with very little error.
So, what does the magic equation that gives us the excellent results shown in Figure 4 say about the relationship between miles driven on the one hand, and gas price and per capita GDP on the other?
Well, it says that for every twenty-five-cent increase in the pump price of gas, Americans drive about a hundred miles less. Gas price goes up, miles driven go down. Makes sense.
And it says that for every $430 increase in per capita GDP, Americans drive about a hundred miles more. Wealth goes up, miles driven goes up. Also makes sense.
Now, the “carbon taxes” I’ve seen discussed are on the order of $20-$30 per tonne of CO2. And by coincidence, $28 per tonne of CO2 emitted is equal to twenty-five cents per gallon of gasoline. So if a $28/tonne carbon tax is imposed on gasoline, how much less might Americans drive?
Well … a hundred miles less … wow, such a stupendous gain, be still, my beating heart …
And how much actual change in our driving habits is a hundred miles less per year?
Well … since Americans drive about 10,000 miles per year, it’s a gigantic, massive reduction in miles driven of one percent.
And that, dear friends, is all the bang you get for your twenty-five-cent per gallon carbon based energy tax. A one percent reduction in miles driven. One freaking percent, and they want to impoverish the poor for that? Grrrr ….
So … what does this mean for the debate on carbon-based energy taxes?
First, it means that in the American situation, there is no way that the benefits of energy taxes are worth the cost. Why? Because the effect of a typical CO2-based energy tax on miles driven is minuscule, only a 1% reduction for a $28 per tonne of CO2 energy tax.
Next, a very slight increase in per capita GDP will nullify the energy tax entirely. Also by coincidence, it turns out that if the current per capita GDP goes up by about 1% (~$430), that will increase the mileage driven by 100 miles … so a 1% increase in per capita GDP will completely nullify a $28 per tonne of CO2 energy tax. And the GDP goes up by one percent all the time …
Next, it means that in order to have more than a one-year effect, the tax will have to continually rise.
The problem with a carbon based energy tax can be seen by thinking back to Figure 2, where I noted the “shock effect”, and how after the slight reduction in miles driven as a result of the 1974 big jump in pump price, after that one-year reduction the miles driven went right back to increasing year after year, with no change in the gas price.
So a one-time jump in the price will make little difference, just a one-year reduction in the miles driven. But by the next year or two, assuming that the per-capita GDP continues to rise as it has in the past, the miles driven will be rising again.
Next, it means that a carbon-based gasoline tax is wildly regressive. To see why, let me start with a slight digression, by bringing in a concept from accounting, that of “fixed”, “variable”, and “semi-variable” costs.
Fixed costs are those costs you can’t do anything about. The amounts are fixed, you can’t reduce them, you just have to pay them.. Maybe rent. Taxes.
Variable costs are costs that are entirely optional. Think maybe eating at restaurants. You don’t have to spend a penny on that if you don’t want to.
Semi-variable costs are costs that you can change, but you can’t eliminate entirely. These would be things like food costs. You can run them up or down, but you can’t eliminate them.
Now, think about the corresponding concepts as applied to the subject at hand—fixed, variable, and semi-variable miles driven.
Fixed miles are things like a commute to work. Short of changing your job or your residence, you can’t change that. You just rack up those miles every year.
Variable miles are things on the order of visiting Grandma in Arizona. You love to do it, but you don’t have to go.
Semi-variable miles are things like going to the post office to get your mail. You can cut the trips down, but not to zero.
What this graph shows me is that any energy tax on gasoline will hit the hardest on the poorest, the people who mostly use their car to get to work. The problem is not just that more of the wages of the poor go to energy, although that is also a problem.
But in addition to the higher percentage of their wages going to energy, the majority of their miles are fixed miles, so they can’t cut back on them. They have to drive them, so they have to pay the tax.
For the wealthy, on the other hand, lots of their miles driven are variable or semi-variable, so they can just scale down a bit. The energy tax means nothing to them. But for the poor, it can be a budget-buster.
This is one of the many reason why energy taxes are so regressive—because for the poor, fixed costs for everything squeeze them all the time, not just fixed fuel costs but also the other bills they have to pay every month. So when energy prices go up, Al Gore and James Hansen just cut back on visiting the grandchildren they love to talk about, no problem for them.
But the single mom whose gas budget barely covers getting to work, she can’t cut back on her gas use, it’s already cut to the bone. So when she pays the energy tax, she is forced to cut back on something for either the kids or herself.
And all of that for a pathetic 1% reduction in miles driven. That’s criminal.
Now please, folks, don’t insult my intelligence by claiming that it’s OK to harm the poor because of that well-worn fantasy, the fabulous claim that wealth redistribution will make it all OK. It won’t. Anyone who believes it will make it all OK has not spent enough time around government programs.
To start with, even the best-intentioned programs only reach a percentage of those most affected. Next, the poorer that people are, the less likely they are to hear about such programs. Think people living in apartments versus people living in their cars. Next, the paperwork required is all too often complex, confusing, and intrusive. Next, many of the poorest people are mistrustful of government. Also, immigrants are often equally fearful of government, and many don’t speak the language. Next, the people who end up getting the most benefits are often not those who suffered the most losses. Next, administering such a program requires a large expensive workforce of bureaucrats and paper pushers to make it function. And of course, they’re all Union, can’t be fired, plus we’ll be stuck paying these pluted bloatocrats their megabucks in retirement money ’til they shuffle off to a warmer place … and I’m not thinking Florida. Next, as with any government program, waste will consume more than you imagine. Think IRS conferences in Las Vegas and thousand dollar hammers. Next, parasitic rent-seekers like lawyers and consultants will be circling the honey-pot and making off with some of that good honey. And finally, there’s never been a government program that people didn’t scam, game, and cheat, so somewhere between a little and a lot of money will simply be stolen.
So no, wealth distribution will only make things worse, or on the best day with a following wind it might “break even” by taking from one bunch of the poor and giving to another bunch … and meanwhile the people at the bottom of the economic pile are hit the hardest. And whether you are a conservative or a liberal, that should appall you.
And finally … we’re going to create all that pain and create a giant bureaucracy and waste piles of money for a crappy 1% reduction in miles driven, a temporary reduction that will be wiped out by the next 1% increase in per capita GDP?
Really? That’s the brilliant plan? Screw the poor and the economy for a 1% reduction in miles driven?
Spare me. That’s more than foolish, that’s a crime against the indigent and everyone else in the country. Almost any other conceivable response to the imagined horrors of CO2 would be preferable. Taxes on energy are destructive and damaging to individuals, to businesses, to the environment, to the economy, and more than anything to the poor, and to turn it from mindless idiocy to criminal tragedy, there is nothing to show for it at the end of the day but a temporary 1% reduction in miles driven—from an energy tax, there’s no lasting gain, only lasting pain.
w.
DATA: The spreadsheet with the data and graphs is here.
[UPDATE] I just wondered, how much will the $28 per tonne of CO2 gasoline tax cost per year? Average fuel economy of the US fleet, cars and trucks, is about twenty mpg. Average person drives ten thousand miles, at twenty mpg that’s five hundred gallons. The tax at twenty-five cents per gallon on five hundred gallons is $125 per year.
In response to that tax, we can expect people to cut fuel use by 1%, or 5 gallons per year. Gas is around four bucks a gallon, so that’s $20 worth.
So the plan is to charge the average driver $125 per year in gas tax, and in response to that he’ll use $20 less gas, reducing his bill at the pump from $2,000 per year to $1,980 per year and cutting his CO2 emissions by a whacking great 1% … who thinks these plans up, and how can we catch them and stop them?
[UPDATE 2] I also got to wondering, just how much CO2 would a $28 per tonne of CO2 applied to gasoline consumption actually save? There’s 8.9 kg (19.6 pounds) of CO2 in a gallon of gasoline. Crazy but true, it’s the extra weight of the oxygen. So we’d be saving one whole percent of that, or .089 kg per gallon. Multiply that by the number of gallons of gasoline burned in the US, about 134E+9 gallons, and we end up with 0.01 gigatonnes (billion metric tonnes, E+9 tonnes) of CO2 saved.
And compared to a hundredth of a gigatonne, how large are the global CO2 emissions? Well, it’s about 9 gigatonnes of carbon C emitted per year, so as CO2 the mass is (16 + 16 + 12) / 12 of that to allow for the extra weight of the oxygen, or 33 gigatonnes of CO2 per year.
And the $28 carbon based energy tax would reduce that by 0.01 gigatonnes of CO2, which is a reduction of three hundredths of one percent (0.03%) … folks, have we truly gone so mad that such a trivial gain, three hundredth of one percent reduction in CO2 emissions, so small as to be absolutely unmeasurable, is used to justify this crazy tax?
100% correct. Most Europeans have no concept of how big North America is. I live 45 km from the nearest town, 110 km from the nearest city and 200 km from a city over 100,000 people where major health care exists. I have to drive anywhere from 45 to 200 km for farm equipment parts depending on what I need or have it couriered. Fuel price is just a cost of doing business, or the cost of my horse and skiing addictions so I adjust other “discretionary” expenses to cover my “fuel” costs regardless of the ridiculous amount of “road taxes” we pay. I do, however, avoid travelling in BC as much as possible due to their incredulously higher road taxes. – Hurtin’ Albertan 😏
Good analysis Willis, but you’re missing one thing. Feedback.
1% is first step response. But as the $25 / tn starts to impact the rest of the ecomony, GDP goes down, then mileage goes down again. And it’s not just mileage. People buy less of everything, less GDP, less mileage.
So as carbon tax strangles the life out of an ailing ecomony the “benefits” will be far greater than 1%.
😉
How much of the energy tax will be used up in paying the salaries and expenses of the extra people needed to administer the scheme?
My bet would be “most of it.”
Greg says:
July 10, 2013 at 12:23 am
Thanks, Greg, and that’s true, but for an introduction to price elasticity, it’s too much information.
Remember, I need to not only write this. I have to defend it against all attacks as well. And since I have no figures on the economic slowdown from a carbon-based fuel tax, it becomes speculation. I prefer to stick to things I have actual measurements of, much easier to defend.
w.
Socialist Norway tax the use of cars heavy:
1. About 100% more expensive to buy than in Germany.
2. Fuel prices 2,30 USD a LITER.
3. And a yearly tax of about 500 USD
4. Toll roads are about 1,50 – 3.00 USD per 10 km and pop up everywhere
http://www.nettavisen.no/motor/article3468801.ece
It feels as if the car is public enemy number one?
Well analysed and well said.
Demonstrably true.
Another factor hurting the poor is that rich people drive newer cars and gas is a smaller percentage of their mobility expense. So all they have to do is delay a new car purchase by a few months! Low income people driving 20 year old cars have less money to save by this option. (Average car age in USA is 10 years.)
The greenies say we could just start using transit. But they never look at the numbers, because if they did, they would find a whole lot of transit trips cost more than driving a car you already own. And if many people switched to transit, the system would break down because, in the USA, about 70-80% of transit cost is paid by taxes on non users who would see their taxes skyrocket to pay for all the new riders.
BTW, the other thing the greenies ignore is that transit uses MORE energy per passenger-mile than modern cars.
Thanks
JK
Willis for President
The only thing achieved by taxes generally is the redistribution of poverty.
Willis, the fallacy in your otherwise splendid analysis is that you ascribe the motivation for the tax is to reduce the level of that lovely plant food known as CO2.
Realists know that the real motivation of governments in instituting these rip-offs is money. Money that they can spend on more socialist nanny state nonsense. CO2 reduction is just a convenient excuse that has the support of greens who are married to the CAGW ideology.
If you want to fix it you have to get rid of the socialists and the green left.
Jim
That’s interesting. Do you have data for that?
Bula, Willis
“And how much actual change in our driving habits is a hundred miles less per year?
Well … since Americans drive about 10,000 miles per year, it’s a gigantic, massive reduction in miles driven of one percent.”
Kerekere, do this calculation again? Vinaka.
Dave
New Zealand does not exactly count as a big country. It’s smaller than Japan.
My opinion is, there is some truth to the initial graph. But the dependency is not straightforward.
Willis says;
“and how can we catch them and stop them?”
You can’t. It’s probably a lost battle. It was lost the day the Vikings stopped traveling to the “Ting” and discussing/voting on important issues. When they decided to leave that to “others”. The political classes emerged.
FijiDave says:
July 10, 2013 at 1:30 am
Hey, Dave, good to hear from you. The calculation?
100/10000 = 1%
w.
Kasuha says:
July 10, 2013 at 1:34 am
Thanks, Kasuha. Normally, you would just control for country size … but whoever made the graph didn’t do that.
w.
Another factor behind figure 1 is the difference in public transportation between those countries. Americans do not have the same extensive public transportation systems as they have in Europa. You can easily get around via rail in Europa whereas in the US it’s not as convenient.
Willis, thanks. My bad. Must’ve been something in the soup! 🙂
Kasuha said:
July 10, 2013 at 1:34 am
“New Zealand does not exactly count as a big country. It’s smaller than Japan.
My opinion is, there is some truth to the initial graph. But the dependency is not straightforward.”
***
I live in New Zealand. It is indeed a relatively small country, but it also has a relatively low population density. That may be a better pointer than country size.
More speculatively, while New Zealand is not as wealthy per capita as the USA, it is not poor, and people have enough money to travel for leisure activities in the great outdoors, something which NZ has in superabundance (ski-ing, hiking, fishing, hunting, boating, beaches, scenery, etc.).
All the best.
I’m sorry, but this article is even more misleading to ones which have the author refers in the beginning.
The author argues: “Well, ignoring fuel price for the moment, who would you think would drive more miles—a citizen of the US, or a citizen of Japan?” However he failed to make a comparison Sweden to New Zealand, Iceland to USA or Canada, what has very similar population density. The total size of country doesn’t matter as very few people rides by car from one side to another anyway.
Population density could matter much more. Sweden has about 20 inhabitants pet km2, while USA have a little more than 30. Even more, most of people live in rather densely populated sates, like California or New York. In fact more than 50% live in states which is more densely populated than Ireland and about 85% live in states which is more densely populated than Sweden.
However even states like Texas most of people don’t have to cover great distances as they live in a city. Even in Texas about 80% of people live in large metropolitan areas, where, if they were reasonably designed, there wouldn’t be need for car.
The author see the trees, but miss the forest. The life in USA is as it is because of cheap petrol everybody have adopted to it. The period when it was expensive was very short and people didn’t change their behavior to adopt to new situation. However in Europe most of people has adopted to take train to work if it is great distance or to cycle if it is short distance or to take a bus or metro if it is medium distance. When You drive, it is a work, when You go by train, You may do other things, like read news, play games, chat with other people, whatever You wish. If the petrol price would be in Europe for 20 years much would change and there would be much more people who would drop driving 3 hours a day.
GDP measures economical activity, not the welfare, You may do many things what doesn’t give any actual service to You nor society, spending 3 hours a day in a car is one example. More miles doesn’t mean better life, it could mean opposite actually. It really doesn’t matter how much You earn, it matter, what can You do and when You waste most of time to ride, You don’t have any left.
For example I cycle to work and hardly ever use car as there is sufficient infrastructure of public transport and daily life is organised in a reasonable way. I benefit from physical activities, I benefit from short travel times.
In short term the increase of price will hurt the poor, but in long run they would be forced to change their habits and they may even benefit from the increase.
Since the figure is “per capita” I assume its not “per capita of car owners” and so one possible confounding factor to your analysis is increasing car ownership (even by the poor) means increasing miles per capita with no individual driving more or less.
The other confounding factor is increasing efficiency over that period where for the same gallon of gas you get to drive further.
@Wayne Delbeke
Wayne, Most Europeans don’t even know how big EUROPE is. I can fly for 5 hours east of the UK and still be in “Europe”. Most think it ends somewhere like Poland.
The other thing of note about that graph is that throughout the entire time shown 1956-2010 there has always been an increasing number of miles driven with the few exceptions being single years of slight decrease at times of economic hardship and in one case two years.
For the years 2006 onwards (ie through 2010 as shown), there has been constant decrease.
Pretty simple take all taxpayer funded cars off the road first, make the legislators experience the gain and the pain for a full 12 months. All the walking and experience of public transport will orientate their thinking. Now thinking of Al Gore and his level of fuelled use……
Australia is a big country with a relative low population which means auto travel is essential, At once stage, nearly two decades ago, I was clocking up 40,000 klms per year. With only one long trip of play. I was travelling in the outback, an odd property or two were 100 klms (60 miles) from the main highway, then there was further travelling to a town! That is not unusual in the outback, some properties far exceed these distances. You simply cannot get around auto use.
Nice post, Willis.
It is also worth noting (as someone mentioned above) that population density affects car use significantly. In the medium sized town where my relatives live in The Netherlands, just about everything they need is a walk or a short bike ride away. Large countries like the US, Canada and Australia typically have much lower population densities, not least because they can. If you run out of milk, or have a doctor’s appointment, or just have to go to and from work, the distances and inflexibility/absence of public transport mean that using your car is the only option for many people, including the poor.
One thing missing from your post is the effect of greatly improved fuel efficiency in modern cars, which has mitigated the effect of fuel price rises. I have looked around, but can’t find anything reliable in the way of numbers on this, and am not criticising you at all. But the point is, with ever increasing taxes on rising base prices, people who can afford to buy modern cars (not the poor, BTW) have had the impoverishing effect of higher prices hidden from them. They should be financially a lot better off than they were ten years ago for the same number of miles driven, but those gains have been imperceptibly snatched from them, mostly by governments.
Near the beginning of your article you state
“And more to the point, I also didn’t like those two years up at the top right of Figure 3, which are 2009 and 2010. In those years, Americans drove about a thousand miles less than expected. So I though about why that might be, and even a bear of little brain would go “global financial meltdown, duh”. And that made sense overall as well, because how far I drive doesn’t just depend on the pump price. It also depends in part on how much money I have in my jeans. When I’m flush I drive more, and when times get hard, I drive less regardless of the price of gas.”
This perhaps misses a lot of the basic phenomenon, which is that many jobs were lost, so that much less commuting to and from work took place. Lots miles are driven because people have to go somewhere rather than because they want to go somewhere, with going to work at the top of the list.
I admire your willingness to jump right in and start analyzing things that interest you, but what you are trying to do now looks like stone-cold economic analysis. The track record of economics since the discipline was invented several centuries ago does not inspire confidence.
D. Cohen says:
July 10, 2013 at 2:59 am
Me, I admire your willingness to offer up vague criticisms without actually specifying a single error I’ve made …
w.
JohnM says (July 10, 2013 at 1:27 am ):
Jim
That’s interesting. Do you have data for that?
Turbo charged, common rail Diesels are the ticket:
http://www.auto-types.com/autonews/volkswagen-passat-tdi-set-a-record-in-the-us-7799-mpg-or-30-liters-100-km-10381.html
There’s something off with the original graph imho. Average miles per car in the uk (second hand prie guides) is 9000-12000 miles per annum. Everyone in the UK knows the price of fuel is a function of govenrment policy to squeeze the pips until they squeak, it has zero to do with demographics – more to do with fuel protests that have brought the country to a halt in the recent past.
Moreover what is the relevance of fuel cost per capita? Japan, Switzerland and the Nordic states are reputeded to have the best mass transit rail systems which will be mostly electric.
I suggest the graph was chosen to support an argument rather than vice versa.
JohnM says (July 10, 2013 at 1:27 am ):
Jim – That’s interesting. Do you have data for that?
JK—Look at the line labeled”Purchase expenditure One car$” at http://www.portlandfacts.com/carcost.html
Annual car purchase costs varies from $571 to $1734 as income goes from $5000 to $70,000+/yr while the operation cost (on the next line) only varies from $2127 to $2570. (I guess the older cars are driven less and have more repairs.)
(sorry about the incomplete post above)
Wayne Delbeke says:
July 10, 2013 at 12:06 am
” Most Europeans have no concept of how big North America is.”
Most Americans don’t know how big America is . In fact most New Yorkers don’t even know that there is an America outside of New York City. Not too sure about the Hollywood liberals either when it comes to where the normal people live.
John says:
July 10, 2013 at 2:12 am
“In short term the increase of price will hurt the poor, but in long run they would be forced to change their habits and they may even benefit from the increase.”
They will die, which is what you want. Less people less pollution.
Any time I see an article or story based on the idea of “Other countries do this, therefore America should do that……….”.
I stop reading.
Good work Willis.
My miles driven for the past 10 years is almost the same each year because no matter what the cost of fuel, I have to get to work.
Mikeyj says:
July 10, 2013 at 4:11 am
Most Americans don’t know how big America is . In fact most New Yorkers don’t even know that there is an America outside of New York City. Not too sure about the Hollywood liberals either when it comes to where the normal people live.
=======================================================================
Most of America is “Flyover country” for East coast Liberals and West coast Liberals.
Willis wrote in part:
“What this graph shows me is that any energy tax on gasoline will hit the hardest on the poorest, the people who mostly use their car to get to work. The problem is not just that more of the wages of the poor go to energy, although that is also a problem.”
==========================================================
A-a-a-nd… it’s to save the grandchildren from the oceans boiling away and the oceans flooding everywhere (wish they’d make up their minds). Woopsie. Kill off enough people and there won’t be any grandchildren to worry about…
Wait up! Problem solved. I guess government can come up with a solution after all, when they put their minds to it. (/bitter sarc really necessary?)
I didn’t know that anybody needs a car to survive. I wonder how people survived 100 years ago.
I would say that at least 80% of poor people wouldn’t need a car if there would be sufficient public transport system. They would save money as well and could afford more and could have better life, but it is
USA shouldn’t do anything because other countries do something in a different way. However, everybody should understand why inhabitants of USA drive so much. It doesn’t have to do anything with the size of country, but first, culture, and second, lack of public transportation.
I just wonder, does the car owners pay that much money to maintain roads?
The interstate highway system, authorized in 1956, was a definite factor in the acceleration of miles driven. According to wikibooks, the interstate road system grew to 10k by 1960, 20k by 1965 and 30k in 1970.
As a little kid I still vaguely remember what driving was like just before the interstate roads were built – kind of like what driving in Ireland is still like today.
Don’t tell the green hoaxsters that they could make a HUGE dent in US CO2 emissions, avoid raising taxes and save billions in highway maintenance costs all at the same time, (to spend on more EBT cards) – simply shut down all the interstate roadways! Then they’ll REALLY be “popular” for stopping this nasty claimte change we’re all suffering…
Population density on its own shows nothing – if we have a population density of 1 per square mile, but also a density of 1 per square mile of every conceivable service or amenity (assuming no need for travel to run them) and assuming that these distributions are evenly spread, then there would be minimal travel. But normally a population density of 1 per square mile would imply extensive travel as services and amenities are not that common…
To take a real example, John’s comparison of Sweden and New Zealand, then Sweden does have lower population density. This may be a factoring of averages though, as Sweden has large basically unoccupied tracts of wilderness along it’s western border and to the north (apologies to any Sami reading who may wish to point out this is perfectly habitable and pleasant non-wilderness), and a concentration of population in the flatter and fertile south and east, whereas New Zealand’s population are spread around most of the coasts of the islands (its wilderness tends to be the middle bits, so are more evenly distributed and have larger distances to travel between them. Population density does not show this, but a bit of basic knowledge does.
The qualifying measure should probably be something like average distance from home to [basket of destinations/frequency of use of these destinations], which would probably be a rather epic effort to pull together with any accuracy, especially as the usage pattern of say hospitals or supermarkets varies between each country involved. But then again, if you want to make the case for a tax with obvious negative risks, then perhaps you should be prepared to do this sort of work rather than simply graph price versus distance (which looks to be a secondary/high school exercise rather than a serious attempt to make a case). To actually put some intellectual effort into your case (a la Willis) is the least people can do – the failure to do so marks so many suggestions for action, rather worryingly.
This is a great article because it shows us something we did not know or understand before about something important. Every reader should now have a much better understanding. Good job Willis.
But, how come we have never seen the proponents of a Carbon tax do an analysis like this. They have responsibility to do so. But then, they don’t care what the impact is. They just know they want a Carbon tax.
I can only offer anecdotal evidence, not hard numbers. I work in an inner city legal aid office. Our clients can get to us by bus, by car, by foot or by bicycle. Most clients have physical problems as well as financial issues. Bicycling or walking would be difficult for most of them, even if the roads were bike or foot friendly. They are left with the bus or a car. So far I have seen one client who used public transit to get to us, and he could not drive because of his eyesight. The rest have a car, or a friend with a car. Bottom line–gas prices are a big deal to these folks, and any increase hits very hard. Willis is absolutely right about the impact of an energy tax on the poor.
John says:
July 10, 2013 at 2:12 am
In short term the increase of price will hurt the poor, but in long run they would be forced to change their habits and they may even benefit from the increase.
I call that the “let them eat cake” theory of economics. Using the same “logic” one could argue that raising food prices could also be a good thing, since many poor people are overweight, and would be forced to eat less.
“John says:
July 10, 2013 at 4:58 am
I didn’t know that anybody needs a car to survive. I wonder how people survived 100 years ago.”
Or a computer, or a phone, or electricity, or petro-chemicals, or pharmaceuticals, or air travel, or things like TV. Really, do you read what you write?
“John says:
July 10, 2013 at 4:58 am
I would say that at least 80% of poor people wouldn’t need a car if there would be sufficient public transport system.”
I would say you have no idea what poor really means. Try not only not being able to afford a car, let alone affording petrol to run it, but living in such poor conditions (Countries) that NO PUBLIC TRANSPORT EXISTS! Let’s not mention being able to afford food every day!
I don’t lose it often, but “John” is an idiot!
John says: “I wonder how people survived 100 years ago. ”
Wonder no more, the answer is – no where NEAR as well as today!
In 1913 most everyone still got around by horse power, cars were a novelty with hardly any roads suitable for driving. Yeah, some cities were starting to get electric trolley service but still, in just about any US city in the summer time, as a great uncle told me way back when, THE STENCH WAS HORRENDOUS! People still had to get in to the city by horse. You couldn’t escape the smell or the heat because no one had air conditioning yet either. On top of that horse flies were everywhere, they got into everything – including your food which relied on a horse drawn ice carriage to stay fresh until you ate it.
If people from back then are up there listening to people today whining about ‘climate change’ I can’t imagine how hard they are laughing.
http://www.post-gazette.com/stories/opinion/perspectives/the-next-page-the-city-horse-time-for-a-comeback-399466/
Population density shows more than area of a country.
To be honest, in my opinion density and size of country plays secondary role to determine fuel consumption. The affluence, the alternatives and the culture is main factors. All countries noted in the figure are affluent, I don’t think that there is any big difference because of it. Australia, USA, Canada and New Zealand are rather similar in this aspect.
Patrick, do You have any alternatives as effective as computer, phone, electricity, pharmaceuticals? I guess no, however commuting with car has alternatives.
It is impossible, that some can’t just accept that car riding is a cultural thing not economical.
One possibly significant variable that you could have included in your multi-linear regression is miles/gallon. It may be covarient with GDP. Both have gradually increased with time. It is certainly a more cost effective way of reducing CO2 emissions than increasing price.
John says:
July 10, 2013 at 2:12 am
“In short term the increase of price will hurt the poor, but in long run they would be forced to change their habits and they may even benefit from the increase.”
I hope you are a troll and not that…., well, let’s just say I hope you are a troll because really, “in long run they would be forced to change their habits and they may even benefit from the increase”?
Say I’m a part of a single wage family of eight. Money is very tight between food, medical, rent, utilities, and fuel, though no consumer debt. So, as a result of this tax my food, utility, and fuel costs go up, I cut out any remaining flexible variable costs and am still coming up short. Now I am, as you well note, “hurt”. Tell me, how exactly am I now going to change my habits to relive my situation so that may end up even better than when I started?
Two wages? The second will at best go to cover the increase in child care costs.
Public transportation? Costs more than driving. If costs go down, that primarily means that taxes have gone up to cover the losses. That doesn’t help me a bit.
Move closer to work? Cost of living within a three mile one way walking radius of work nearly doubles. That’s not going to help.
Or maybe you would be of the mind that we should die and decrease the surplus population.
I so hope you are a troll.
Watchman says:
July 10, 2013 at 5:13 am
You raise some good points, the more you think about such things, the more there are issues raised, I guess as an Australian visiting all the great things to see and do in New Zealand I have been responsible for seriously skewing their per head of population to miles travelled. Our Dollar was buying more and it was holidays (and work too at times) so cost of fuel never entered the equation, and all those Americans that were tossing prawns on a Barbie (who actually does that!!) all over Australia and boosting our mileage travelled and fuel used – sort of reminds me of all those climate models that miss vital factors like clouds and make assumptions, guesses, and someone pays out good money for speculation.
Thanks for making us think Willis – Politicians hate thinkers, thinkers question too many things!!
John says:
July 10, 2013 at 2:12 am
In short term the increase of price will hurt the poor, but in long run they would be forced to change their habits and they may even benefit from the increase.
And the use of the word “forced” is the difference between Europe and America. Freedom means not being force by a government to do something whether good for your or not. As long a socialists think force is a proper way to treat citizens then please stay on your side of the Atlantic.
John – I must apologize for saying this but Europeans smugly telling me that I should bicycle to work like they do because I like in a city like they do. I live in Dallas Texas a major city. However my workplace is 32km from my home. This in not unusual, nor is the fact that although Dallas has both a train and bus service there is no realistic way to make that commute. My wife might seem a more likely candidate as her office is only 10km from our home, and there IS bus service between our neighborhood and her workplace area.
I examined this idea as she doesn’t particularly like driving. It turned out that her 10km commute would take more than 1.5 hours and involve 2 transfers. More surprising was that it turned out to be as expensive or more so than driving, when comparing fuel and insurance cost (her car is paid for). Finally we must add in the weather factor – the temp today will be 38°C. This is not unusualc and will be the average for the next 45 days. My 45 kilo executive wife is not going to bicycle 10 km in her dress , nor is she going to walk 1/2 km to the bus station and then wait in the heat.
you will no dout say that these things are functions of our (relative) wealth and location, however I will give you one more ancedote: as manager of a major distribution center in Virginia where the climate is cooler, I bullied the local bus service for months to get them to provide bus service for our 1200 employees. I argued that -being in an industrial park among other companies-there would be plenty of passengers. They agreed to a one-month test. We did plenty of advertising for amonth in advance and made bus passes available in the center…at the end of the one month test, the ridership turned out to be exactly zero..
The thing, I’m not a Troll. I’m just tired to see people making bad decisions and later to complain about it.
Oh, You could easily cycle to work. I cycle by average 25 km a day and I’m perfectly fine and actually I save time compared to car. If I would have a need I could cycle up to 20 km or about 12 miles each way. The time is not wasted compared to time driving.
You could also find a friend who goes the same direction and both of You would save half. Even if You did it once a week You would save more than increase of price. If there are 3 friends Yous ave even more. All You need is good communication with others.
Could You please ask to Yourself why nobody use public transport? Because it is expensive. Why it is expensive, because nobody use it. As well, You most likely consider only short term marginal costs to car and public transport. If so, of course car wins. However You need to buy a car, to maintain it, to place it somewhere. How much does it cost to ride to work if You include all these costs.
And if You really need a car for a day, You can hire one.
Finally, the author could be right, the demand of petrol wouldn’t change much in USA even the price would double. It is twice bigger in most of Europe, but there are freaks who drive a car to work, when there are convenient and cheap public transport. Socially bad activities should be punished and economical means are the most effective.
There are about 10 to 25% of people who will always need a car, while most of people need it because of habit, culture and lack of infrastructure, not because car is necessity.
Okay, it’s official. John is a troll. I particularly like the one about finding a friend and driving half way… it’s actually gotvme giggling.
John says…
Speaking from ignorance of geography, or population density, or any other kind of reality will leave you looking like an idiot. You’ve accomplished it in spades.
No doubt the Luddites (look it up) were fine folks. No doubt the Amish can make it work. But the current reality of the twenty first century cannot be solved by references back to a time when 38% of the workforce was farming. Why not refer back to 1800 when about 90% of the workforce was farming. Certainly they were making things work. Didn’t need mass transit or automobiles.
What does that have to do with 2013 when farm labor is approaching 2% of the total labor force in the United States? Whale oil lamps and horse drawn plows were very labor intensive ways of living, but they have no application in our time, especially in the west. Total miles of railroad track peaked in the early 1900’s at around 250,000 miles. Today it is less than 100,000. The very infrastructure for mass transit would have to magically restored for you scheme to have any hope of working. But it doesn’t. People cherish and defend the freedom to be able to travel when, where and how they would like. And they don’t need or want to have more of their hard earned dollars stolen from their pockets to fund stupid schemes at carbon reduction.
I write this as I sit on a commuter train. I like mass transit. But it is not a solution to higher taxes that hurt the poor. Come on down from the ivory tower. The view from behind the wheel of a car worn thin in the commute to work may just adjust your attitude…or not if you truly believe your utopia might be the answer in the here and now.
pbh
fhhaynie says:
July 10, 2013 at 5:45 am
“One possibly significant variable that you could have included in your multi-linear regression is miles/gallon. It may be covarient with GDP. Both have gradually increased with time. It is certainly a more cost effective way of reducing CO2 emissions than increasing price.”
There is no cost effective way to reduce CO2, because there is “no benefit” from reducing man made CO2. The payback on more fuel efficient cars is so bad(hybrids are the worst) that our big government nannies are compelled to force us to do the right thing. That’s socialism.
@John-
What is it with you Europeans; always ready to send someone around with guns to force me into a situation I did not choose for myself? Why do I say “With guns”? Because that’s ultimately what happens with government, when they “force” people into something, as if you hadn’t noticed…
It would be interesting to run a correlation test with gravity as a variable. I think you will find that the more your country sux the less likely you are to want to drive around in it.
Pertinax says: “Public transportation? Costs more than driving. ”
True and you got me going…!
Boston’s MBTA carries about 1.8 billion passenger miles per year at a cost of about $1.3 billion per year or 72 cents a passenger mile, (over 2/3 of which is taxpayer subsidized).
http://metrobostondatacommon.org/site_media/weave_thumbnails/852.png
http://www.mbta.com/uploadedfiles/About_the_T/Financials/Stats%20Presentation%209-7-11.pdf
According to AAA, cost per VEHICLE-mile is 61 cents, cost passenger mile is under 30 cents from another site I found but unable to confirm.
Now imagine if we car owners were SUBSIDIZED like the MBTA? Someone “ELSE” would pay for 2/3 of your gasoline, 2/3 of your car payments and 2/3 of your insurance and maintenance!
John says later…
I’ve been to the UK. I enjoyed riding the trains there. But even in the UK many of the small rail lines that made the use of mass transit for the common folks possible is long gone.
I love my bicycle. in some years my riding has gone over the 10,000 mile mark. But using a bike to ride 80 miles each way to work? Stupid thought, isn’t it.
Just because you have opportunities to live a life style that suits you and saves money doesn’t mean that it will fit for anyone else, much less for everyone else. Are you volunteering to pay for that lack of infrastructure you so glibly ramble on about? Standard rail track costs in excess of five million dollars per mile. Electrified rail track is nearly an order of magnitude higher. Who will pay for it…and how?
Crunch a few number and get back to us. Airy fairy hand waving will not produce the infrastructure. If the infrastructure was in place it would be under used. 40 million people in California is plenty for me. I don’t think the added population density to make your scheme possible would in any way add to my joy of living.
Go back to the troll cave. It is research time.
Dear RCM,
My intention was to show that arguments of some people were not valid, not that some people should do something else. It’s everybody’s’ own decision. I’m not a socialist for Europe’s standard, but I could be one for USA standard.
You gave valid examples, it is almost impossible to use any alternatives for both of You. The cycling is not possible two months a year. Regarding costs, of ridership You skip significant costs, Your family don’t have to pay for it, but somebody have to do that.
Regarding example You gave, it perfectly well characterize the culture. Americans ride a car and no cost savings would be an argument. If we can agree that it is bad to waste fuel or anything else, than we can argue that riding a car, when it is unnecessary, is socially unfavorable action. Thus those people who act wrongly for whole society should be somehow motivated, a tax could be rather good motivator.
dp says: ” I think you will find that the more your country sux the less likely you are to want to drive around in it.”
But a true pessimist could say that the worse it is wherever you live – the more you drive to be away from wherever that is.
On Update 2: if there are 8.9Kg CO2 in a gallon of gas, one percent of that is 0.089Kg not 0.89Kg as currently stated. Assuming the error carried in to the rest of the calculation, net benefit is only 10% of the original result. If 0.89Kg was a typo for 0.089Kg, then maybe that should be corrected.
[Thanks, fixed. It was just a typo. -w.]
I wanted to show other perspective, but it appears that nobody is interested. Very sad.
“John says:
July 10, 2013 at 5:43 am
Patrick, do You have any alternatives as effective as computer, phone, electricity, pharmaceuticals? I guess no, however commuting with car has alternatives.”
I guess you have not seen the alternatives available. WOW! a bicycle? Can I have food please, bicycles give me gas? John, you have no idea what you are talking about regarding poor, people in abject poverty. You want to deprive them the luxury you enjoyed getting to where you are now.
Lil Fella from OZ says:July 10, 2013 at 2:47 am “Australia is a big country with a relative low population which means auto travel is essential” and “You simply cannot get around auto use.”
That is right. There is practically no public transport except in the centre of large cities (state capitals). Anyone one in the country or even in the outer suburbs needs a car or families even two to go to work, go shopping, go see a medical doctor etc. Some say that Sydney (NSW) is the largest city in area in the world. It stretches about 60km north, south and west (east is the ocean) I lived in an outer suburb (no public transport within 15km, 40km to theCBD) I travelled about 35-40,000 km /yr just going to work, my wife in her car travelled about 20,000 km/yr part-time teaching. When the three daughters were going to University 30km away (40 minutes in peak hour traffic) they each had their own car (five car family then). They would have averaged 15,000km each. Around where we lived two incomes were necessary to support kids going to University.and pay the mortgage on the house.
“John says:
July 10, 2013 at 6:28 am”
If you live in a world where you have the choice, private bicycle, private car or some form of public transport I guarantee you there are MILLIONS in Africa, even India and China, right now that would trade places with you in an instant. Talk about a different perspective, my guess is you have never experienced poverty let alone seen it in reality!
John’s critique (July 10, 2013 at 2:12 am ) of the article is misplaced. Even if most people live in densely populated states, those states are relatively larger than European countries. Moreover, a significant number of people live outside of the major cities. For example,New York State is not just New York City. In Upstate NY there are five relatively large metropolitan areas: Buffalo, Rochester, Syracuse, Utica, and Albany, Schnectady & Troy stretching about 300 miles west to east. Travel within each of those areas is primarily cars and, importantly, travel between them is also by car.
Another point to keep in mind is that these areas once (prior to 1930) had public transit that was comparable to European cities. Extensive trolley within the cities and interurban trains between the four western cities were available. Add in extensive train services and it was possible to live and work without having a car. That has all changed and now it is extremely inconvenient to not have a car. In theory I could use public transit to commute to work but I estimate it roughly doubles the time in transit and the sparse options available means that schedules have to be arranged around the time available to the point that public transit is not a practical option.
I agree with Willis that an energy tax is regressive and would practically achieve little or nothing.
Public transport (PT) works in large density populations. Take New York, London, Hong Kong, central Sydney, Melbourne, Perth etc. Once the population density starts to disperse, PT becomes expensive (Beyond taxpayer subsidies, and in Sydney, prices are subsidised to the tune of ~75% by he taxpayer).
Mikeyj says:
July 10, 2013 at 6:10 am
Don’t get so upset. I didn’t say trying to control anthropogenic emissions was economically benificial. It isn’t. Click on my name to discover one reason.
Thinking a bit more and shifting into Jonathan Swift mode… if a government wants less of something, tax it. If a government wants more of something, subsidize it. So of course it makes sense for a government to tax fuel for driving and then give the money to those who don’t drive. It reduces the number of people who drive and increases the number of people who don’t drive.
I’m all over that. Starting now, all of ya’ll who drove in to work today can each send me five bucks for each day you drive ’cause I just quit my job and quit driving.
I’ve got it all figured out. I’ll have everything delivered; food, clothing, pharmaceuticals. I’ll have my clubs delivered to the golf course down the road and they can keep them there for me so I’ll have them available whenever I bike down for 9 or 18 holes. I can hike the 1/2 mile to the reservoir for some fishing whenever the mood strikes. I can get all my reading material online and do a little online-gambling from time to time, depending on how big my non-driver subsidy checks are. I’ll upgrade my cable to get all the premium movie channels and put in a home theatre. I’ll have to give up downhill skiing and stick to cross-country in the winter, but I suppose it’s inevitable I’ll have to make a few sacrifices.
Yup. This will work out great! Let’s all do it. And think of how much better off the poor will be with a fuel tax after they quit driving altogether. We’ll ALL be rich.
Taxing fuel is the way to go if you want to eliminate poverty.
John says:
July 10, 2013 at 6:28 am
“I wanted to show other perspective, but it appears that nobody is interested. Very sad.”
Not true. Most were interested enough to read what you wrote. It appears most of the readers here disagree with you. Happy pedaling.
Of course they would like to change with me, because I’ve made decisions to give me a choice.
I just can’t see how it relates to those who drive a car, because they can’t be poor when they can afford to have a car even a 20 year’s old one.
John says: ” If we can agree that it is bad to waste fuel or anything else, than we can argue that riding a car, when it is unnecessary, is socially unfavorable action. Thus those people who act wrongly for whole society…”
‘bad to waste fuel’ – In free market capitalism, the ONLY person to make the FREE decision whether or not a particular use of the fuel is ‘bad’ is – the one who PAID for it.
‘people who act wrongly for whole society’ – WHO gets to make the determination whether or not a given act is wrong? You? Some dictator? In FREE countries we elect representatives to write laws that determine what acts are “wrong” and those representative are even further RESTRICTED by our Constitution as to what laws they can write. So in our FREE country, WE THE PEOPLE collectively have ultimate control of what laws we wish to have hanging over us.
Individual freedom is the main reason more people immigrate to the USA than the total of those to ALL other countries combined.
Wills Eschenbach: “[A]ny energy tax on gasoline will hit the hardest on the poorest.”
If a “carbon” tax really did accurately price a valid externality, and if the the tax’s proceeds were distributed in a neutral (I’m thinking per capita, but I’m open to being convinced otherwise) way, it would still be true that the tax would “hit the hardest on the poorest.” Yet I for one would be comfortable with such a tax, since it would contribute to the accuracy of the price signal, making resource allocation more efficient–and thereby raising some otherwise poor people out of poverty.
Of course, the preceding paragraph relates to a parallel universe that none of us inhabits; the externality such a tax addresses is illusory. But I raise the point to caution against arguments based on the proposition that a given price change “hits the poor the hardest.” All too often that’s not an argument so much as a tautology: suffering from price increases is almost the definition of being poor.
Now, you may argue–and I may agree with you–that some prices affect the poor more than others; it’s at least plausible that increasing the cost of, say, milk or sugar will have a greater impact on the poor than raising the Tesla’s cost. But basing choices among among goods and services to tax on how much we–or, more likely, those boys and girls in Washington–think the tax will affect the poor is almost certain to result in worsening our allocation of resources; the economy is too interconnected for any of us to know accurately who will ultimately be affected and how.
Yes, a “carbon” tax is a terrible idea. And the reason is that it will make us poorer as a group and thereby make more poor. But if such a tax really did remedy an externality as its proponents claim, the result would be a more-productive allocation of resources and a consequent reduction in poverty. It could therefore be desirable even if, for the reasons Mr. Eschenbach sets forth, it can be characterized as in some sense “hit[ting] the hardest on the poorest.”
So, although Mr. Eschenbach’s post is interesting as usual, I don’t find the quoted aspect particularly compelling.
“John says:
July 10, 2013 at 6:53 am
Of course they would like to change with me, because I’ve made decisions to give me a choice.”
And what does one do when one does not have that choice?
Willis, I disagree… but not with the analysis per se. It is true that higher energy costs reduces energy use very little. And when it does it is not always good – think of all houses with too much insulation and to little ventilation that is infested with mould and mildew. But anything you tax becomes dearer and on the margin less of it will be used. Raise income taxes on the poor and more people will be unemployed, raise an energy tax and less energy will be reduced. Even a minimal government will have to tax something and I prefer less environmental damage to more unemployment.
I also would add that preferably a tax is taken as late as possible in the economic cycle. Energy taxes are both a production tax (when it is used for e.g. production or commercial transport) and a consumption tax (when it is used for e.g. residential heating). In my eyes it makes it neutral and a good revenue source that internalizes environmental damage (i.e. makes it cost) and strikes at least some part in the later stages of the economic cycle.
(If you’re going to argue that governments can’t be trusted to lower income/payroll taxes if they are allowed to raise energy taxes, well, yeah, could be…)
“Joe Born says:
July 10, 2013 at 6:59 am
Now, you may argue–and I may agree with you–that some prices affect the poor more than others; it’s at least plausible that increasing the cost of, say, milk or sugar will have a greater impact on the poor than raising the Tesla’s cost.”
I do believe you have never had to chose, heat or eat (Or anything else actually)!
Willis: Of course, the real impetus is simply to generate more tax revenue, regardless of the excuse.
Mike M,
You may do whatever You want unless You affect others. It is not a freedom You talk about, it is anarchy. Your freedom end where starts my freedom and vice versa.
I intentionally stated “If we can agree”, those “we” in USA should be citizens of USA. You asked: “WHO gets to make the determination whether or not a given act is wrong?” Answer is simple, the society. And every member of society is rights to do the best to convince others.
Ptrick,
“And what does one do when one does not have that choice?”
There are always a choice. Just in many cases we don’t like the alternatives.
John says –
“I wanted to show other perspective, but it appears that nobody is interested. Very sad.”
Frankly John, it sounds like you live in a bubble, out of touch with reality. Some perspective eh?
John says:
July 10, 2013 at 6:53 am
So you think all the poor choose to be poor by making poor decisions. Try telling that to the millions who are living from paycheck to paycheck because the cost-of-living has been going up faster than their income,or those that have lost jobs, or have been foreclosed on their house.
another hit to the poor is that our food is transported by truck trains and boats so the added taxes for carbon are added to the “food chain” increasing food prices on everything.
I completely disagree with the premise, that the original graph doesn’t show what it claims to show, i.e., gas prices are inversely correlated with per capita fuel use, the implication being that gas pricing impacts the amount of fuel used per capita.
Of course it does. Try raising prices to $100 per gallon and see what happens to per capita fuel use, even in the larger countries.
But the relationship goes both ways, because you’re really looking at the result of a supply/demand situation in each country.
In the U.S., politician’s heads would be on the block if they tried to put taxes at EU levels. Why? Because the impact on their constituents’ lifestyles would be extremely oppressive due to the way that the transportation system has evolved here. In other words, low gas prices permit long driving distances, so people choose to live far from where they work, and will take their car for convenience even if a bus runs alongside them to work each day.
In other words, the U.S. has a gas pricing structure that more closely approximates a true “free-market” price, simply because the politicians don’t dare tax gas much more than they already do. Even the relatively low tax that is levied is primarily used to improve the road systems in most states. EU countries have perverted the free market by determining that their people need to change their behavior, so they’ve taxed gas (and cars) oppressively. They’ve done this for so long, and so consistently, that the people have adjusted without a revolution, but make no mistake, they have adjusted.
When politicians decide to tax something on the pretext of changing their constituents behavior for the better, you can bet on two things: 1) They don’t really give a rat’s butt about your behavior, and 2) They want more money to spend on stuff they really do care about. In the meantime, their tax increases pervert the free-market pricing structure, which usually leads to unintended consequences elsewhere in the economic system.
Public Transit is largely designed to take advantage of economies of scale. Whether Public Transit can work largely depends on how people and their destinations are organized. If people “live” in one small area and “work” in another small area, then transit is reasonably efficient. However, best case 50% of the vehicle miles are essentially “empty” as you must return the vehicles to pick up the next load of passengers.
If however passengers and their destinations are essentially random it is a nightmare to design an efficient transit system. You cannot achieve the economy of scale necessary to fill and route Transit vehicles such that you can pay the driver and vehicle costs. Your costs per passenger mile go through the roof, as do passenger wait times.
It is a nonsense to suggest that public transit can solve this problem, because it is hugely expensive to supply Transit in these circumstances. To solve the random problem you need many more smaller vehicles. However, the labor costs of having a paid driver for each of these vehicles quickly overwhelms the costs of the vehicles and fuel, making it much cheaper and more efficient overall if people drive themselves.
When cities are laid out such that passengers and their destinations are largely random, then private vehicles are significantly less expensive and more efficient, less time is wasted that could be used more productively, and overall CO2 will be reduced as compared to using Transit. Otherwise the transit system essentially becomes a very inefficient, expensive taxi service that provides poor service because it doesn’t drive you door to door.
This is what most people miss when they suggest Transit as the “universal” solution to private vehicles. The model only works when demand is concentrated. When demand is diffuse, private vehicles are much more efficient, because you don’t have empty vehicles driving around waiting to pick up passengers. With private vehicles the vehicles only move when they have passengers.
John,
True. I could.
I live on what passes for a mountain around my neck of the woods, about a thousand feet above the floor of the Tennesee valley, but let’s ignore that. It does rain an average of one out of every three days where I live. It gets pretty darn hot in the summer, and pretty darn cold in the winter, but let’s agree that I ought to just ignore that too, that I ought to butch up and deal with that.
Of course, I have kids to get to school. Kids to pick up from school and transport to after-school care. I have Dr.’s appointments to get them to, dentist appointments, hockey games, karate classes, voice lessons. I have groceries and other goods to buy.
There is no public transportation within any reasonable distance of my work, my home, or most of these destinations where I live.
No thanks.
Watchman is right about the population density issue. If you have a big country but everyone lives in a few small spots the population density of the country will be low, but the average person will live in a high density area. Perhaps something like the median population density weighted by inhabitants averaged over a grid formed from 25sqmi blocks over the country. Thus Siberia would be weighed much lower than Moscow.
Miles per gallon has been increasing so that the use per capita does not quite match the same graph.
Additional note – countries with the low miles driven and high taxes are also all below replacement birth rates. We should never adopt policies that lead to not enough babies. Really, who is going to feed all the 70 year olds in Russia in 15 years?
“John says:
July 10, 2013 at 7:19 am
There are always a choice. Just in many cases we don’t like the alternatives.”
Well, in my experience, in Africa, people walk. They don’t even have the luxury of a bicycle, let alone rods to use it on! So, no roads, no bicycle, no car, no public transport, no beast and cart, what are the alternatives?
The UK tory party solved the problem way back, realising that a one off fuel price increase had only short term effect they introduced the “fuel price escalator”. Fuel tax increased each year by the rate of inflation plus four percent. This is why we now have the world’s highest fuel prices.
Wow, those people in the big cities don’t drive much do they?? Willis, I average much closer to 40,000 miles a year. Many you could expand your analysis a bit more, exclude those that live in the top twenty cities, and see what the average mileage is for the rest of us!
How can there be “8.9 kg (19.6 pounds) of CO2 in a gallon of gasoline” when, according to http://wiki.answers.com/Q/How_much_does_a_gallon_of_gasoline_weigh, gas weighs 6.073 pounds per US Gallon. Just askin’.
John is what I call a person of little thought. He sees the world from his own vantage point and believes that what is right for him applies to all. But I think it is worse than that. He believes that he knows what is best for all of humanity. Our greater prosperity and longevity is because we continue to master the use of energy and it has never been the case that energy use has been metered out by overlords of society for maximum benefit with the exception of wartime rationing. Energy is everything and more energy is better than less energy. If there are problems, there are solutions. I think that Elon Musk ( SpaceX, Tesla, PayPal, etc. ) would not claim to know what is best for all of us. What he says is that he thinks he knows a better way and puts his time, talents, and treasure behind proving that to be true. John is just a clanging gong with nothing to show for his life but words. ( I am striving to not have my words be my only legacy ). Actions speak louder than words John.
Perhaps Elon Musk can get behind clean and safe nuclear technology, safe pebble bed reactors, or thorium reactors to complete the revolution of energy abundance with maximum environmental benefit. More affordable clean energy would benefit all. Battery technology is getting better all of the time. But you can’t legislate innovation and prosperity. I have looked down on the valley in LA and seen the brown smog. It is much better than it use to be and it is getting better all of the time. But socialist forcing cannot compete with capitalism. Just look at what Kennedy did with the private sector. Get the EPA and other government organizations out of the standards business, set the long term goals, lower the cost of doing business, and get the government out of the way of the private sector. Get the Johns out of our lives.
“So you think all the poor choose to be poor by making poor decisions.”
No, they didn’t choose to be poor as companies don’t choose to bankrupt. But people may have made poor decisions.
However true reason why African are poor is their lack of capital (including human capital). However most poor people in Western World are poor because of bad decisions (for example, no attention to subjects in school, too much partying, using drugs, as well spending money where the money shouldn’t be spent.
Richard Howes says:
July 10, 2013 at 7:36 am
How can there be “8.9 kg (19.6 pounds) of CO2 in a gallon of gasoline” when, according to http://wiki.answers.com/Q/How_much_does_a_gallon_of_gasoline_weigh, gas weighs 6.073 pounds per US Gallon. Just askin’.
——————–
Cause the oxygen that the engine burns the fuel with doesn’t come with the fuel.
Molecular weight of CO2 / atomic weight of C = 44/12 = 3.66667
6 * 3.666667 = 22 pounds, ballpark of the CO2 in gasoline. Of course gasoline isn’t pure carbon that converts 100% to CO2.
Richard,
Let’s consider Methane CH4. When you burn it you make 1CO2 and 2H20. The CO2 weighs more than CH4 (almost three times as much). Same basic process, you grab oxygen out of the air and add it to the carbon. The inclusion of that oxygen raises the weight.
“John says:
July 10, 2013 at 7:39 am”
(for example, no attention to subjects in school, too much partying, using drugs, as well spending money where the money shouldn’t be spent.”
You are talking out of a hole in the back of your head! There are more degree holders in Addis Ababa, Ethiopia than in Sydney, Australia!
Yet another example of “John” opening mouth and changing foot!
A carbon tax on fuel will also impact commercial vehicles, like those involved in delivery of essential goods and services. Think food delivery, clothing, household goods and the like. A fuel price increase will naturally be passed on to the consumer in higher prices for those goods, thus increasing the attack on the poor.
In other words, the stated ends (cutting carbon) don’t justify the meanness.
John,
A lack of capital is not the reason Africa is poor. Their capital level a couple hundred years ago was not significantly different than that of the rest of the world. Additionally they do not have significantly fewer natural resources than other parts of the world. Something else is different between Africa and Europe.
Poverty may be largely caused by poor choices. However, taxpayers paying someone at the IRS $100,000 per year to work for a union that argues for IRS agents who then enforce a tax that raises the cost of gasoline disproportionately felt by the poor doesn’t help. If I have an extra $200 in my pocket at the end of the year I will either spend it or save it. If I spend it someone somewhere gets paid for contributing to the economy since I buy a good or service. If I save it someone somewhere gets hired as the bank lends the money to an employer. If it gets confiscated by the government to raise the price of gasoline, what contribution is made? What good or service has the IRS agent on “official time” provided? The single mother working at IHOP (my mom growing up) is better off if I have that extra money and use it to go out to eat than she is if that money goes to the IRS worker.
“Well, in my experience, in Africa, people walk. They don’t even have the luxury of a bicycle, let alone rods to use it on! So, no roads, no bicycle, no car, no public transport, no beast and cart, what are the alternatives?”
Of course they do, because of reasons I stated above. Africa is completely different story and doesn’t have anything common to people in USA or other countries where everybody have chance to get good education.
“John says:
July 10, 2013 at 5:43 am
…some can’t just accept that car riding is a cultural thing not economical.”
That’s where you go astray John. Car usage by the average person anywhere is based almost entirely upon economic decisions made by the individual. Sure, there are cultural elements involved in the decision as to which car to purchase, or whether to even own one, but most of the decision process is based solidly on economics. You just don’t understand economics, apparently.
I purchase used cars because they’re cheaper to operate overall for the time I own them. My wife drives an all-wheel drive because she has to do extensive traveling in our winter weather. I also own an older SUV for the occasional hauling I have to do. I don’t care about the gas mileage on it because I only drive it a couple thousand miles a year. Hers is a smaller SUV for better gas mileage, but an SUV because she has to haul a lot of stuff. My older car is always the more comfortable of the three vehicles we own because we use it for longer trips. Etc. All of those choices were based on economic decisions. I even buy mostly white or silver vehicles because they don’t show our typical salt-spray dried winter slush as much, so they look better in winter generally, so I don’t have to run them through the car wash every other day to keep them looking decent.
Sure, cultural decisions are involved as well (clean car–dirty car?), but you vastly underestimate the degree to which nearly all decision-making regarding personal transport is based on economics.
Yowza Willis, slick as an acrobatic show. Instantly, most here will have seen that the graph was one of country size with the NZ folks an outlier and nothing to do with gas-price economics. But what you did next was magic and a total destruction of idiot carbon economics. This supports a theory of mine that economists all emigrated away from Europe over the last 20 years or so and left the London School of Economics and the rest adrift from their moorings, handing out asterisked PhDs. Not many of them seem to have come to North America, either. I think a comparison of the quality of learned papers of pre-control-knob times with today’s would show us how slovenly acceptable papers have become and the damage to all science that has been done by the grantophagus browsers. I strongly suggest you make a paper out of this for publication in an economics journal. I’m sure there are other faulty graphs of this kind, particularly in OECD-UN agenda driven papers. Your simplification of all climate models to a two variable equation is another of your enduring masterpieces. This can be judged of course by the droves of prominent control-knob critics that jump all over your stuff – a special higher form of peer review.
“Sure, cultural decisions are involved as well (clean car–dirty car?), but you vastly underestimate the degree to which nearly all decision-making regarding personal transport is based on economics.”
This contradicts conclusions what have made the author, that increase of price by about 8% will decrease millage by about 1%.
John, I’m going to guess that you live in a dense population fairly flat urban environment with a well developed public transportation system. You are basing your opinions on what you have available to you personally.
The problem is that for more than 80% of the United States your personal experience isn’t true. Most US cities do not have a well developed public transportation system. Rail travel has dropped dramatically over the years as cars are both cheaper and more convenient to use between rural locations in the US. Trains must always follow the same path and if you live off of that path or want to go somewhere off of that path it becomes a serious problem. And typically the distance from a train or bus station isn’t just 10 – 20 KM but usually much more.
I’ll give you specifics. I live 5 miles 8 KM from the nearest store the elevation change between me and the store is approximately 250 feet which isn’t horrible. But it does make riding more of an issue. The roads are rural which means you must ride the edge of the road with traffic. I work in a neighboring town and drive 28 miles 45 km per day to work with a 2300′ elevation change between my house and my work. So imagine biking down that mountain and back for 90 km a day of biking. We get 5 – 6 months with rain likely and possible and heavy rains in there along with snow. Again imagine biking in that. While there is a bus line it doesn’t come closer than about 1 km from my house and it doesn’t go near my work. It isn’t actually possible to crosslink between the 3 different bus lines to make it to work on time and I couldn’t make it home before the bus line stops running for the evening.
Now explain to my my options that I have besides driving a car to work. Oh and aside from the 2300′ elevation change I’m not all that different than a lot of people living in the US in terms of travel times or what is around me.
“John says:
July 10, 2013 at 7:51 am
Of course they do, because of reasons I stated above. Africa is completely different story and doesn’t have anything common to people in USA or other countries where everybody have chance to get good education.”
If someone has NO ALTERNATIVE to walking, WHAT ALTERNATIVE do they have? Lets not go down the education path, you are on a cycle track to failure there!
John,
You misunderstand the author’s point. An increase of the price of gasoline by 8% will be met by a decrease in expenditures (or decrease in savings or increase in borrowing which are the same thing just offset in time). However, economically I will decrease my expenditures somewhere other than driving to work. A person buying a used car doesn’t get to choose the energy efficiency of a 10 year old car. I will also drive to the store to buy food. My economic choices are that food and earning money are more important than dining out.
Now back to the single mom waitress with 5 kids. You decrease the amount of money in the wallets of everyone in the community by $200 per year (except that IRS agent). She is hit double because she is in a marginal field (where people cut expenditures first) and she has to pay more. What does she do? Does she go buy a brand new car with better mileage? Does she stop driving to work? Where does she cut her expenses? Do we raise her taxes to put in a bus system that will take her an hour to go the 10 miles to work? Do we require her to move to a city with much higher living expenses but a subway system? Do we give her a check based on the money extracted from the economy thereby teaching her children that wealth comes not from work but from the government? What are the consequences of your plan on that single mother?
I can’t even imagine trying to carry two carts worth of groceries, clothing and other miscellaneous goods back to a residence using “public transportation”. Yes, could rent a car but then there is the inconvenience and time cost of having to wait on car delivery and return especially if I need something on short order or frequently. Being able to hop in a vehicle anytime I want to and go to Wal-Mart, then Ross, then McDonald’s then Target then Barnes & Noble etc,etc none of which are anywhere close together and then having that automobile to put everything purchased into is a terrific convenience in addition to being efficient. This is a lifestyle that, unless experienced, is hard to fathom by Europeans and similar countries and not one that most here are willing to give up voluntarily. Even the Greenies only pay lip service to a restricted transportation lifestyle and would force it only on people other than themselves.
LamontT,
I live rather close to place where I work, the terrain is flat, the weather is rather rainy and cold in winter. Public transportation to my work is not convenient, therefore I switched to bike.
My first argument was that the size of USA doesn’t influence millage that much. Other factors like poor public transportation system, urban sprawl is reason why USA consumes much more fuel.
First, there were cheap petrol, than people could afford not to worry about distance, therefore they could afford to live far from their work place. This is the core reason, most of people live in cities, where the services and the work had to be close, but it is not true in USA, because fuel has been cheap and people could not to care about millage.
You talk, why You can’t, it is valuable information, I try to understand why there is situation that You can’t.
Rod Everson: “Car usage by the average person anywhere is based almost entirely upon economic decisions made by the individual.”
Hear, hear. Particularly when the value of most people’s time is taken into account, public intra-city transport is in most instances hideously inefficient. And this is from someone who went for most of his working life without owning a car. (After my first three I went for over thirty years before I bought my fourth.)
Sure, there are those to whom the cost would still be worth it if they paid the true (unsubsidized) cost. But in all but the absolutely largest cities, few people who take the bus would do so if they had to pay the full cost–even if they all had the money.
“John says:
July 10, 2013 at 8:17 am
This is the core reason, most of people live in cities,…”
No, that is incorrect! MOST people do NOT live in in cities.
If someone has NO ALTERNATIVE to walking, WHAT ALTERNATIVE do they have? Lets not go down the education path, you are on a cycle track to failure there!
As I sad: “There are always a choice. Just in many cases we don’t like the alternatives.”
They can not to go anywhere, it is alternative, but really bad one, therefore in most cases they choose to go. And there are always a question why You need to go somewhere. For example woman in Africa often spend much time collecting firewood, but solar panels would do the same trick, but they just don’t have money to buy it. It is question of luck of capital, because if they had it, they wouldn’t walk at all.
I was working in the southeast in the summer of 2008 when gas prices spiked, and one effect that was readily apparent was a temporary change in the composition of vehicle types being driven. There were just as many vehicles on the road, but fewer of the large pickup trucks.
Parking lots at work and in shopping malls seemed to be just as full, but many of the pickup trucks had been left at home and their place had been taken by cars of various makes and sizes.
I have to guess that many of the employees at the plant where I worked had multiple vehicles; and before the price spike they had taken the vehicle they were most comfortable with as their daily driver. If the vehicle they liked best was a truck, they took the truck. But after the price spike, they started using the vehicle in their personal fleet with the least fuel costs. This new pattern lasted until the price spike had passed, and then the usual pattern returned.
The American economy and lifestyle is built upon affordable go-anywhere, go-anytime-you-want transportation. America is no longer an industrial nation, it is a service economy; and if you take away some good part of our affordable go-anywhere go-anytime-you-want transportation, the service economy will suffer immensely.
John,
Equating capital with luck is extremely misguided. Capital is built through work. The capital in Europe and the US was not just found, it was built. I am not claiming the woman in Africa is not hard working, but we should not ignore the contributions of our fathers and grandfathers in building things that lasted long enough to build future capital (steam engines, internal combustion engines, roads, rule of law, etc). She is unfortunate enough to live in an area where almost all capital built for most of time was destroyed through war. However, the difference in total accumulated capital is not an issue of luck but culture.
Imagine building the NYSE in Nigeria during the 1800’s. That has been a huge tool used to direct wealth into generating capital. How much good would it have done in a society that constantly blows up any infrastructure they manage to build? Even if Nigeria had enough money to move everyone out of poverty (and their oil reserves are enough to basically do that) the culture there is more likely to blow it up than use it to build future income streams.
Education is not key here. Those living in Nigeria are not less educated than those in New York in the 1800’s.
Think of it another way. If you put a solar panel on every roof in Nigeria, how many would be smashed in 5 years?
The problem John is that the entire rural sprawl development in the US has happened over the years because there is plenty of land and people if given the choice don’t want to be squished into small areas. The US allows people to not be crammed up shoulder to shoulder.
But some thinkers seem to feel that everyone should live like you are advocating and FORCE people to live that way. With no regard for what the people themselves want. I personally don’t approve of that.
So yes in the US we have horrible public transportation infrastructure and people are not crammed into tightly packed urban areas but instead sprawl out into the countryside where they would prefer to live. And yes there are some who like the crammed and packed cities. I’m not one of them I spent months between jobs last time because I refused to look in the major cities for a job. I loathe how crammed with people they are.
The reality is that it isn’t possible to force people back into the cities now but it doesn’t stop others such as the green lobby from trying to force people to do that and abandon living in the countryside.
Willis,
Interesting analysis, but I think you need to include the effect of keeping the tax revenue neutral on the impacts you consider. I agree that taxes are bad things, but an energy tax is not necessarily the worst tax. Payroll taxes have much worse effects, especially on the working poor.
If all the proceeds of the carbon tax are used to reduce payroll taxes by a fixed dollar amount for each worker, then the effects are much different for the example you gave of the working mother. For the lowest paid workers, their payroll tax would be reduced by more than their energy costs. Also, unlike taxes, they also have the option to reduce energy costs over time by getting a more efficient car or moving closer to work.
Rod Everson says (July 10, 2013 at 7:24 am): “In other words, the U.S. has a gas pricing structure that more closely approximates a true “free-market” price…”
Rod cuts to the heart of the matter. In the US we live where we live because we don’t have to live close to work or school or stores or public transit. Most of the “problems” created by our choices are “solved” by the automobile. Europe is a more artificial environment created by artificially high fuel prices. This better suits some people like commenter John, which is fine, but is less suited for people like me and a number of other commenters, which is also fine.
John also seems to know what’s best for other people, which is still fine as long as we keep him (i.e. his US counterparts) out of public office, or better yet ensure that in any public office he holds he can’t make us do what’s “best” for us. Unfortunately we in the US have increasingly been electing people who know what’s best for us and we’ve given them the power to make it stick. 🙁
Steve,
If you raise the tax on gasoline but then reduce the payroll tax enough that everything is a wash then the miles driven probably won’t change at all. Citizens have already decided that they are best served by spending x dollars on gas. If you raise the cost of gas to x+$200 and then give them an extra $200, they are probably going to spend x+$200 on gas and end up in the exact same position they were in previously.
This was on the news around here for a day or two. A study was done that showed owning a car was more important in finding a job then having a HS diploma. Why? Employers want to ensure you have a reliable way to get to work each and every day.
John says:
July 10, 2013 at 6:28 am
I have Kleenex if the tragedy is too much for you …
John, I’m a musician, and I used to think like you. When I was younger, I used to think that it was the audience’s fault if perchance they weren’t interested in my obviously fantastic music.
Took me a while to realize that if the audience didn’t like the music, that was not on the audience, it was on the musician …
I suspect that the reason your ideas aren’t resonating with the folks here is that you said:
Many people, myself included, have had it up to the eyeballs with well-meaning but clueless folks like yourself telling us or our friends “this will hurt, but you’ll benefit from it”. This seems to be a specialty of brain-dead “progressives” and your basic gormless Eurocrats. Not sure which if either of those groups you represent, but from this side it comes across very unpleasantly. The words I’d use to describe that attitude include arrogant, supercilious, ignorant, patronizing, and uncaring.
THAT is why folks aren’t listening to you, John. Because you’ve shown yourself to be all of those things. You advise that the poor should bike to work? Yeah, that’ll work fine for the woman waitressing from 4PM to midnight in the North Dakota winter, who drops off her two kids at a friends house before going to work and picks them up on the way home … I want to be there when you tell her that biking to work might hurt to start with, but that in the long run she’ll benefit from pedaling through snowdrifts at 1 AM with two kids strapped to her back, I could sell tickets to that show …
Do you see not only how clueless, but how actively, aggressively, patronizingly uncaring that is? You assume that everyone is perfectly free to make all these wonderful choices for the good of the planet, when mostly the poor have very, very limited choices. The waitress doesn’t have a choice of public transit, or biking, or buying a fuel efficient car. She’s got a clapped out old car she hates but can’t afford to replace … and you come along with your airy-fairy theories and you’re shocked that no one buys in to your Pollyanna nonsense?
The problem is not that you wanted to show us another perspective but nobody is interested.
The problem is that you’ve revealed your point of view, you’ve shown us your assumptions of your own superiority and god-given wisdom to direct others in the one true path … and people find your inner workings to be most arrogant and unpleasant.
w.
John said,
“However most poor people in Western World are poor because of bad decisions (for example, no attention to subjects in school, too much partying, using drugs, as well spending money where the money shouldn’t be spent.”
That statement shows how misslead you are in profiling the “poor”. There certainly isn’t any statistical relationship with making those bad decisions and being poor. People that are rich are probably more likely to make those “bad decisions” you mentioned than the poor. Why not get out of yourself and find out how you can help those poor climb out of poverty.
John says:
July 10, 2013 at 6:53 am
John, that’s either absolutely hilarious or destructively clueless, I can’t figure out which.
So when the ex-husband left the 20-year-old car behind, along with the kids and the unpaid bills, when he skipped out with the 20-year-old office temp … your claim is that the ex-wife and kids are not poor because they still have the 20-year old car?
What planet are you living on, John? It’s statements like that that have people howling in the aisles, either in laughter or outrage, I can’t tell from here …
w.
Steve Taylor says:
July 10, 2013 at 2:22 am
@Wayne Delbeke
“Wayne, Most Europeans don’t even know how big EUROPE is. I can fly for 5 hours east of the UK and still be in “Europe”. Most think it ends somewhere like Poland.”
Steve, I hitch hiked (a lot of walking, too) all over Western Europe as it was 50 years ago and managed to visit every country but Portugal and Finland. I found the countries quite small being from Canada and marvelled that there were all those wars between countries many of which could be dropped into Lake Superior (82,000km^2). The largest Canadian federal electoral riding-Nunavut (1,878,000 km^2 with one MP – member of parliament) is almost 4 times the size of the Western Europe of pre EU days (~500,000km sq). There are several electoral ridings in the Rocky Mountain regions in British Columbia that are far larger (Prince George-Peace River at 244,000km sq) than Switzerland (40,000km sq) with many times the potential skiing resources if they were developed. No offense, but when you are talking big, this is a little perspective.
John says:
July 10, 2013 at 7:19 am
Yes, that makes perfect sense. We don’t actually have to eat, that’s just an illusion that people need food.
We eat out of pure choice, because we don’t like the alternative …
And don’t get me started on optional breathing …
….
Do you actually read what you write before you send it to an unwilling world, John?
w.
I grew up in west Texas. My waitress mother wouldn’t have had to bike through snow during her ~7 mile commute. There were some 110+ degree days though. Although I guess we should have ponied up and traded in our 20 year old Buick LeSabre to buy whatever the equivalent of a Prius was back then. The rest of the time we could bike. If someone died of heat stroke that would just fall under the “may” part of “they may even benefit” part of the earlier posts.
Willis, I for one particularly appreciate your incessant demonstrations that high energy policies are detrimental to the poor (possibly the first time I have ever used incessant in a positive sense) in daily life and as far as the environment is concerned.
John
Trolls should be made of sterner stuff. My wife and I (both 71 years old) are on vacation in St. Louis, and are seeing many of the sights via our rental bicycles. When we’re at home in Northern California we have to drive over an hour over steep, narrow, winding roads to get to the more civilized and refined area where Willis lives, then it’s still almost an hour of driving to the “big” cities of our area. I haven’t tried it, but I doubt my bicycle will pull the trailer I fill with ice chests to contain a month’s worth of frozen foods, plus other groceries and shopping items (like a 30-foot extension ladder). Our almost non-existent public transportation won’t tow my trailer either.
When we shop locally it’s a hilly five-mile trip to get groceries, mail, newspaper, and hardware, and even though we walk/jog/bike/swim five miles or more daily, we need our car to do the heavy hauling.
The good old days where I live were not any better. Les than 100 years ago, a ship came every Wednesday from San Francisco to carry supplies and passengers. Families living in the area would leave their homes in their wagons drawn by horses on Tuesday on a 20-mile journey to meet the ship on Wednesday, then immediately begin their homeward journey as soon as their business was complete.
John, all of your comments display an either natural or willful ignorance of the variety of life circumstances that are well known to most Americans, and to informed citizens of the world. To reduce your ignorance, take your bicycle to the Oregon-California border and peddle south on Highway 1. When you finally arrive at San Francisco, you should be ready for the real America you will find starting at Fargo, North Dakota and traveling any direction thence. Happy commuting!
Rod Everson says:
July 10, 2013 at 7:24 am
You seem to be confusing two things. The first one is whether fuel prices are inversely correlated to fuel use.
The other is whether Figure 1 reveals that relationship.
The first is true.
The second one, not true, because they have not controlled for a huge variable, which is the population density. The denser the population, the less you have to drive. As a result, all that graph 1 has shown is that it’s farther between things in the US and similar countries, so people drive more.
w.
interesting how some still try to rationalize taxing carbon …gas and diesel.
HOW has the government taking money from productive initiatives ever created a positive equal result for society. Taxes are never good, at best a necessary evil.
Boiled down it is just taking from one person to give to another …by force. How people can rationalize that is why we are in the mess we are in.
Willis says:
…Now please, folks, don’t insult my intelligence by claiming that it’s OK to harm the poor because of that well-worn fantasy, the fabulous claim that wealth redistribution will make it all OK. It won’t. Anyone who believes it will make it all OK has not spent enough time around government programs….
>>>>>>>>>>>>>>>>
Amen to that Laws and regulations nowadays are longer than ever because length is needed to specify how people will be treated unequally…. By making economic rules dependent on discretion, our bipartisan ruling class teaches that prosperity is to be bought with the coin of political support. Any wonder why Academia is now sitting eagerly at the govenment’s feet waiting for another tidbit?
Don’t believe that? Then just ask Archer Daniels Midland Co., one of the all time biggest campaign contributors to both the republicans and democrats..
This corporate/politician old boys club has increasingly diverted the money from the wallets of the poor and middle class into that of the wealthy/ well-connected. GRAPH: Federal receipts by source One of the nasty little bait-n-switch tactics is telling workers that the employer “Pays Half” the payroll tax. From the point of view of the employer it is part of your wages (along with unemployment insurance) If he fires you or better yet replaces you with a ‘contract’ worker most of that cost goes away so it is all considered part of the cost of labor and the higher the taxes and other benefits the less take home pay you get to keep.
For more independent confirmation of how voters are bamboozled and then ripped off, there is the IMF Report
A carbon tax has never ever been about CO2 or global warming. It is an alternate method of collecting taxes and gaining more control over people. The problem big corporations/big government has is controlling the underground economy. millions of Americans exist in an underground economy that has ballooned to $2 trillion annually…. Americans who are increasingly taking jobs that pay “under the table” either because nothing else is available or they need a second source of income to make ends meet….
The Obamacare law had a provision aimed at the underground economy The provision calls for all businesses to file 1099 forms with the IRS for all transactions with other businesses over $600. This new requirement will force businesses to divert scarce resources to complying with additional bureaucratic red tape. It was finally killed no doubt because big businesses like Walmart/Sam’s club, Loews/Home Depot and the oil companies who sell to small businesses screamed about the additional red tape.
If you scrape away all the rhetoric and hand waving and screaming, Global Warming ===> Agenda21 ====> ‘Sustainability’ =====> Transit Villages. (The newest version of closed cities/company towns) It is and never has been about the environment. It is all about corralling people into small areas so they can be efficiently controlled and milked of their labor/wealth. If you can no longer afford to own property or travel if you can not own your own business then you are a serf.
You can see it at Transition Network: …whose role is to inspire, encourage, connect, support and train communities as they self-organise around the Transition model, creating initiatives that rebuild resilience and reduce CO2 emissions. TRAIN COMMUNITIES??? We now have to be trained to be good little serfs?
Mortgage foreclosures, a carbon tax and sky-rocketing energy costs is the easiest way to force people out of the uncontrollable rural and suburban areas into cities. Straight from the US government:
And the US is busy implementing the infrastructure:
ICLEI: Sustainability Accelerated – Connect with ICLEI and our network of cities, towns & counties to reach your sustainability goals. “45 top mayors and county leaders pledge action on extreme weather and climate, as the Resilient Communities of America campaign is formally launched in Washington”
NMHC: Green Practices/Sustainability “Apartments are the core of any sustainability strategy. They are more resource- and energy-efficient than other types of residential development because their concentrated infrastructure conserves materials and community services. As part of an infill or mixed-use development, apartments create communities where people live, work, and play with less dependence on cars. This reduces the consumption of fossil fuels and their carbon emissions”
The “micro-unit” mini-apartment is coming to New York City
San Francisco considers allowing nation’s tiniest micro-apartments: At a minimum 150 square feet of living space — 220 when you add the bathroom, kitchen and closet — the proposed residences are being hailed as a pivotal option for singles.
California Declares War on Suburbia – Wall Street Journal
L.A. County’s Private Property War
Willis, your research just adds to the mounting evidence that this has absolutely nothing to do with the environment or climate and everything to do with raping the little guy.
Gary Pearse says:
July 10, 2013 at 8:01 am
Thanks, Gary. It’s an analysis I’m very proud of, as I’ve never seen any like it, and because the two variables (GDP and fuel cost) work so clearly and intuitively to explain the miles driven.
So I’ve been a bit surprised to see folks concentrating on side issues, like the first graph. The meat, as you point out, is in the later analysis, not the first graph, but in the analysis of how many miles Americans drive.
w.
Steve Reynolds says:
July 10, 2013 at 8:57 am
Oh, right, the mythical payroll tax reduction … as an advocate of that, I’m sure you can explain how that helps the unemployed guy sleeping in his car and looking for work?
What’s that? It doesn’t help him?
Then how in the hell can you call it “revenue neutral” with a straight face?
Re-read the section I wrote above about your “revenue neutral” nonsense. I said:
Come back when you’ve solved those problems, and then we can discuss “revenue neutral” solutions. Until then, you’re just waving your hands and painting pretty word pictures.
w.
Thank you for a very informative article, Willis, but I miss one point. I would assume that higher gas prices do not only affect how much we drive but I would also expect that it affect what kind of cars we buy.
I would expect that people buy smaller and more energy efficient cars when gas prices go up. At least I do that. If you take that into account we may save considerably more than 1% for every 25 cent per gallon.
I’m not saying that a carbon tax is good; I only say that you do not have the whole picture.
Willis,
All extrapolations break down at some point. Obviously if GDP increased by a factor of 10 we wouldn’t expect people to drive 100,000 miles per year (273 miles or ~5 hours per day). However, miles traveled (including plane trips) might jump into that range. So I have two questions:
1) Have you considered adding miles traveled by means other than automobile? A mediocre first approximation for air travel cost could be jet fuel price
2) How far out do you think the results from the current analysis might apply? 15k miles, 20k?
“John says:
July 10, 2013 at 8:22 am
For example woman in Africa often spend much time collecting firewood, but solar panels would do the same trick, but they just don’t have money to buy it. It is question of luck of capital, because if they had it, they wouldn’t walk at all.”
Oh dear! LACK (Luck) of capitol isn’t a problem. The COST of solar (Not that you would actually be able to cook doro wat, in Ethiopia, for instance) is prohibitive, and does not work well at night or if you saw a “kitchen” there. THAT IS WHY trees are cut down for wood burning and cooking!
[…] This is one of the many reason why energy taxes are so regressive—because for the poor, fixed costs for everything squeeze them all the time, not just fixed fuel costs but also the other bills they have to pay every month. […]
Not so Willis. Here in the UK, the number of households living in ‘Fuel Poverty’ has decreased quite dramatically
Patrick,
Women in Africa use wood for burning and cooking because of a lack of infrastructure. The lack of infrastructure is directly tied to corruption and violence. If I have $1B I want to invest in building an oil refinery would I build it in Nigeria? Not only are there attacks against infrastructure investments there, there is also the stark possibility that one day in the not too distant future the entire facility can be confiscated by the government.
These differences mean the $1B would generate a better return on investment building expensive low return (or possibly even negative depending on future electricity prices) solar in the US than for potentially high return in a violent corrupt country.
Willis,
Who cares if the carbon tax hurts the poor? They will just need more government programs to help them. See, this has nothing to do with carbon or the environment. It’s about a political agenda.
…“revenue neutral” solutions.
I always hated this term. The government never asked if a tax increase would be revenue neutral to my net household income. It also seems to suggest that the money belongs to the government and they can trade this revenue for that revenue as they see fit.
Jan Kjetil Andersen says:
July 10, 2013 at 10:06 am
I would expect that people buy smaller and more energy efficient cars when gas prices go up. At least I do that. If you take that into account we may save considerably more than 1% for every 25 cent per gallon.
People base their car-buying decisions on many factors, fuel-economy being just one. There are issues of how many vehicle occupants you expect to have, and how much stuff you may need to carry, even if just on occasion. An additional consideration is safety.
The type of car one buys even seems to be indicative of the personality type of the buyer. I think the Magliozzi brothers came up with that.
John says, “I didn’t know that anybody needs a car to survive. I wonder how people survived 100 years ago. ”
100 years ago things were different. Not long ago I lived about 20 miles from a grocery. Could I survive by riding a bicycle to the store? I suppose. But I’d probably need to take a day off work to do it, but that’s a moot point, since my job was 35 miles from home. Could I have gotten a job closer? Maybe, but it wouldn’t have paid half. My next door neighbors, who were in their 60’s and 70s probably would not be able to obtain enough food to eat, so they probably would not have survived, except for the kindness of others (e.g., me) who would have helped them.
For work, I /need/ a car. My job doesn’t happen without one. 100 years ago my job didn’t exist. Things change.
Interesting note on fixed costs that I learned in graduate accounting: “In the long term, all costs are variable.” We sold the house and moved and now there is a grocery a mile away. But work is still 20. If the price of gas doubles I’m not going to drive appreciably less. That 100 miles per 25 cents thing makes sense intuitively. We combine trips more than we used to.
Chad B. says:
July 10, 2013 at 7:28 am
Watchman is right about the population density issue. If you have a big country but everyone lives in a few small spots the population density of the country will be low, but the average person will live in a high density area.
———————————————–
Fair point, but the thing is that even in sparsely populated countries like Australia, people (especially those with kids) want a house and backyard space of their own. That means that Australia’s biggest city (Sydney) continues to grow and join up to satellite towns and villages. You can see it when you fly in.
Most people are still out of walking range of shops, medical services, their job etc.But a car puts them within easy range of all of the above.
None of this is remotely ‘high density.’
Excellent, Willis, but I would add one thing regarding the poor mother scratching by with no optional miles driven – not only will her commute costs go up, but so will the cost of everything else that moves by motor fuel. So she will get screwed on not only her gasoline bill, but her electric bill, her food bill and the cost of everything else she needs to provide for her kids.
Der Fuehrer speaks so glibly and smarmily about “saving the planet for our grandchildren,” but there are a lot of grandmothers – especially black grandmothers – trying to raise their grandkids on low incomes here, today, right now who are in exactly the same fix as the mother you mention.
Let’s also not forget the thousands of poor people MURDERED by carbon taxes in Europe, because they couldn’t afford to heat their homes during several of the most severe winters since 1850.
Carbon taxes, and the advocacy thereof, are CRIMES AGAINST HUMANITY, and the institutors of and advocates for them should be punished accordingly.
@mkelly –
There is no such thing as a “revenue neutral” tax. Even if the tax is fully refundable to its payers, there is still the cost of administering it – which, given the usual propensities of bureaucracies to fatten themselves, will likely run to a substantial fraction of the tax collected – and this excess has to come out of the taxpayers’ hide somewhere else.
@more soylent green –
Yes, the object is to force poor people into complete government dependency – when the poor are starving, they must then go to the government for handouts in return for voting again for the scum that screwed them over in the first place. A dirty business to be sure.
Johanna,
I completely agree with you. What I was suggesting is that the population density of Maine, which is the least urban state in the US, should be treated differently than New York where almost half the population lives in a single city. The average density of New York state is far far different than the population density where the average New Yorker lives, and that difference will be much bigger than for Maine. Australia (which I believe is mostly uninhabited – correct me if I am wrong) will have an even more pronounced effect. That was why I suggested something like the average population density around each citizen (within some given radius – I suggested 5 miles).
This would treat Sydney more like Houston than the Outback, and neither would be treated like Manhattan. New York state and Florida have similar population density over the full state, but Miami is far different from Manhattan.
[…] Now, the “carbon taxes” I’ve seen discussed are on the order of $20-$30 per tonne of CO2. And by coincidence, $28 per tonne of CO2 emitted is equal to twenty-five cents per gallon of gasoline. So if a $28/tonne carbon tax is imposed on gasoline, how much less might Americans drive?[…]
And by coincidence, £16 ($25) is the carbon floor price set in the UK. The problem, outside the realm of motor fuel, is the tax applies to pretty much every activity. I’m struggling to think of anything that will be exempt from such a tax.
I Always have a good laugh at those ‘polluter must pay’ comments. No, the end consumer will pay. And, as you have pointed out frequently, those living ‘hand to mouth’ will shoulder the largest burden (often those who buy the ‘polluter must pay’ line).
My view is that our (Western) politicians realised a long time ago that any talk of increased income tax would result in electoral failure but one can always make up the revenue shortfall by getting a bunch of idiots to support ‘evil must pay’ type taxes. Carbon being the latest. Water next and before you know it we will be taxing sunlight and hence the whole planetary food chain.
@Chad B –
You make an interesting point that ties in with the whole misconcept of wealth redistribution. The only redistribution that ever really occurs is from poorer to richer. If Americans are subject to a wealth transfer tax (for lack of a better name for it) and those monies are then paid over to poor countries’ governments, they will wind up in the hands of a very few kleptocrats infinitely richer than the American taxpayers paying that wealth transfer tax.
This is little different from the sort of wealth redistribution effected by subsidies for wind power and electric cars – der Fuehrer’s crony capitalists make big bucks at the expense of low- and middle-income people, and rich celebrities get to buy their toys (electric cars) at prices which are reduced by taxpayer subsidies but still too high for average people – and the price reduction comes out of the nhides of those low- and middle-income taxpayers. Thus, Ms. Janeelia Thomas, black, 46, earning $31,200 a year as a grocery clerk, raising three grandkids in a tough southside Chicago neighborhood, helps very white Justin Beaver and Leonardo di Caprio buy their $100,000 electric cars (which actually probably cost $250,000 to make). (Ms. Thomas may not be paying any income tax, but her other taxes still help support this injustice. Almost any tax effectively redistributes wealth upwards.)
Corruption is a hellacious problem in third world countries that will inevitably defeat the advertised (not necessarily the real!) purposes of such wealth redistribution schemes. These countries will only be lifted out of poverty by self-initiated development of their cheap, i.e., fossil fuel, energy resources – exactly what der Fuehrer is telling them NOT to do. (Do you believe the man’s effrontery telling poor people in Soweto that they should never aspire to driving an SUV?)
Willis Eschenbach says:
July 10, 2013 at 9:38 am
John says:
July 10, 2013 at 6:53 am
I just can’t see how it relates to those who drive a car, because they can’t be poor when they can afford to have a car even a 20 year’s old one.
John, that’s either absolutely hilarious or destructively clueless, I can’t figure out which.
Willis: I think that John is TOTALLY unfamiliar with Western economy & culture, mostly because things like cars in Europe are considered luxury items and so he can’t possibly imagine an economy/culture where almost everyone has at least one and usually several vehicles. The problem is that the progressives want to force us into living like Europeans (as pointed out in previous comments) as long as THEY don’t have to.
However I too have an 18 year old car that I consider (personal choice) worth keeping up as long as I can keep it running (I will call it quits if the engine or auto transmission has a hard failure). Since I know how, repairing/maintaining it is way cheaper than buying a newer one. However I do wish that I still had the now 43 year old 1970 Dodge Charger RT that I use to own!
Patrick says: @ July 10, 2013 at 10:18 am
“John says: @ July 10, 2013 at 8:22 am
For example woman in Africa often spend much time collecting firewood,….
>>>>>>>>>>>>>>
Check out Chiefio’s comment on that problem at Leucaena leucocephala… a reasonable solution was found in the 1970’s but it doesn’t put $$$$ into the pockets of the ‘bloatocrats’ (love the word Willis) or into corporations.
Instead we get GMO seed and the following train of actions to make sure ALL farmers have to pay the big ag corporations a tithe.
Interesting then that a contributor to the FAO’s Forum, Professor El-Tayeb, Ph.D. Professor Emeritus of Industrial Biotechnology at Cairo University commented that: “..currently available (GMO’s) mostly contribute negatively to poverty alleviation and food security – and positively to the stock market.” http://www.warmwell.com/gm.html
1961 PVP is the Plant Variety Protection: The International Union for the Protection of New Varieties of Plants: Gave seed companies a monopoly on only the commercial multiplication and the marketing of seeds. Farmers remained free to save seed from their own harvest to plant in the following year, and other breeders could freely use any variety, protected or not, to develop a new one. click
1991 PVP monopoly has applied to seed multiplication and also to the harvest and sometimes the final product as well. Previously unlimited right of farmers to save seed for the following year’s planting has been changed into an optional exception. Only if national government allows, can farm-saved seed still be used, and a royalty has to be paid to the seed company even for seeds grown on-farm. click
December 2006 “In the EU, there is now a list of ‘official’ vegetable varieties. Seed that is not on the list cannot be ‘sold’ to the ‘public’ To keep something on the list costs thousands of pounds each year…Hundreds of thousands of old heirloom varieties (the results of about eleven thousand years of plant breeding by our ancestors) are being lost forever . click & click & click
THE UNITED NATIONS SUPPORTS THIS
FAO is supporting harmonization of seed rules and regulations in Africa and Central Asia in order to stimulate the development of a vibrant seed industry”…An effective seed regulation harmonization process involves dialogue amongst all relevant stakeholders from both private and public sectors. Seed quality assurance, variety release, plant variety protection, biosafety, plant quarantine and phytosanitary issues are among the major technical areas of a regional harmonized seed system. The key to a successful seed regulation harmonization is a strong political will of the governments involved…” click
(Links are several years old so may not work)
John says:
July 10, 2013 at 2:12 am
I’m sorry, but this article is even more misleading to ones which have the author refers in the beginning…..
>>>>>>>>>>>>>
When I lived in the Boston MA area I used a bike and commuter rail to commute. The use of rail in high density areas like Boston, NYC, Washington DC makes sense.
However I now live 20 miles (32 km) from ANY type of village or store and my nearest neighbor is a 1/2 mile away.
What I said in my first comment is the only way an EU style rail system will work. Move everyone out of the country/suburbia into high population density Transit Villages and take away their transportation and right to own land.
Of course this is just a rehash of feudal fiefdoms and robber baron company towns but that won’t stop the herd of sheeple following pied pipers like Hansen and Al Gore.
“Chad B. says:
July 10, 2013 at 10:27 am”
Yes, I know this. My wife is African!
You make an interesting point that ties in with the whole misconcept of wealth redistribution. The only redistribution that ever really occurs is from poorer to richer.
Misconception in the sense that the whole ‘wealth redistribution’ outlook relies upon the view that ‘wealth’ is a constant. The whole history of the industrial revolution proves that ‘wealth’ is not a constant. You have time to spend at a keyboard responding to a WUWT post. Why are you not currently scrounging for food, shelter and fuel like a typical Ethiopian today (or an unemployed English Cotton worker in 1863)?
All those “take a bus or bicycle, or a train” comments make me very angry.
They are made by people who have no idea, yet possess the audacity to teach others how to live.
Buses and trains are heavily subsidized. I take UK as example. If majority of nation took to trains and buses, the nation would go bankrupt. Train companies say that they raise prices to cool demand, because trains are overcrowded as they are.
When I lived in London, I did not have a car. I walked everywhere, and if it was too far, I took a bus, or a train.
Now I live in a small town, and not having a car is equivalent of being in home prison. There is no train to take my kids to school, and no bus to the shop. If I try bicycling down our country lanes, I’d better make sure my Will is up to date, as I will be running a high chance of being a roadkill.
And no, I don’t drive in circles just to burn fuel, believe it or not, and I dont need to be told what to do.
Great job, WIllis. You really have to be amused by people arguing your logic when you have an R^2 of 0.98. No model is perfect (or should be considered so). But wouldn’t climate alarmists just die to have the climate agree half as well with their models?
John says:
July 10, 2013 at 4:58 am
I didn’t know that anybody needs a car to survive. I wonder how people survived 100 years ago.
I would say that at least 80% of poor people wouldn’t need a car if there would be sufficient public transport system. They would save money as well and could afford more and could have better life, but it is…..
>>>>>>>>>>>>>>>>>>>>>>>>>
Geez, are you really that dumb??? A 100 years ago there WAS NO TAX at least in the USA. If you own land now YOU HAVE TO PAY TAX or you lose it. That means you have to earn money and that means you have to sell your labor or the fruits of your labor in some manner. That means TRANSPORTATION.
Second you have the RURAL POOR thanks again to the big Ag Corporations. For the USA according to the United States Department of Agriculture:
In 2011, 17.0 percent of the population, or nearly 8.2 million people, living in nonmetropolitan (nonmetro) areas were poor.
You really need to start looking at a bit of history.
So from the very start of the USA there was political favoritism for the big boys AND the farmers were making and shipping goods to market.
BTW, the Whiskey Rebellion has still not completely died out. The NSS lost more than one caver ridge walking looking for new caves to being shot to death in the very poor rural areas of the USA.
I don’t understand. Are the “years” and the “pump price” multiplied together to get the “emulated miles driven?” What is the relationship between these variables?
“3×2 says:
July 10, 2013 at 12:22 pm
Why are you not currently scrounging for food, shelter and fuel like a typical Ethiopian today (or an unemployed English Cotton worker in 1863)?”
And even Ethiopians in good paying jobs, some westerners are probably wearing sneakers made there right now, are having to do that too.
Willis: “Oh, right, the mythical payroll tax reduction … as an advocate of that, I’m sure you can explain how that helps the unemployed guy sleeping in his car and looking for work?
What’s that? It doesn’t help him?
Then how in the hell can you call it “revenue neutral” with a straight face?
Re-read the section I wrote above about your “revenue neutral” nonsense.”
Of course the effect of a tax cannot be neutral for everyone, but I think the payroll tax break I suggested would actually benefit almost every low-income family with a member on a payroll.
Even “the unemployed guy sleeping in his car and looking for work” would probably be better off if an RN carbon tax replaced the market distorting maze of subsidies for ‘renewable’ energy that we have now. If potential employers were not paying various taxes and fees to support those subsidies, they might be able to afford to hire him.
This article is a real blast of common sense and scientific revelation. It shines like a light in a dark Climate Changed World.
Mike M says:
July 10, 2013 at 5:38 am
John says: “I wonder how people survived 100 years ago. ”
Wonder no more, the answer is – no where NEAR as well as today!
In 1913 most everyone still got around by horse power…
>>>>>>>>>>>>>>>>
Too right.
My husband’s aunt delivered milk everyday in a pony cart. This would be in before heading off to school.
People like john do not seem to realize child labor and slavery ended not because of the do-gooders but because of the Industrial Revolution and access to cheap Energy. I have friends I grew up with and worked with who grew up in houses with no electric or plumbing. Who did farm chores before and after school and got yanked out of school to help as needed. One guy was over 21 and dating a teacher while a senior in high school. Not because he was dumb but because he had missed so much school. (This was upstate New York BTW)
As author of the original study criticized in this blog, let me respond. Willis Eschenbach fails to address the key issues raised in my study.
I agree with Eschenbach that the graph he criticizes (Figure 4 in my report) by itself does not prove that fuel price affects per capita vehicle travel. My study provides much more evidence. It reviewed more than a half-century of fuel and travel elasticity literature. It highlights four key features:
1. Many demographic and economic factors affect transportation price sensitivities including age, income, employment rates, and the quality of transportation options available to travelers. In particular, per capita fuel consumption tends to be much lower and transportation elasticities tend to be much higher in communities with good walking, cycling and public transit, where residents have viable alternatives to driving.
2. Long-run elasticities (more than five years) are typically three times short-run (less than two years).
3. About two-thirds of the long-run response to fuel price changes consists of changes in vehicle fuel economy (more miles-per-gallon), and one third consists of changes in mileage. Measuring just one or the other will underestimate total fuel savings.
4. Price sensitivities seem to have increased significantly in recent years. Although fuel and travel elasticities seem to be quite low in the U.S. during the last quarter of the twentieth century, a number of studies indicate that they have returned to historically normal levels.
Eschenbach’s analysis fails to address these issues. His regression analysis does not account for demographic, economic and geographic trends during the last quarter of the twentieth century which stimulate automobile travel demand. It only reflects short-term impacts although carbon taxes are intended to affect very long-run consumption. It only considers changes in mileage, not the much larger changes in fuel consumption. It does not evaluate separately the different time periods as my study indicates is needed for accurate results.
My overall conclusion is that the long-run elasticity of fuel consumption to price is typically -0.4 to -0.8 (a durable 10% fuel price increase causes consumption to decline 4-8%), and the long-run elasticity of vehicle travel with respect to fuel price to be -0.2 to -0.3 (a durable 10% fuel price increase typically causes per capita vehicle-mileage to decline 2-3%). Eschenbach and others have found significantly lower elasticities in the U.S. between 1970 and 2004, which probably reflected demographic and economic trends during that period including rising employment rates and real incomes, declining real fuel prices, highway expansions and suburbanization. Many of these trends are now reversing. As a result, U.S. fuel elasticities are likely to increase to historically and geographically normal levels.
These elasticity values are less than unity, so fuel is considered “inelastic”, but much more price sensitive than Eschenbach concludes. The long-run reduction in vehicle travel is two or three times higher than his short-run estimates, the reduction in fuel consumption is two or three times higher than his vehicle-travel reductions, impacts tend to increase if transport options improve, and these are all economic transfers not economic costs, their ultimate impacts on consumers and the economy depend on how revenues are used. Eschenbach adds two common but incorrect assumptions, that carbon taxes are inherently regressive (they harm the poor) and that they are economically harmful. The regressivity of fuel prices depends on the quality of transport options and how revenues are used. If lower income people have good alternatives to driving and revenues are used in ways that benefit poor people, fuel/carbon taxes can be progressive overall. Yes, crude oil price spikes are economically harmful because money is transferred to petroleum producers, but if carbon tax revenues substitute for more economically harmful taxes, such as income or sales taxes, it can support economic development.
A good example is the country of Norway, which is a petroleum producer, has one of the world’s highest incomes and GDPs, has a cold climate and low population density, yet maintains one of the world’s highest fuel taxes and maintains a multi-modal transportation system which encourages walking, cycling and public transit where possible. As a result, Norwegians drive about half as many annual kilometers and consume about half as much petroleum per capita as in the U.S. By discouraging domestic consumption Norway has more petroleum to export, making it more economically successful overall.
For more information:
François Boilard (2010), “Gasoline Demand In Canada: Parameter Stability Analysis,” EnerInfo, Vol. 15/3, Fall, Centre for Data and Analysis in Transportation, Université Laval (www.cdat.ecn.ulaval.ca); at http://www.fss.ulaval.ca/cms_recherche/upload/cdat_en/fichiers/ioiriofo,_vo.15,_oumbir_3,_f_2010.pdf.
Dan Brand (2009), “Impacts of Higher Fuel Costs,” Federal Highway Administration, (www.fhwa.dot.gov); at http://www.fhwa.dot.gov/policy/otps/innovation/issue1/impacts.htm.
Kenneth Gillingham (2010), Identifying the Elasticity of Driving: Evidence from a Gasoline Price Shock in California, Stanford University (www.stanford.edu); at http://www.stanford.edu/~kgilling/Gillingham_IdentifyingElasticityofDriving.pdf.
Shanjun Li, Joshua Linn and Erich Muehlegger (2011), “Gasoline Taxes and Consumer Behavior,” Stanford (http://economics.stanford.edu); at http://economics.stanford.edu/files/muehlegger3_15.pdf.
Todd Litman (2005), “Efficient Vehicles Versus Efficient Transportation: Comparing Transportation Energy Conservation Strategies,” Transport Policy, Vol. 12/2, March, pp. 121-129; at http://www.vtpi.org/cafe.pdf.
Todd Litman (2011), “Transportation Elasticities: How Prices and Other Factors Affect Travel Behavior,” Victoria Transport Policy Institute (www.vtpi.org); at http://www.vtpi.org/elasticities.pdf.
Todd Litman (2012), “Changing North American Vehicle-Travel Price Sensitivities: Implications For Transport and Energy Policy,” Transport Policy, http://dx.doi.org/10.1016/j.tranpol.2012.06.010; at http://www.vtpi.org/VMT_Elasticities.pdf.
Fred Pearce (2011), “End of the Road for Motormania,” New Scientist, 2825 (www.newscientist.com); at http://www.newscientist.com/article/mg21128255.600-the-end-of-the-road-for-motormania.html.
Elisheba Spiller and Heather M. Stephens (2012), “The Heterogeneous Effects of Gasoline Taxes: Why Where We Live Matters,” Resources for the Future (www.rff.org); at http://www.rff.org/RFF/Documents/RFF-DP-12-30.pdf; complete report at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2129396.
Clark Williams-Derry (2011), “Toll Avoidance And Transportation Funding: Official Estimates Frequently Overestimate Traffic And Revenue For Toll Roads,” Sightline Institute (www.sightline.org); at http://www.sightline.org/research/sprawl/toll-avoidance-and-transportation-funding.
John says: @ July 10, 2013 at 5:43 am
…..It is impossible, that some can’t just accept that car riding is a cultural thing not economical.
>>>>>>>>>>>>>>>>>>>>>
Right…
Anyone else want to fund John’s move to a place like Sutton County, Texas? There is a nice place for sale prefect for furthering his education. link
I am sure our Canadian and Aussie friends can also pick some nice spots for him to live in too.
Bring your bike John and don’t for get the several gallons of water.
John says:
July 10, 2013 at 6:53 am
Of course they would like to change with me, because I’ve made decisions to give me a choice.
I just can’t see how it relates to those who drive a car, because they can’t be poor when they can afford to have a car even a 20 year’s old one.
>>>>>>>>>>>>>>>>>>>
That is YOUR CHOICE.
I lived in cities in apartments for most of my adult life. I FINALLY have my farm. My husband is in his seventies and I am in my sixties. We live on what was a dirt road in the south with the temperature in the high eighties to 100F (30C to 38C) the humidity ~60 to 80%.
You want me to bike on narrow roads for over 35 miles to go shopping??? To pick up 500lbs of feed??? You are either very very myopic, selfish or as someone else stated an idiot troll.
I think you miss my point. English Cotton in 1863 or Ethiopian ‘Sneakers’ in 2013. Both represent ‘wealth’ that didn’t exist before. Wealth is not a constant!
Todd Litman says:
July 10, 2013 at 12:50 pm
“A good example is the country of Norway, which is a petroleum producer, has one of the world’s highest incomes and GDPs, has a cold climate and low population density, yet maintains one of the world’s highest fuel taxes and maintains a multi-modal transportation system which encourages walking, cycling and public transit where possible. ”
I’m friggin 67 years old. I’m not walking,cycling, or riding public transportation. .I worked over 50 years and that has provided us with a retirement income sufficient enough to do almost anything we want, within reason. It’s called freedom the American way.I frequently thank my ancestors for fleeing Europe about 100 years ago. Socialist democracies don’t not appeal to me. They may be your ideal, but not mine. Imitating Europe is a bad thing.
I stopped reading John’s comments after the sentence, “In short term the increase of price will hurt the poor, but in long run they would be forced to change their habits and they may even benefit from the increase.” It brings to mind one of my favorite lines from Robert Heinlein:
“There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.” From The Moon is a Harsh Mistress. It’s that word, FORCED. Who decides what change is good, and what change is bad? If John were forced by the government to buy a car and abandon the bicycle because cars are safer (never mind whether or not this statement is actually true or not–the government won’t care as long as it serves its purpose) would he like that? I’d fight for John to be able to keep his bicycle.
Almost forgot. We own a Corvette, Chevy Tahoe, and a Cadillac STS. We don’t drive much anymore, but that’s our choice, not the socialist government.
Willis, if you were on the other side of the climate debate, you would probably be a grant-fed multi-millionaire, but of course, the only way that would be possible is if there was unequivocal evidence that CO2 is the main control knob and the natural thermostat not supported. Like many others, I initially had no reason to distrust the control-knob folks. It did seem to be getting warmer and intuitively (often an unreliable helper) I could accept that we were burning more fuel and increasing our population. My skepticism arose when I encountered the alliances of scientists with the UN, Green anti-human activist organizations, science/government/policy agenda and then my anger arose with the dishonesty, dirty tricks, fiddling with climate records, blackballing dissenting scientists, dispatching editors that didn’t toe the line….something had to be very wrong with AGW theory if they needed to pile on all this other stuff.
These were the negative inducements to changing my mind. After reading your thermostat hypothesis and your subsequent tropical thunderstorm governor which clicked in when a hot spot arose with sun blocking clouds and a vertical heat engine to send the heat aloft to where it could be shipped out to outer space … well that sealed the deal for me. The 31C SST ceiling you demonstrated was, for me, an E=mc^2 moment. The stinginess of the CAGW folk with other than positive feedbacks got me thinking- with a couple of billion year history of continuous life, with temp swings of only 7-10C, and armed with your thermostat hypothesis, I was securely in the skeptical camp.
Your trashing of the effectiveness of economic policy of taxes to dissuade people from driving their cars, your posts on agricultural productivity and other BENEFITS of more CO2, the idiocy of corn ethanol and its effect on food prices, the unsustainability of sustainable energy sources and the CAGW policy war on the poor, etc, have been a service to mankind. But I don’t need to tell you that, like saving the Nile crocodile, you won’t be thanked so much.
Joe Born says:
July 10, 2013 at 6:59 am
Wills Eschenbach: “[A]ny energy tax on gasoline will hit the hardest on the poorest.”…..
>>>>>>>>>>>>>>>>>
Willis is correct.
The last time gas prices went up it had an immediate impact on my hay and grain costs. Roughly if you double the cost of fuel and you also double the cost of feed and hay. The only reason this is not seen by the city consumers is the price is muffled by the bureaucrats and corporations. Once the family farmers who are stabilizing food prices are driven out of business, probably with in a decade or so with the Food Modernization Act now in place, expect to find the Ag business to take advantage of their consolidation of the food industry and raise prices through the roof.
Patrick
“No, that is incorrect! MOST people do NOT live in in cities.”
How it can be possible that 82% is not most people, I just checked this.This is far mucg greater
John says:
July 10, 2013 at 7:39 am
“So you think all the poor choose to be poor by making poor decisions.”
No, they didn’t choose to be poor as companies don’t choose to bankrupt. But people may have made poor decisions.
However true reason why African are poor is their lack of capital (including human capital)….
>>>>>>>>>>>>>>>>>>>>>>>
No John, you are wrong AGAIN. Africa is poor because of piss poor government and Kleptocracies. See: Zimbabwe: From Breadbasket to Dustbowl
John
I didn’t know that anybody needs a car to survive. I wonder how people survived 100 years ago.
Much of the US population in 1900 was rural, they lived on farms. If they were lucky, they were able to go into town once a month, mainly for necessities like sugar, salt, flour, other foodstuffs and clothing, and even a short trip of 5 miles took a long time with horses and wagons. Roads were mainly dirt or mud, depending on the weather, and were rarely cleared of snow in the winter. Your bicycle wouldn’t work well in that world. Both sets of grandparents’ main mode of transport from the farm was by horse, even into the 1930’s. There were few rural towns with rail access (those that had it prospered and many still survive even without the railroads servicing them) and farmer’s had to convince trains to stop even if they were located along the tracks.
The area I used to live in was a top 150 metropolitan area in the country, 21 miles from my job. Few bike paths and most streets were not designed for bike traffic and a major river crossing with most bridges being Interstate. I could drive this in 30 – 35 minutes easily and my car got 35mpg with gas at $1.85 at the time. I had my car serviced for a few days so I took the local mass-transit (bus) service which cost $3.50 each way with 5 transfers. My commute time increased to 1hr 45min and these four days of mass transit had two bus breakdowns with waits of 45min for a replacement to arrive.
With my car, I could stop at a grocery store on the way home so no real increased mileage to do any shopping for the entire week. If I were to stop for groceries on the bus, I would have to walk to a different store, walk back and have to pay full fair carrying perhaps two days of groceries.
So why would I rather drive? Time, convenience (the grocery and other stores along my drive), expense and not having to be at the whim of someone else.
Also, 100 years ago most of the people in the US heated their homes with coal and wood burning stoves with fire and burn fatalities common. Diseases like cholera, diptheria, typhoid fever, polio, tetanus, measles, mumps and many others were common and life-threatening even for the rich. Malaria outbreaks happened in Washington DC, St. Louis and even NYC. Appendicitis and peritonitus were often fatal. Life expectancy was low (50-60 yrs) and infant and childhood mortality rates were high (20%).
Yes it is surprising that anyone survived 100 years ago. If we can continue progressing, in 2113 people will be surprised any of us survived.
Willis: Maybe I’m missing something, but the chart that set you off shows the relationship between the price of fuel and per capita energy use. Yet you spend the better part of your post going on about miles driven. There certainly are many factors that affect fuel use beyond price, but trying to show that by substituting miles driven for per capita energy use isn’t the way to go about it. Sure, the number of miles driven affects energy use, but so do a lot of other things, like the size and efficiency of the vehicles being driven (and population density &c.).
Also, I wouldn’t be so confident in your results showing a very strong correlation among real per capita GDP, the pump price, and miles driven. This analysis shows that from about 1970 to 1995 in the United States, GDP and vehicle miles traveled moved in tandem; that is, an increase in GDP led to a proportional increase in miles traveled. After 1995, however, vehicle miles traveled increased at a slower rate than the economy, suggesting the link between the two factors is not as strong as it once was.
John,
You are mistaking “City” for “Urban.” In old-world countries the two are probably synonymous, but they are not in the US. I believe 18% “rural” is probably about right if forced to separate the American population into “Urban” and “Rural”. However, there is a HUGE difference between what counts as city life where car use can be limited and where most people live. Take a tour of Queens through google maps and you will see the difference. Even there in the midst of the largest city in the US the population density is low enough that not having a car would be a different category of citizenship. The Dallas Fort Worth region is ~5-6 million people depending on how it is counted, but only maybe a half million would really consider themselves living “in the city.”
If you want to compare what would work for limited auto use you would really have to compare to “Urban Core” populations, not “Urban”. Even then some cities (Houston) are not livable for a productive family without a car. Note the use of the word “productive.” Can you live there without a car? Yes. Can you live there and contribute more to society through production of goods and services than you consume through aid packages? Not likely.
John says:
July 10, 2013 at 4:58 am
I would say that at least 80% of poor people wouldn’t need a car if there would be sufficient public transport system. They would save money as well and could afford more and could have better life, but it is
The stupid it hurts.
Public transportation may work starting from a certain human density and a certain number of humans. Under it there cannot be any efficient public transportation. It costs much more then driving a car, in all, energy and costs and time. Each solution is best in certain circumstances.
Another good read. But why, in figure 2, do you have cost on the vertical axis and miles on the horizontal axis? Usually, antecedents go on the horizontal axis and hypothesized consequences go on the vertical.
NotAboutToChange says:
July 10, 2013 at 8:17 am
I can’t even imagine trying to carry two carts worth of groceries, clothing and other miscellaneous goods back to a residence using “public transportation”….
>>>>>>>>>>>>>>>>
I have done it. Carrying groceries and laundry and such on a bike. It is fine on level terrain in moderate weather when the distance isn’t too far, the roads are wide and you are young. It really sucks when it is snowing hard and 30 below or 90F and 80% humidity. (I never did figure out how to put chains on my bike…)
For older people without the decent reflexes of the young or with health problems, it is a cruel punishment that can lead to physical damage or death. My husband was hit by a car while biking (head injury) and so was his brother (lost a leg)
John says:
July 10, 2013 at 8:17 am
….My first argument was that the size of USA doesn’t influence millage that much. Other factors like poor public transportation system, urban sprawl is reason why USA consumes much more fuel….
>>>>>>>>>>>>>>>>>>>>>
You forgot a really really big reason why Australia, Canada and the USA consumes much more fuel. We GROW YOUR FOOD. The USA exports twice the food compared to the #2 food exporter.
John says:
“I didn’t know that anybody needs a car to survive. I wonder how people survived 100 years ago. ”
They survived 10 years less. If you want to jetison a few hundred years more frivolity you can shave median age back down below 50 and rescue the Social Security lockbox.
I know how sparely populated is metropolitan areas in USA. The density in Dallas could be lower than some countries in Europe. However the density has been influenced by decisions made by people in first place and only than people were influenced by the density, and it is whole my point that USA (people) have made it to like it is.
Todd Litman says:
July 10, 2013 at 12:50 pm
“A good example is the country of Norway, which is a petroleum producer, has one of the world’s highest incomes and GDPs, has a cold climate and low population density, yet maintains one of the world’s highest fuel taxes……………
—————————————————————————————————————
A high income and GDP doesn’t mean much when that income and GDP is taxed until you are in poverty (relatively speaking).
@Chad
Excellent comments
I’m sorry to those who believe I tried to say that they have to cycle, I just wanted them to ask why they do as they do. It is often very hard, impossible to make the change, especially to those who live in countryside, in many cases it would mean to drop the lifestyle they have and it would be bad thing as I come and still live in countryside and value such lifestyle very high.
However, what I tried to show is that not the size of USA is reason why You need to drive, most of my opponents made so many good comments why they personally can’t, if they could and it would be cheaper they would already do so. Why it is so?
The most important reason in my opinion is choice of people, often these are choices made long time ago.. There is nothing wrong to drive a car. My brother drives more than most of You and I can’t say that he wastes fuel. But in general most of societies should consume less fuel, but I can’t say it about all individuals.
Every country should decide what kind of policy it should take by them selves. I even don’t think that USA should be like Europe, not at all, however none of them should live as other lifestyle wouldn’t exist.
I just wanted to rise the discussion about the reasons, because the conclusion, in my opinion, was wrong. You should read Todd Litman comment who adds some scientific argumentation.
I personally benefited from the discussion, I hope others benefited at least a little from my opinion.
Gary Hladik says: @ July 10, 2013 at 9:04 am
…. Unfortunately we in the US have increasingly been electing people who know what’s best for us and we’ve given them the power to make it stick. 🙁
>>>>>>>>>>>>>
Actually that is not quite correct.
>>>>>>>>>>>>>>>>>>>>>>>>>>
From Rasmussen polls:
Or in a more indepth look at America’s Ruling Class
Yes John, we certainly have made it like it is. We are the only first world country with a birth rate that is at or above replacement levels. Why are we at or above replacement? Each family is afforded sufficient space to live as they see fit. When people are shoved into urban cores then they are not free to have the number of children they would find ideal. If you don’t like our population, fine. Should our tax rates go high enough to emulate European gasoline usage? Unless our leaders are absolute morons they should see that will lead to European style birth rates. Social safety nets cannot possibly work when there are more people using them than providing them as will likely be the case in many European and Asian countries over the next 2 decades.
I’ve recently returned to California after living in the UK for 7 years. Most of my friends there didn’t have the concept of driving for long distances unless it was on holiday to the continent. Long trips were taken on the train. I did have one friend that mostly worked from home, but would drive in to work 90 miles each way a couple of times a week. That was highly unusual. We in the US, especially the western states, have a different perception of distance. It doesn’t matter that I live only 5 miles from work, I still travel 200 miles on the weekend to visit family and friends and after living in the UK fuel is cheap!
Even with the much higher fuel costs there, driving was nearly always cheaper than taking public transportation. If you lived in London then it was pretty much insane to drive anywhere unless it was Sunday – Parking, congestion charge and traffic alone were enough to discourage most drivers. Otherwise the time and cost to commute was difficult to use as an offset for driving the car. Parking problems were usually my deciding factor. Those espousing the train as a solution must keep in mind that it will not reduce poverty, but if appropriate to the environment and culture, it can be a great thing to have.
When I lived in Chiswick and the later Ealing and commuted to lovely Slough for work (17.5 miles each way) I rode my bicycle a good deal of the time. I wouldn’t recommend it for most as, mileage aside, riding in the UK is much more dangerous than in the US. No room for cyclists and motorists don’t look out for them like they do in other European countries. Weather was always a pain with getting wet about 98% of the time and commuting in the dark for most of the year. However, I could get to work in less than an hour and it didn’t cost me anything but sweat. To take the train took me more than an hour and cost more than driving did (which could take anywhere from 20 min to 3 hours depending on traffic – usually about 35-40 min).
When I left fuel prices were outrageous at $2.50 a gallon and now they don’t seem so expensive at $4 a gallon. In the UK I was much poorer earning the equivalent amount of money. Please don’t try to foster that crap on us and let us work out our problems our way. The more socialist our government becomes the poorer we will be. I say more CO2 for everyone!
John says:
July 10, 2013 at 2:27 pm
I know how sparely populated is metropolitan areas in USA. The density in Dallas could be lower than some countries in Europe. However the density has been influenced by decisions made by people in first place and only than people were influenced by the density, and it is whole my point that USA (people) have made it to like it is.
———————————————————————————————————————
And the difference is that few Europeans have any choice whereas most Americans (and similar nations) do. Why are you so dense that you cannot see that we are NOT going to give up these choices voluntarily simply for some ones religious idea of “what is best for mankind”. Sounds like you are a victim of the brainwashing that I saw when in Copenhagen some decades ago. When I ask for but couldn’t get or find ice for water or anything else, the locals chastised me because they had been convinced that ice would cause stomach cancer (not pollutants because plain tap water was ok to them). Obviously the Gov had spread this rumor to save energy, naturally the elite could have all of the ice they wanted. Might explain the lack of cold beer also.
My husband informed me he just got an e-mail that one of the guys he knows was just hit and killed by an unlicensed driver (Mexican) in Durham NC. The guy was 36. (And yes you can get killed driving a car too.)
Chad B. says:
July 10, 2013 at 2:44 pm
Chad, while I agree with your point about space & family size, I disagree to the ever increasing population need mantra. It is not necessary.
Many countries have found their population balance and I find it not wrong. Considering the high taxes one pays in Europe and the inefficiencies induced by higher bureaucracy, higher costs due to “green fantasies” which do not work, or other failed fantasie projects we see that there are huge reserves which could be used to maintain a larger “older population”, if this would be needed. Especially thinking also at the ever increased productivity.
There is no need for ever increasing population levels. Social safety nets may collapse rather due to all kind of abuse.
NotAboutToChange says:
July 10, 2013 at 2:53 pm
“you are a victim of the brainwashing that I saw when in Copenhagen some decades ago. When I ask for but couldn’t get or find ice for water or anything else, the locals chastised me because they had been convinced that ice would cause stomach cancer (not pollutants because plain tap water was ok to them).”
That’s funny. That particular lie has to my knowledge never been spread in Germany. Do Danes swallow ice cubes whole?
“We are the only first world country with a birth rate that is at or above replacement levels.”
This is close to truth, but not true. Iceland have it above as well. However my objection is in a different aspect.
If You look closer to total fertility rate, You will notice that there are significant difference between groups of population. In general Hispanic population has much higher fertility rate, while white non-Hispanic Americans have it below 1.8 what is below many European countries where most of people are white, like Finland, Sweden, Norway, Denmark, Netherlands and few others (I intentionally exclude France as it have rather high percentage of migrants. No wonder it have higher total fertility rate.
Thus, You can’t argue that the lifestyle is reason of more kids. I would say that Europe has less kids because of luck of willingness to have them, not because of no possibilities to have sufficient housing.
3×2 says:
July 10, 2013 at 10:20 am
[…] This is one of the many reason why energy taxes are so regressive—because for the poor, fixed costs for everything squeeze them all the time, not just fixed fuel costs but also the other bills they have to pay every month. […]
<a href="
Lars P. says:
July 10, 2013 at 3:04 pm
” There is no need for ever increasing population levels. Social safety nets may collapse rather due to all kind of abuse.”
Please read Julian Simon’s The Ultimate Resource and find out what exactly the ultimate resource is.
http://www.juliansimon.com/writings/Ultimate_Resource/
3×2 says:
July 10, 2013 at 12:22 pm
You make an interesting point that ties in with the whole misconcept of wealth redistribution. The only redistribution that ever really occurs is from poorer to richer.
Misconception in the sense that the whole ‘wealth redistribution’ outlook relies upon the view that ‘wealth’ is a constant. The whole history of the industrial revolution proves that ‘wealth’ is not a constant….
>>>>>>>>>>>>>>>>>>>>>>>
And recent history shows the wealth redistribution from the worker to the more wealthy is very very real.
1976 – A typical American CEO earned 36 times as much as the average worker. By 2008 average CEO pay increased to 369 times that of the average worker. (SFC, 4/29/08, p.E2)
IMF report: In the United States the share of the top 1 percent has close to tripled over the past three decades, now accounting for about 20 percent of total U.S. income
John says:
July 10, 2013 at 5:43 am
“Patrick, do You have any alternatives as effective as computer, phone, electricity, pharmaceuticals? I guess no, however commuting with car has alternatives.
It is impossible, that some can’t just accept that car riding is a cultural thing not economical.”
John thinks riding on a train is free. It is not. Here in Germany using the train (with a 50% rebate deal) costs me twice as much as the same distance (350 km) with my car. Granted, the car runs on LPG, which our stupid warmist government has given tax exemption for its planet saving properties (less C than gasoline per weight), so I’m paying half the German gasoline price.
John and some others also seem to think that once you supply a train with electricity you’re done. No, you’re not. Railway companies in Europe have about 1 employee per kilometer of track; and maintenance of railways is darn expensive. A simple level crossing sets you back 100,000 EUR I would estimate. Be prepared for frequent repairs. Trains are heavy; the vibrations destroy everything given enough time.
John says:
July 10, 2013 at 3:07 pm
“Thus, You can’t argue that the lifestyle is reason of more kids. I would say that Europe has less kids because of luck of willingness to have them, not because of no possibilities to have sufficient housing.”
Don’t you think that the “lack of willingness” and the “lifestyle” are the exact same thing?
Steve Reynolds says:
July 10, 2013 at 12:43 pm
….Of course the effect of a tax cannot be neutral for everyone, but I think the payroll tax break I suggested would actually benefit almost every low-income family with a member on a payroll…..
>>>>>>>>>>>>>>>>>>>
Have you ever bothered to look at who pays taxes on wages???
Nearly haf of Americans do not pay income tax. CHART: Percentage of population not represented on a taxable return
This does not mean the bottom half does not pay taxes. They do but they are hidden. 151 Taxes Hidden In Loaf Of Bread
The correlation makes perfect sense. There is a fairly predictable pattern to increasing VMT’s, that is not controversial to transport economists. Trouble is the subject has been buried in ideology and activism.
The late Professor Charles Lave was a classic writer on the subject. Anti car activists always interpret rising VMT’s as “cities getting less and less efficient and people driving further and further as the city sprawls”. In fact, it is more and more people getting to drive, including the bottom income quartile, women, the elderly, and the young.
It is an absolute myth that Europeans “prefer public transport” more than Americans do. Everything IS explained by GDP per capita and the price of petrol. Eschenbach is spot on.
Europe’s cities have been de-densifying just as the USA’s have been, again with a lag due to GDP per capita and the cost of petrol. Look at authoritative density figures here:
http://www.demographia.com/db-worldua.pdf
Every city in France outside Paris, is less dense than Los Angeles. Germany, Sweden, Italy and the Netherlands all have several cities that are less dense than LA. LA is actually not really low density – it is 3 times denser than cities like Houston and Atlanta and Indianapolis and even Boston.
There are a number of factors that keep SOME rare cities “high density” in the modern era but I won’t bore everyone here with the explanation. The UK has consistently high density cities due to decades of growth containment urban planning – and this has been an absolute disaster for transport efficiency, housing affordability, social outcomes, and economic productivity.
KevinM says:
July 10, 2013 at 2:25 pm
John says:
“I didn’t know that anybody needs a car to survive. I wonder how people survived 100 years ago. ”
They survived 10 years less. If you want to jetison a few hundred years more frivolity you can shave median age back down below 50 and rescue the Social Security lockbox.
>>>>>>>>>>>>>>>>>>>
Actually the average age was ~45 or less before 1900. link Now we are in the upper seventies.
Hi Willis,
even before you worry about the graph itself the data looks suspect. Australian price of petrol at below USD 1.00 seems way to low considering we currently pay around $1.50 AUD per liter at an exchange rate of 0.915. Our fuel price has not dropped below USD $1.00 in years.
Prof. Robert Bruegmann, one of the world’s greatest experts on cities, says the following in “Sprawl and Accessibility” (2008):
“…….contrary to what many people assume, Los Angeles has been getting denser rather than less dense for at least the past half century during an era when most people have used the automobile as their primary means of getting around. The Los Angeles urbanized
area (the census bureau’s functional definition of “urban” that includes a central city and all of the surrounding land above 1,000 people per square mile) has increased in density from barely over 4,000 people per mile to over 7,000 people per square mile, making it the densest urban area in the United States.
It is this increasing density, not sprawl, together with the fact that Los Angeles has one of the lowest provisions of freeway miles per capita in the nation, that has led to increasing traffic congestion in Los Angeles. This has happened despite the fact that Los Angeles has one of the most extensive transit systems and lowest car ownership rates in the country today.
One of the things that all of these erroneous preconceptions about sprawl demonstrate is the complexity of urban systems and the way that in these complex systems almost every cause is also an effect and vice versa. Thus, rather than say, as many people do, that the automobile was a principal cause of sprawl in the twentieth century, it
would probably be at least as accurate to say that a desire for lower density living was the reason automobile makers were able to transform themselves from a small industry turning out luxury products to an enormous industry making a product that has become a standard fixture in affluent households worldwide.
It also suggests that all transportation means are profoundly ambiguous in their
impact on the built environment. The railroad, surely a key factor in creating the dense industrial city of the nineteenth century, was also a key factor in its decentralization.
Likewise the automobile, which clearly has aided in the dispersal of cities, can also play a role in making them denser.
Curiously, as Los Angeles has become more dense over the last 50 years, the large, old cities of the American East and Europe have continued to become less dense. No large European urban area now counts even 15,000 people per square mile and many, particularly highly affluent northern European urban areas like Hamburg or Copenhagen, are now less dense than Los Angeles. With this decline in density has come a spectacular rise in automobile ownership and use. Despite draconian governmental
policies to inhibit automobile use and the expenditure of billions of dollars on public transportation, transit ridership in Europe has remained largely flat since World War II while automobile ownership and use have soared. Although many people like to observe that Europeans still drive less than Americans, in fact the upward trajectory of automobile ownership and automobile use has increased in Europe in almost exactly the same way as in the United States, simply with a time lag due to a lag in affluence…..”
https://www.jtlu.org/index.php/jtlu/article/download/30/23
One aspect no one has touch on is what happens when you crowd people into too small a space?
In animals you get all sorts of destructive habits and even deaths if you do not allow an animal enough space especially if you have several in a group.
When, because of employment, I was forced to live in city apartments, I escaped to a farm in the country every evening where I kept my horse and on weekends went backpacking in the mountains or caving all this thanks to my owning a car. However if you trap people in a city with no option for relief what happens?
Good point – there is a great book by Prof. Patrick Troy (Australian National University) called “The Perils of Urban Consolidation”, in which he is scathing about urban planners belief in some kind of utopian idyllic high-density-living past where everyone reacted positively with their neighbours. The truth is that most people can’t wait to gain the ability to have their own patch of private space somewhere.
I would love to see some good, scientific, or at least verifiable data on MPG loss(gain? – never!) when using ethanol blend gasoline. On four separate occasions I have measure the MPG on two different cars when taking a trip of more than 1000 miles (at least 500 each way) and each and every time I got at least 5% better gas millage when using only gasoline without ethanol. Told my son about this and he told me “You must be wrong. The internet claims that there is less than a 2% decrease if any!” Finally he tried it on a trip to Fargo ND and back and has thanked me ever since. He claims he has a 8-10% improvement on his 22MPG truck on the highway. (went from ~20 to ~22 MPG) With a 5 to 10 percent loss you are in essence paying for 5 to 10% “water” in your gas. How does that save the environment? How does it save Oil, Gas? Sounds like a scam or the butcher with his thumb on the scale!
Gail: “Have you ever bothered to look at who pays taxes on wages???
Nearly haf of Americans do not pay income tax.”
But income tax is not the payroll tax I am referring to. Everyone with a (not underground) job pays social security, medicare…. and other payroll taxes. Those are the taxes I would reduce to neutralize carbon tax revenue.
Since 9/11 any job below 1000 miles or so that is not just a one day gig or does not require tools (rare) – driving has become my default so I clock close to 20K miles per year (mostly in rentals unless I need to drag the 5th wheel to some remote location to live in for the duration) and still manage to get platinum status on at least two airlines
just doing my part to put more plant food in the atmosphere
Todd Litman says:
July 10, 2013 at 12:50 pm
Thanks, Todd. First, thanks for your comments. Let me be clear that my comment was about the way the guest editor at Judith Curry’s blog used the graph, not the way you used the graph.
Next, you say that you “agree with Eschenbach that the graph he criticizes (Figure 4 in my report) by itself does not prove that fuel price affects per capita vehicle travel”, so we’re in agreement on that, and that was my only point about the graph. And regarding whether fuel price affects per capita vehicle travel, we agree on that as well, we both say it does. So far, so good … but there we part company. You go on to say:
And yet, despite your claim that all of those things things are necessary “for accurate results”, I can estimate the US miles driven with 98% accuracy using just fuel price and real GDP per capita. How much more accuracy are you expecting beyond that? … it’s kinda hard to argue with success. Call me crazy, but from my perspective I just showed that all those things are NOT necessary for accurate estimation of miles driven.
Next, my analysis covered the period 1956 to 2010, with no loss in accuracy with time. So what do you mean that my analysis “only reflects short-term impacts although carbon taxes are intended to affect very long-run consumption”. My analysis reflects all impacts up to the length of the data … can you do better?
I guess that’s my question, Todd. If your method is so superior to mine, give use the magic formula, show us the data, toss YOUR spreadsheet in the ring the way I have so that everyone can examine your method and decide for themselves how it works compared with mine.
Next, you say my analysis “only considers changes in mileage, not the much larger changes in fuel consumption.” It appears you have forgotten that all I have to do is divide the estimated mileage driven by the US fleet economy to get the estimated fuel consumption.
Finally, you accuse my analysis of being simplistic. There are two reasons that I stopped looking for more explanatory variables.
First, the R2 is 0.98 … there is very little further accuracy available even if we had a 100% perfect model. What kind of greater accuracy are you expecting?
Second, as I said, I’m shaving with Occam’s razor, which is sometimes stated as “Don’t multiply causes un-necessarily”. So if I can explain Amercan driving habits with 98% accuracy using just fuel price and per capita real GDP, then why on earth would I want to consider the “demographic, economic and geographic trends during the last quarter of the twentieth century which stimulate automobile travel demand” as you recommend? How will that help me understand the last 2%?
For example, I tried adding the US fleet fuel economy to the mix. Yes, the R^2 increases if I do that. From memory it went from 0.977 to 0.982. So for me, adding that is multiplying causes un-necessarily, for only a tiny gain.
My best to you,
w.
Matthew R Marler says:
July 10, 2013 at 2:08 pm
Ummm … ’cause it’s Hannah Fairfield’s chart, not mine?
w.
John says (July 10, 2013 at 1:33 pm): “How it can be possible that 82% is not most people, I just checked this.This is far mucg greater”
From Wikipedia, “[The US] is very urbanized, with 82% residing in cities and suburbs as of 2008…” [my bold] According to this in 2000 52% of the US population lived in suburbia, i.e. non-city, non-rural. So Patrick is technically correct.
The US Census bureau, however, pretty much defines “urban” as “non-rural”, so we have the strange situation that most Americans live in “urban” areas even though most “urban” Americans actually live in “suburbs”. Personally I see a big difference between my suburban/semi-rural neighborhood and nearby San Francisco, but far be it from me to argue with my
political mastersdedicated public servants. 🙂Willis writes ” I can estimate the US miles driven with 98% accuracy using just fuel price and real GDP per capita.”
And so you can closely align fuel consumption with GDP (after all “miles driven” is just a measure of fuel consumption). So what is your explanation of the current sustained reduction in fuel consumption (and GDP)? There have been stock market crashes and economic hardships a number of times over that period. What makes this period special?
John says:
July 10, 2013 at 7:18 am
Mike M,
You may do whatever You want unless You affect others. It is not a freedom You talk about, it is anarchy. Your freedom end where starts my freedom and vice versa.
I intentionally stated “If we can agree”, those “we” in USA should be citizens of USA. You asked: “WHO gets to make the determination whether or not a given act is wrong?” Answer is simple, the society. And every member of society is rights to do the best to convince others.
I love this argument. Shall we look at how successful majority rule has been in the past? Majority rule authorized the Salem witch burnings. Majority rule legalized slavery. Majority rule instituted Jim Crow laws. Majority rule elected Hitler chancellor (Godwin, yes, I know, but this IS relevant). Your precious society is quite good at misguidedly removing the freedoms of minorities and couching it as necessary for the greater good. Why on Earth should I trust you with this one?
Simple enough, people are still not working or underemployed. The economy is slowly getting a bit better but companies are not adding jobs. No work or under employed means less driving.
wodehouselee says (July 10, 2013 at 4:32 pm): .”…Although many people like to observe that Europeans still drive less than Americans, in fact the upward trajectory of automobile ownership and automobile use has increased in Europe in almost exactly the same way as in the United States, simply with a time lag due to a lag in affluence…..”’
I hope John doesn’t see this. His head might explode. 🙂
Gail Combs says:
July 10, 2013 at 4:00 pm
Top 10 Percent of Earners Paid Majority of US Tax Percentage (not the wealthy but the wage slaves)
Rank……..Income
Top 1% – $343,927+
1-5% – $154,643 – $343,927
5-10% – $112,124 – $154,643
10-25% – $66,193 – $112,124
25-50% – $32,396 – $$66,193
Bottom 50% <$$32,396
The top 10 percent of income earners paid 71 percent of all federal income taxes in 2009 though they earned 43 percent of all income. The bottom 50 percent paid 2 percent of income taxes but earned 13 percent of total income. About half of tax filers paid no federal income tax at all.
This does not mean the bottom half does not pay taxes. They do but they are hidden. 151 Taxes Hidden In Loaf Of Bread
Actually it does mean that the bottom half don’t pay (federal) taxes.
http://gregmankiw.blogspot.com/2012/07/progressivity-of-taxes-and-transfers.html
Darrin writes “Simple enough, people are still not working or underemployed.”
But the unemployment rate was higher in the early to mid eighties. Plug in 1956 to 2010 into here for example…
http://data.bls.gov/timeseries/LNS14000000
So that doesn’t make this period special.
Steve Reynolds says:
July 10, 2013 at 5:57 pm
Weren’t you the guy who didn’t answer when I asked how that would help the guy who is living in his car and driving around looking for work. Or the hundreds and hundreds of Hispanic folks living here in Sonoma County, both legal and illegal, who work only occasionally in the legit economy. Or the students who are paying taxes on gas but aren’t working?
Your claim is that when the government takes money from one man and gives it to another, it’s OK as long as the government doesn’t keep any of the money. So I’d like you to pretend that the government has taken $100 from you and given it to me. That’s 100% revenue neutral, right?
So since it’s all so revenue neutral … how about to make things more realistic, you actually write the check for $100 and send it to me?
What’s that you say? You’re not gonna send the money?
Why won’t you send me the $100? Well yeah, Steve, you’re right, me taking $100 out of your pocket isn’t fair. Because REVENUE NEUTRAL DOESN’T MEAN EITHER FAIR OR EQUITABLE.
w.
Steve Reynolds says:
July 10, 2013 at 5:57 pm
Gail: “Have you ever bothered to look at who pays taxes on wages???
Nearly haf of Americans do not pay income tax.”
But income tax is not the payroll tax I am referring to. Everyone with a (not underground) job pays social security, medicare…. and other payroll taxes. Those are the taxes I would reduce to neutralize carbon tax revenue.
>>>>>>>>>>>>>>>>>>>>.
I suggest you look at history. Politicians are very very good at telling us how great something is and then it morphs in to something nasty that benefits them and their buddies not us. A carbon tax would be like the Federal Reserve Act of 1913, a stealth tax that is a direct short across the productivity of the country.
Already the average American now works for twenty years for the government simply to pay his taxes. [Lost Rights: The Destruction of American Liberty, by James Bovard (St. Martin’s Griffin, 1995), p. 289.] That does not include all the years we labor to pay the ‘interest’ on the freshly printed fairy dust lent by banks that we use to buy just about everything from groceries to houses.
The ruling class has figured out the best way to make us serfs.
@TimTheToolMan says:
July 10, 2013 at 7:22 pm
You know administrations love to tweak statistics to make themselves look better and this is one of those case. The U6 number which counts unemployed, those who have fallen of the unemployment rolls but still looking for work and the under employed has us at 13.8% for this month. We have counties in my state close to 30% unemployment and that doesn’t show in the national average. For a good explanation of the U6: http://www.forbes.com/sites/susanadams/2013/06/07/the-unemployment-news-is-worse-for-many/
I have no doubt you’re right about continuing unemployment, Darrin, but that’s not what I’m driving at. There must be an underlying cause and I believe it can seen in the Hannah Hartfield graph (as well as Willis’ graphs although not as clearly.
The difference as I see it is that in the early eighties after unemployment had peaked, consumption again rose as prices dropped and continued to rise for years. Things got better quite quickly. This time consumption continues to fall and the recovery has been prolonged.
Todd Litman says:
July 10, 2013 at 12:50 pm
These elasticity values are less than unity, so fuel is considered “inelastic”, but much more price sensitive than Eschenbach concludes. The long-run reduction in vehicle travel is two or three times higher than his short-run estimates, the reduction in fuel consumption is two or three times higher than his vehicle-travel reductions, impacts tend to increase if transport options improve, and these are all economic transfers not economic costs, their ultimate impacts on consumers and the economy depend on how revenues are used. Eschenbach adds two common but incorrect assumptions, that carbon taxes are inherently regressive (they harm the poor) and that they are economically harmful. The regressivity of fuel prices depends on the quality of transport options and how revenues are used. If lower income people have good alternatives to driving and revenues are used in ways that benefit poor people, fuel/carbon taxes can be progressive overall. Yes, crude oil price spikes are economically harmful because money is transferred to petroleum producers, but if carbon tax revenues substitute for more economically harmful taxes, such as income or sales taxes, it can support economic development.
A somewhat fair point in that consumption taxes can be made both progressive (we need another word because I find no “progress” in taking DISproportionately more from someone just because they have more) and more efficient than income taxes. But hold on, you said they are less economically damaging than sales taxes. Whoa. Why? That statement demonstrates a significant bias in your understanding. Unless you can demonstrate that a particular form of consumption is more destructive or has higher externalities than another, then any sales tax is completely equivalent to a carbon (consumption) tax. But that is your bias, isn’t it? You believe that CAGW is a problem and that a carbon tax will be a Coasian solution to the problem. But what if you’re wrong? Then you are introducing a distortion to the market which penalizes carbon intensive energy and makes “renewables” appear to be cheaper when in fact they aren’t. Given the quite obvious failures of the CAGW models you have to realistically entertain that possibility, so you shouldn’t be advocating for a carbon tax, but you should still be advocating for a consumption tax.
Now you (and I) could make an argument that gas taxes should be higher to support our road infrastructure. I certainly have no issue with that at all, but I don’t want any of that money diverted to subsidize public transit, and ideally I want the US road network privatized -not unlike the Canadian equivalent of air traffic control- with the gas tax stream going strictly to funding the system. Buses use roads so they pay the tax. Public transit ridership too low? Then you either explicitly subsidize it or it goes away. I’m looking at you Amtrak and CA high-speed rail.
All of this presumes that the government would implement a carbon tax in a revenue neutral manner. But then again, this is the same government that claimed health insurance premiums would go down with Obamacare. Fool me once, shame on you. Fool me 17 trillion times, shame on me.
Finally, I would add that you neglect the deadweight losses associated with any tax and I would hope that the news cycle over the last few months has convinced you that our government is spectacularly good at making deadweight losses.
A good example is the country of Norway, which is a petroleum producer, has one of the world’s highest incomes and GDPs, has a cold climate and low population density, yet maintains one of the world’s highest fuel taxes and maintains a multi-modal transportation system which encourages walking, cycling and public transit where possible. As a result, Norwegians drive about half as many annual kilometers and consume about half as much petroleum per capita as in the U.S. By discouraging domestic consumption Norway has more petroleum to export, making it more economically successful overall.
Now hold on there. I think you’re double dipping a bit in this example. How much of Norway’s GDP is excess oil production (beyond what even an American would use) that they sell on the open market? How much value does Norway obtain from exporting the additional “saved” oil versus the cost of all of the public transit subsidies? Why don’t they raise the gas tax even higher and export even more oil? If public transit, walking, and biking are always winners then Norway should ban the consumption of all petroleum and export it all… Where’s the breakeven point? 60%? 80%? 99%? Or have they arrived at the Goldilocks point already?
And finally, Norway is limiting the freedom of its citizens through such high fuel taxes. Perhaps they would like to consume more fuel and live a more American lifestyle. Perhaps not. I’m certain that there are some Norwegians who would consume more gas if they could afford it even if a majority would not. Heavy taxation inherently limits that choice.
TimTheToolMan says:
July 10, 2013 at 7:22 pm
Darrin writes “Simple enough, people are still not working or underemployed.”
But the unemployment rate was higher in the early to mid eighties. Plug in 1956 to 2010 into here for example…
http://data.bls.gov/timeseries/LNS14000000
So that doesn’t make this period special.
Unemployment is a bad statistic even when U6 is taken into account because if you aren’t looking for a job you don’t count. Labor force participation rate is as low as it was in 1979 (maybe it ticked back up a bit-I haven’t looked at the last couple of months) and has been falling. The participation rate in the 80’s and 90’s was rising or plateauing. But obviously prices do play a role as well in the efficiency of vehicles and the amount of elective driving we do.
OK, re read your original question. I would say the underlying cause of the slow recovery is due to how Obama has handled the crash and recovery. In other words, bad policy. I heard several economist say at the time his actions were going to prolong economic malaise, not pull us out of it in a reasonable amount of time. I would say they’ve been proved out as right.
Obamacare hasn’t helped either as businesses are unsure just how much it’s all going to cost. Companies cash reserves have been on the rise as they sit on their cash instead of spending it.
Willis: “Weren’t you the guy who didn’t answer when I asked how that would help the guy who is living in his car and driving around looking for work.”
I’m the guy, but I did answer:
“Steve Reynolds says:
July 10, 2013 at 12:43 pm
Of course the effect of a tax cannot be neutral for everyone, but I think the payroll tax break I suggested would actually benefit almost every low-income family with a member on a payroll.
Even “the unemployed guy sleeping in his car and looking for work” would probably be better off if an RN carbon tax replaced the market distorting maze of subsidies for ‘renewable’ energy that we have now. If potential employers were not paying various taxes and fees to support those subsidies, they might be able to afford to hire him.”
Willis: “Your claim is that when the government takes money from one man and gives it to another, it’s OK as long as the government doesn’t keep any of the money.”
Willis, you are doing what you often complain about: saying I have made statements or points that I have not made. Please quote my exact words. I am probably as much against taxes in general as you are.
What I do claim in the style you used:
It is less bad for the government to take money from one man if it stops taking it from another poorer man and also stops making almost everyone poorer by distorting markets with subsidies.
Darrin writes “I heard several economist say at the time his actions were going to prolong economic malaise, not pull us out of it in a reasonable amount of time.”
From an outsider’s point of view it looks like the US has topped out its credit card and something had to give. Only time will be able to tell whether Obama’s policies are heading the US in the right direction or not but again from an outsider’s point of view previous policies that resulted in the escalating national debt clearly weren’t good ones either.
At the end of the day recovery will mean people finding employment and that slowly seems to be happening. It still doesn’t explain the continued decreasing oil consumption though.
John et al. are working towards the Agenda 21 vision of tiny urban enclaves with the rest of the landscape unpopulated. The better to control you, my dear!
Gail: “I suggest you look at history. Politicians are very very good at telling us how great something is and then it morphs in to something nasty that benefits them and their buddies not us. A carbon tax would be like the Federal Reserve Act of 1913, a stealth tax that is a direct short across the productivity of the country.”
I agree that is a risk to instituting a carbon tax, so keeping it revenue neutral is absolutely critical. But a simple carbon tax is much more difficult to subvert for the benefit of political cronies than subsidies or the designed for graft cap and trade bill.
Willis Eschenbach says:
July 10, 2013 at 7:22 pm
Steve Reynolds says:
July 10, 2013 at 5:57 pm
Gail:
“Have you ever bothered to look at who pays taxes on wages???
Nearly haf of Americans do not pay income tax.”
But income tax is not the payroll tax I am referring to. Everyone with a (not underground) job pays social security, medicare…. and other payroll taxes. Those are the taxes I would reduce to neutralize carbon tax revenue.
Weren’t you the guy who didn’t answer when I asked how that would help the guy who is living in his car and driving around looking for work. Or the hundreds and hundreds of Hispanic folks living here in Sonoma County, both legal and illegal, who work only occasionally in the legit economy. Or the students who are paying taxes on gas but aren’t working?
It wouldn’t but then you need to answer why the hundreds and hundreds of Hispanic folks who work in the shadow economy shouldn’t have to pay for infrastructure and services. He explicitly stated “not underground.” The point being that they should be here legitimately or not at all. A consumption tax for which they cannot be compensated by e.g. the EIC actually encourages legitimate immigration. I’m all for expanded immigration but I see no reason to reward someone for coming here illegally, so let’s put aside that strawman.
The same goes for the student. They drive on the roads. They consume (destroy) a resource: gasoline and diesel and roads. Why shouldn’t they pay? If we choose to reward scholarship, then give them a refundable tax credit like the EIC as long as they’re in school. That’s a choice we can make (I wouldn’t) that directly addresses that concern.
No system is absolutely perfect. He was speaking in the aggregate. And he’s right that a consumption tax if done properly will be both economically more efficient AND can be “progressive” (man, I HATE that word). Fewer distortions in the system make it run better and overall we win. Now, where I have a problem with a carbon tax is that it’s a limited consumption tax that creates its own distortions based on a problem that empirically is not happening, so I would much prefer sizing the gas tax to properly (and ONLY!) care for and expand our road network. Similarly I’d want as many usage taxes directly tied directly to services as possible so that the consumer/taxpayer knows and sees both the services and their payments in as transparent a system as possible. A broad consumption tax could provide for everything else that we decide to subsidize (defense, entitlements, etc.) and it can even be engineered to provide subsidies to low income workers.
Finally, “fair” is entirely arbitrary. Team Blue and Team Red and Team Libertarian would all disagree on what “fair” is. Team Blue also loves carbon taxes, but so does a chunk of Team Red. I happen to think that everyone should pay something into the system and if you use something you should pay for it. Team Blue just thinks that I should pay for everything. I don’t like Team Blue very much…
I’m a little surprised no one brought up CAFE standards. They’re going to magically move us along the curve because our vehicles will now be made with fresh unicorn which will reduce fuel consumption. This will be Good(tm) and will Save(tm) money. Just like Tesla made a “profit” last quarter once you include all of the government credits.
I still don’t know why Congress hasn’t passed a law mandating higher annual incomes by 2025 as well. I mean, laws fix problems, don’t they?
John says:
July 10, 2013 at 6:05 am
Oh, You could easily cycle to work. I cycle by average 25 km a day and I’m perfectly fine and actually I save time compared to car. If I would have a need I could cycle up to 20 km or about 12 miles each way. The time is not wasted compared to time driving.
—-
I live in Canada where about 8 months of the year, the ground is covered with snow or ice. I’d kill myself getting to work on any kind of bike. And even if I lived in an area that was warmer, biking is not the solution. It’s just too far. If you have kids or have other responsibilities, it’s awfully wasteful to be spending your time on a bike when you could be at your kid’s hockey game or dance recital.
Progress is made by spending less time on wasteful things. We don’t need to wait hours for a boat with a steam engine. We have things like Fed-ex that will ship things for us, or we can travel by plane. Sure, biking is great exercise, but it’s not the only form of exercise.
And that seems to be your biggest flaw (of the countless other flaws). It’s that you don’t seem to understand progress. In none of your comments do you deny that the people affected are indeed affected. If they are, then some/many will already be doing the things you say and will reach a breaking point where they cannot cope. We need to move in the other direction. The direction of success.
If I am understanding your analysis- the trend of miles driven is increasing over time. The effect of gas price is minimal. The first graph has some (minor) outliers, so use GDP instead of time. GDP is increasing over time with some minor setbacks. So second graph does not have the outliers, but has a little more variance around the trend. Both have the same R^2.
It is probably true that there is very little discretionary spending for gasoline. My daily commute is 100 miles round trip. There are no public transportation alternatives. Upside is lots of time to listen to music.
w- I downloaded your spreadsheet. As before, Open Office Calc has issues. Excel is more tolerant of referencing cells in numeric calculations that don’t contain numbers or formulas (i.e. text) and setting them to zero.
One of the common factors when there is a high incidence of ultra long distance commutes like what you are talking about (David Moon), is that property prices have been severely inflated by urban planning. This effect was first noted by Peter Hall et al in 1973 in their report “The Containment of Urban England”.
“DRIVE TO QUALIFY” IS REAL.
This term is commonly used by the real estate and mortgage industries to refer to the phenomenon that housing tends to get progressively cheaper and hence within the mortgage servicing capability of buyers, the further away from the established centers of cities one gets.
Anthony Downs discusses this phenomenon in his 2004 book, “Still Stuck in Traffic”. Also, Downs was one of the contributors to the famous “Costs of Sprawl 2000” paper. There is a chapter entitled:
“The Effect of Lower-Cost, Outlying Land on Housing Costs”:
Page 448 onwards of the following PDF is highly relevant:
http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_rpt_74-c.pdf
Dr Kara Kockelman of the University of Texas, some of whose research is referenced in the “Costs of Sprawl” study, has done further research since with the same outcomes.
Downs makes a lot of the point that the more expensive houses are relative to incomes, the more incentive there is for households, especially first home buyers, to locate further away from CBD’s, because the savings on housing costs are greater than the additional cost of travel (assuming employment is in the CBD).
For example; Anthony Downs; “Can Transit Tame Sprawl?” Jan 2002:
“…..In “The Costs of Sprawl 2000″, a recent study conducted by Rutgers University, the Brookings Institution and several other organizations, part of the research examined how housing prices vary with distance from the regional downtown of each metropolitan area. Although only a few areas were analyzed, the study showed consistently that prices of similar homes tended to decline about 1.2 to 1.5 percent per additional mile from the regional downtown, except where
proximity to the ocean had more influence on prices—as in Southern California.
Meanwhile, longer-distance commutes added to fuel and travel-time costs by about the same amount per mile in every region. The study also found that per-mile housing-cost savings from added commuting distance were much larger in regions with absolutely very high housing costs than in those with absolutely low housing costs. Therefore, it was more likely to be economically worthwhile for households to move further out to gain cheaper housing in high-housing-cost regions such as the San Francisco Bay and Boston areas, than in low-housing-cost areas…….”
There are studies which purport to prove otherwise. These studies all suffer from the fatal flaw that they compare the actual current “housing” cost of incumbent households – including people whose mortgages are already paid off, or nearly so, and whose “housing” costs are next to nothing. This misses the point that a new buyer of the same often quite high-value homes would certainly achieve much lower “housing plus transport” costs by buying further away. In fact, even the incumbents with mortgages paid off, would improve their financial position by cashing up their high value property and moving further away.
A basic understanding of the underlying logic of urban economics would immediately make us suspicious of the flawed claims referred to above. If a situation ever does exist in an urban economy, where real-life comparable “housing plus transport costs” got lower the closer one gets to the city’s most significant concentration of jobs and amenities, the workings of free markets would ensure that enough people would very soon relocate more efficiently, that this situation would reverse. Markets do not find their equilibrium at a price where supply is in excess of demand.
Advocates who insist that this disequilibrium exists, are blinded by a mythology that people really do have an irrational “love affair with their car” and actually enjoy their daily traffic congestion so much that they will not even rationally act to improve both this situation (which nobody actually regards as anything other than frustrating and a waste of time) and their financial situation.
Of course there might be lower “housing plus transport costs” in the case of a very much smaller “home” near a city’s CBD, but urban real estate markets will find their own level, and the simple reason that households are not flocking to smaller and smaller homes in more and more efficient locations, is that these homes simply do not meet their requirements for other attributes in a home, particularly space.
Far superior outcomes result from allowing relatively free markets to decentralise employment and urban amenities, and keep economic land rent low and highly dispersed in cities, rather than concentrated. This is why the low density, “sprawled”, affordable-housing US cities actually have highly competitive average commute-to-work times, AND far higher housing quality enjoyed by medium and lower income earners.
I have also pointed out occasionally that the same policies that are designed to increase commuter rail travel mode share (as if this is an end in itself) actually undermine the potential for “walk to work” mode share. Ironically, the “dispersed” urban form with low land costs and as little concentration as possible of location-advantage housing cost “premiums”, works not just to keep car commutes short in time, but allows maximum scope for people who might want to buy a home close enough to work to walk there. Heavily centralised urban form results in “amenity”, such as walking to work, to be captured by the highest income earners who can afford the prices where the amenity is concentrated. The same applies to proximity to green space and to other urban amenities.
Radial public transport routes tend to “converge” closer to a city centre and hence services at these locations are extremely frequent; these locations too, tend to be “priced” so that only higher income CBD workers enjoy them. The very large subsidies involved in commuter rail services are overwhelmingly captured by higher income earners and the owners of property rendered more valuable by the “planning” that is designed to maximise the ridership. Lower income earners are forced into expensive long distance, highly congested car commutes; OR they might be able to afford to locate on a commuter rail route 60 miles or more out. Ironically, the subsidy involved in getting them the 60 miles to work every day by train, is far more than the “subsidy” to the automobile based development and roads that would have enabled them to have a short car commute – let alone a walk or a bicycle ride.
Here’s something else to disappoint the people who think Europeans forswear cars in favour of public transport, cycling, etc:
Vehicle Ownership and Income Growth, Worldwide: 1960-2030
Joyce Dargay, Dermot Gately and Martin Sommer
January 2007
http://www.xesc.cat/pashmina/attachments/Imp_Vehicles_per_capita_2030.pdf
There is a consistent “S-curve” relationship between income growth and vehicle ownership growth. What varies, is where a nation is on the curve. France and Italy are converging on the USA.
Vehicle ownership and VMT both approach saturation eventually. All the poor, women, elderly, and young, are mobile and there is little more uptake. People don’t just drive more and more and more as they get wealthier. There is a “Zahavi Travel Time Budget” that humans tend to “sort” into.
Another fascinating factor that emerges in the work on land and transport economics, of academics like Charles Lave and Peter Gordon and Alex Anas, is that when planning does not interfere unduly, residences and businesses and amenities tend to “sort” into more and more efficient co-location to each other. Ironically, forced centralisation of urban activities – like UK “City Centre First” planning policies – always worsens traffic congestion, and “prices out” the bottom quartiles of the population from access to everything. Data for average trip to work times show that the USA’s very low density cities have shorter trip to work times as well as housing around 1/3 the price, of the UK’s heavily planned cities.
In my opinion, popular fads for growth containment urban planning are just as much part of an absolutist, political-ideological movement that denies objective reality and the scientific method, as the CAGW fraud. They both stem from the same source. All the fraudulent distortions run in the same direction – towards ordering the population around and restricting their freedom and undermining western civilisation. Growth containment urban planning is like an economic WMD deliberately devised and sown as an ideology, by an enemy power’s program of subversion.
Anthony Downs points out in “Still Stuck in Traffic” (2004) that the real potential low-end cost of automobility has steadily fallen, which is what has allowed poorer people to achieve it. A small Asian made car, ten years old, will cost a buyer a lot less per mile over the next few years, in real terms compared to the cheapest option from 1960. The very much higher reliability is very significant.
Willis, I’m wondering where China would fall on Figure 1. I’ve heard that their gas is relatively cheap, yet I’m guessing they don’t log a lot of miles per capita.
TimTheToolMan says:
July 10, 2013 at 8:27 pm
Didn’t realize your an outsider looking in. Last figure I saw was we still have about 9 million people out of work that were working before the downturn. That’s 9 million people who are no longer driving to work on a daily basis and can’t afford to drive to grandma’s on the weekend. Otherwise that’s a lot of gas saved.
Wouldn’t be surprised if our increased natural gas supplies due to fracking have also helped to decrease fuel consumption in industry.
Steve Reynolds says: ..”subvert for the benefit of political cronies than subsidies or the designed for graft cap and trade bill.”
Well will you look at that, there goes one of those cap and trade graft designers now – from hiding in Maryland all the way to the US Senate, commie Ed Markey. Let me guess, Henry Waxman is angry that Dianne Feinstein and Barbara Boxer were passed over for Sec of State? He could of been a contender, on the senate environment committee holding down arctic tundra at the north pole.
“A good example is the country of Norway, which is a petroleum producer, has one of the world’s highest incomes and GDPs, has a cold climate and low population density, yet maintains one of the world’s highest fuel taxes and maintains a multi-modal transportation system which encourages walking, cycling and public transit where possible. ”
———————————————–
Have you ever been to Norway?
Walking and cycling are off the menu for practical purposes for at least 6 months of the year. In winter, it gets so cold that china in unheated rooms can shatter.
To suggest that it is a good thing that Norwegians have at least half of what they earn taken from them and redistributed by a caring State is … let’s just say, a matter of opinion. What is clear is that Norwegians are greatly constrained from exercising their own choices about transport – first, because a lot of their income is expropriated and diverted to politically correct transport; and second, because fuel taxes are massive and designed to penalise car owners even if they can afford to buy one with what is left after tax.
Using an example such as this reveals the real agenda – take people’s money and punish them until they do what “we” think is right.
Thanks to commenters above who mentioned the organic growth of cities vs the urban planners’ wet dreams. Once again, reality trumps the models. A good example is the omnipresent mantra of closing of roads in city centres and turning them into pedestrian malls. The “artist’s impressions” always show a sort of Parisian scene with affluent young shoppers and cyclists, shaded by cute trees. The reality is boarded up shops, empty, windswept plazas, and a mugger’s paradise.
Steve Reynolds says:
July 10, 2013 at 8:17 pm
Thanks, Steve. Sorry I missed it, but I see I didn’t miss much. You’ve returned to say that if people are working they get benefitted, which may or may not be true, and the guy sleeping in his car “would probably be better off” … sorry, non-responsive. The guy in his car doesn’t get a dime from your whiz-bang payroll tax break, no matter how much you wave your hands and claim he’s doing wonderfully.
Sure, glad to. You said:
In other words, you are arguing that if the tax is “revenue neutral” it’s OK … which is the same as arguing that “when the government takes money from one man and gives it to another, it’s OK as long as the government doesn’t keep any of the money”, as I said.
“Less bad”? I don’t listen to any justification that begins “It is less bad”. All that means is that you’ve found something worse than whatever you are justifying … and that’s supposed to impress me? Fail.
w.
“wodehouselee says:
July 10, 2013 at 6:50 pm”
Urban planning has involved very little planning since the late 19th century IMO. I would love to afford a house here in Sydney, and the Sydney region is massive by far one of the largest urbanised areas in the world, but with a median price of ~AU$700,000 it simply is out of my price range. So, like many, I rent an apartment in a 2, 3 storey block, with 18 apartments, on blocks of land that once had 3 detached houses. The noise level is astounding to the point I have to wear ear plugs to sleep, even though we actually have by-laws that protect people from noise (Apparently they don’t work because people seem to ignore them)! I am not in a position to move to an alternative home.
Across the play area near my block, is a new development just completed. Its 2 block and 2 storey complex with no less than 56 dwellings where only 2 houses once stood!
It is interesting that in the UK, where high density buildings were the “solution” to increasing populations in the 1950’s and 1960’s I see now these hi-rises are being pulled down. In Australia, we’re bulldozing beautiful houses in favour of 2 to 3 storey blocks. A backwards step.
Yes, it is disgraceful, and Australians need to wake up to the reasons why, and insist on change. There is a finance and economics blog in Australia called “Macrobusiness”, and a member of the writing team, named Leith Van Onselen, using the I.D. “The Unconventional Economist”, is an outstanding writer on urban planning and housing affordability issues. One of the world’s best.
Australia has several of the world’s best advocates of reform; it is odd that there has been so little traction gained by them. Alan Moran, Bob Day, Ross Elliott, Patrick Troy, Joe Flood, Ray Brindle, Tony Recsei, John Muscat, Michael Warby.
But this recent revelation helps to explain why there is no political will to tackle housing affordability:
http://www.news.com.au/realestate/news/rudd8217s-luxury-property-portfolio-miles-from-struggle-street/story-fncq3gat-1226673021164#ixzz2Y4US1YSx
Rudd’s luxury property portfolio miles from Struggle Street
“…..Mr Rudd owns luxury homes in Canberra, Brisbane and on the Sunshine Coast. In total, they’re estimated to be worth more than $10 million. It includes a $1.4 million block in Brisbane’s well-heeled Norman Park that he bought two years ago with a plan to build a million-dollar-plus home for visitors……”
TimTheToolMan says:
July 10, 2013 at 7:46 pm
I have no doubt you’re right about continuing unemployment, Darrin, but that’s not what I’m driving at. There must be an underlying cause….
>>>>>>>>>>>>>>>>>>>>>>>>
Yes there is an underlying cause the US government screwed the American people so their buddies could get richer.
You can start with Reagan and the leverage buyout/corporate raider thefts where banks printed fairy dust money (created out of nothing) they then lent to corporate raiders who used it to buy controlling shares in US companies. Companies like Gillette who HAD NO DEBT! The companies were then suddenly saddled with a lot of debt transferred to them from these raiders and often were dismantled and shipped overseas. The bankers and raiders made big bucks from the transactions and Americans had there livelihoods stolen.
For a more in-depth analysis see:
http://www.econlib.org/library/Enc1/TakeoversandLeveragedBuyouts.html
The second betrayal of the American people was the signing of NAFTA and then the World Trade Organization treaty (1995) banning inport tariffs, followed by Clinton’s efforts and success in getting China admitted into the WTO in September of 2001
That is very evident in this chart of US trade balance Take a good look at the years 1995 and 2001 and what happened afterwards.
Statistics (courtesy of Bridgewater) showed in 1990, before WTO was ratified, Foreign ownership of U.S. assets amounted to 33% of U.S. GDP. By 2002 this had increased to over 70% of U.S. GDP.This is the most recent ramification of Clintons policies.
This guy is not talking through his hat either. The USA has only 10% of her labor engaged in producing wealth (tradeable goods) (Manufacturing – 7%, Mining – >1%, Farming -2% ) China and Russia want to see the downfall of the USA and Clinton gave them the means. SEE:
Clinton’s China Policy
Clinton Approves Technology Transfer to China
How China Conquered America
US-China Business Council USCBC 2012 China Business Environment Survey, Focus: Technology Transfer
And now China and Russia are making the move to give the USA the final death blow.
With that as a background our Ruling Class wants to impose MORE tax and MORE regulations to strangle our
economyability to generate tradeable goods even further? Who in Hades are they loyal to the BRICS countries???Gail Combs: “Willis is right [that gas prices affect the poor the most].”
My point was not that they don’t. My point simply was that “it hurts those most who can afford it the least” is rarely a good reason for not raising a price, since in most cases it is little more than a tautology; almost any time you raise a price it affects the poor more than the wealthy. But distorting the price mechanism to avoid price increases creates more poor by causing resources to be misallocated.
Again, the “carbon” tax is a horrible idea. But if it actually did improve the price mechanism’s performance at reflecting actual costs, the fact that the poor would have to pay more for their goods would not a good reason for not implementing it.
wodehouselee:
You appear to be better-read on the subject than I, but, just in case you missed it, I’ll commend to your attention Robert Bruegmann’s “Sprawl: a Compact History.”
Willis,
I was thinking about the same types of things Todd Litman said in his reply – demographics, fuel economy, and recent changes in price sensitivity. What struck me is that using GDP per capita should capture many of these effects. For instance, if a large portion of the population suddenly retired and there wasn’t a change in productivity then per capita GDP would decrease significantly. Additionally the demographics would change, and the price sensitivity of retirees will be different than workers. So in this case price sensitivity, demographics, and per Capita GDP are not independent variables.
As far as fuel efficiency goes, what is an increase in GDP per capita other than an increase in output per input? That is each barrel of oil used produces more goods and services. In other words, as the efficiency of the economy increases (output per worker goes up) we should expect a similar increase in the efficiency of vehicles (output per gallon). Again, GDP (although in this case GDP per worker, not GDP per capita) is not independent of fuel efficiency.
Obviously this is hand waving, but I think this might answer objections like Todd has.
Chad B; it is surprising that there is such a good fit between the basic variables that Eschenbach uses, and that the other demographics that people like Litman regard as important, barely count.
But I think Litman and others like him are constantly grasping at straws in the hope that the automobile era is coming to an end and humanity will flock back to mass transit. (The Russians flocked away from it as soon as they had the freedom – I wonder why?)
Actually, VMT per capita have to reach a kind of saturation eventually, because most of the increase for the last few decades is due to more and more people driving. Once all the women, the poor, the elderly, and the young, are driving, there is a limit to how much further and longer people want to drive every day. In fact people do tend to order their lives to some extent, around locating efficiently relative to jobs and schools and other amenities. The underlying trend in the VMT per capita curve has to be S-shaped.
There is a “Zahavi travel time budget”, which describes how humanity have generally spent about the same time per day travelling, on average, for centuries. Gains in speed result in them going further, not spending less time.
Thank you Mr. Eschenbach for your posting. However, it does not respond to my criticisms.
The problem with your analysis is not simply the statistical method you used to measure the price elasticity of vehicle travel, it is the way you extrapolate past trends to predict the effects a cabon tax would have on fuel consumption without taking into account underlying demographic and economic factors that affect demand. Vehicle travel grew steadily in the U.S. during the last quarter of the twentieth century, it experienced a nearly constant year-to-year growth which dominates your statistical analysis. This was the period of steady increases in incomes, vehicle ownership, growth in female workforce particiaption which both increased household income and travel demand, and develpment of the Interstate highway system and more dispersed land use development – all factors that increased travel demand. Nearly all of these factors have peaked; per capita vehicle ownership is saturated, and the Baby Boom generation has passed its peak driving age. It is inappropriate to use elasticities derived during that period to predict future price impacts; it is comparable to a parent who, by extapolating their children’s 1-16 years growth rate, predicts that by the age of 30 they will be 28.4 feet tall and wear size 40 shoes.
If you read my article you’ll see that many previous studies found a relatively low price elasticities in the U.S. in recent decades, similar to your results. See for example, Small and Van Dender (2005), Hughes, Knittel and Sperling (2006), and CBO 2008. However, more recent studies, some using more disaggregated analysis, show much higher elasticities. See Boilard (2010), Brand (2009), Gillingham (2010), and Li, Linn and Muehlegger (2011). For several years, Komanoff has maintained a spreadsheet (http://www.komanoff.net/oil_9_11/Gasoline_Price_Elasticity.xls), similar to yours which also shows rising price elasticities, particularly incorporating a two-year lag.
The decline in travel demand and rising price elasticity of vehicle travel shows up in various ways. For example, many recent toll roads are failing to achieve their traffic volume and revenue projections, which were calculated by extrapolating past trends. See NCHRP (2006) and Williams-Derry (2011).
You use the SHORT RUN price elasticity of VEHICLE TRAVEL to predict the LONG RUN changes in TOTAL FUEL CONSUMPTION. As I pointed out, this is incorrect and greatly understates the effectiveness of a carbon tax. Also, you fail to acknowledge that a fuel tax is an economic transfer rather than a cost, so the social equity and economic effects depend on how revenues are used. By addressing these issues you could shift the emphasis of your message from simply opposing carbon taxes to discussing how they could be optimized – for example, what complementary policies should be implemented to increase their effectiveness, and which other taxes should be reduced or what additional investments should be made to maximize benefits to low-income households and best support economic development.
I welcome feedback on my research, but please first read my article before criticizing it, and address the issues it raises.
Best wishes,
-Todd Litman
wodehouselee says:
July 10, 2013 at 10:55 pm
One of the common factors when there is a high incidence of ultra long distance commutes like what you are talking about (David Moon), is that property prices….
>>>>>>>>>>>>>>>>>
Thank you very much for the additional insight. You are correct.
I bought my first home (in the Boston Area) not because I wanted the long commute but because it was the only place I could afford/mortgage company would lend money for.
When I moved to NC I carefully looked at all the areas and picked one where the home prices were much less than closer to the city. With the new four lane connecting to Raleigh making the commuting time less than 1/2 what it was, the home prices have dramatically risen even with the present housing market slump.
Even when choosing an apartment (I have lived in over 40) I always always looked at prices vs commute vs distance to other amenities.
Thanks, Gail; it’s common sense and every ordinary citizen understands it. But try and get any advocate of growth containment urban planning to understand firstly that their policies force up the price of housing, and secondly, that ordinary people are forced into very inefficient location decisions. There is more – their policies increase traffic congestion delay too. It is impossible for the small amount of extra public transport usage that results from the planning, to capture more “benefit” than the losses in efficiency that the planning distortions cause the local economy.
Because the UK economy has been constraining urban growth the longest, there is now plenty of academic research that indicates that the results have been very perverse. It is sickening that cities in the USA, Canada, Australia, etc would be adopting such policies in the face of the evidence from the UK. This includes significant loss of international economic competitiveness and loss of industry. If the UK was not so lucky as to have the City of London with all its global connections in finance and media and so on, which is less affected by grossly inflated land prices, its economy would have collapsed completely before now. But the disparities and tensions in society are becoming unbearable, and housing conditions and choices for the lowest quartile are a major part of the problem.
Joe Born says: @ July 11, 2013 at 5:39 am
My point was not that they don’t. My point simply was that “it hurts those most who can afford it the least” is rarely a good reason for not raising a price, since in most cases it is little more than a tautology…..
>>>>>>>>>>>>>>>>>>>>
You are not talking about a business who raises prices so it can make a profit and stay in business. You are talking about a government INTENTIONALLY HURTING THE POOR THEY CLAIM TO BE HELPING.
That is what Willis and the rest of us are trying to say. If you want to help the poor, if you want to help the economy, if you want to make your country strong you do not strangle business in red tape and the people with taxes. And you certainly do not make ENERGY, the most CRITICAL part of the economy more expensive.
The only one helped by a CO2 tax is CHINA AND RUSSIA not the USA and certainly not the climate or environment.
Todd,
What Willis was saying is that the best way to maximize benefits to low income houses is to lower the costs they must pay to participate in the economy. Raising everyone’s taxes by $200 per year and then transferring $200 to low income houses improves the low income houses none whatsoever. Additionally the society is worse off by removing potentially useful labor from the labor pool and directing capital toward wealth transfer enforcement. You could have the wealthy business owner, a poor janitor, and an assembly line worker making goods, but now you only have a slightly less wealthy business owner, a poor janitor, and someone whose sole job it is to take money from both the business owner and the janitor and then give back to the janitor the same amount of money that was taken from him (and of course be paid for his trouble).
Additionally, if the economic harm induced on “low-income” households by the gasoline tax is offset by direct payments then the miles driven by “low-income” individuals can generally be expected not to change at all (since there is now no additional cost for the extra mileage).
So, the best designed tax system for gasoline is not to introduce one at all (except insomuch as it goes to pay for the roads on which people drive and on which goods are delivered).
Also, he was not critiquing your article. He was merely showing that insomuch as the US is concerned per capita GDP and fuel cost are sufficient to predict miles driven. This does not purport to figure vehicle purchase preferences, and he doesn’t address anywhere fuel consumption, and he doesn’t address other nations. You accuse Willis of predicting long term changes in fuel consumption – he does no such thing. Those would be logical next steps, but the presented analysis doesn’t address that.
The impact carbon taxes have on transportation reminds me of what happens when a tax (or even a royalty) is added to a mineral reserve evaluation–the reserve gets smaller. There’s no way to avoid it.
Add a federal tax to mining, you have less to mine–the marginal material gets wasted (left in the ground), most likely never to be recovered.
SImilarly, add a carbon tax to fuel, lop off the poor, leave them behind. And they’re the ones we should help the most, not the least.
But then, a carbon tax as a solution to “Climate Change” masquerades as beneficial; the real purpose is far more sinister.
Shame on a nation that would do it to their poor.
Now, does a 100mi reduction in driving result in $430 GDP/c?
DirkH says:
July 10, 2013 at 3:09 pm
Please read Julian Simon’s The Ultimate Resource and find out what exactly the ultimate resource is.
Dirk, I appreciate Julian Simon, and thank you for the link! This does however in my mind not change what I said.
John said- “Socially bad activities should be punished…”
And Progressives wonder why so many despise them.
Bang on, as usual. (I suppose it’s possible you’ve written a clinker along the way, but I’ve managed to miss it.)
I’d like to disagree with one line: “nothing to show for it at the end of the day ”
Now it’s true that there’s no progress on solving the problem that was purportedly the point of the exercise. There is, however, something to show: ” a large expensive workforce of bureaucrats…”
And, of course, their votes for whomever looks to keep ’em well fed. It almost looks like that might have been the goal the whole time.
As always, thanks for the insightful and entertaining writing.
A W
Todd Litman says:
July 11, 2013 at 7:25 am
You use the SHORT RUN price elasticity of VEHICLE TRAVEL to predict the LONG RUN changes in TOTAL FUEL CONSUMPTION. As I pointed out, this is incorrect and greatly understates the effectiveness of a carbon tax. Also, you fail to acknowledge that a fuel tax is an economic transfer rather than a cost, so the social equity and economic effects depend on how revenues are used.
=======================
NO, DAMMIT!! The assumption in the bolded section is that there is NO DEADWEIGHT LOSS!! And you neglect to cite any evidence that the money would be well spent but simply speculate that it might be. Australia implemented your Pigovian system. Why don’t you tell us how beneficial that’s been?
I would note also that you have failed to address the criticisms of your Norwegian example, i.e. demonstrate the net economic benefit of increased fuel taxes.
Hello Willis. From your post it appears your conclusion is incorrect – in particular, your statement:
“…we’re going to create all that pain and create a giant bureaucracy and waste piles of money for a crappy 1% reduction in miles driven, a temporary reduction that will be wiped out by the next 1% increase in per capita GDP?”
Introduction of any initiative such as a tax (and we’ll focus on a carbon tax in this instance) is analysed by comparing the growth path of “miles travelled” without a carbon tax with the growth path with a carbon tax. What happens is that the growth path without a carbon tax continues to increase pretty much as it has in the past (noting that this accounts for things such as wealth increases and a range of other factors that impact on miles travelled). The growth path with a carbon tax is ALWAYS going to be less than the growth path without a carbon tax. This is because (as you’ve identified) it increases the cost of travel.
Therefore, there is a PERMANENT reduction in miles travelled (as compared to what would have been the case without a carbon tax). Over a period of 10-20 years the growth paths diverge quite a lot so the impact at the end of 10 years is quite significant (a sort of copm
poinding of the 1% reduction).
Best regards
Mladen
TskTsk: I suppose everyone on this forum is aware of Monckton’s calculations of the cost effectiveness of Australia’s carbon tax?
http://joannenova.com.au/2011/07/gillards-tax-on-carbon-pollution-the-facts/
Like I have been saying; everything about “climate change” policy AND “smart growth” urban planning policy, is really about ideological objectives for which any pretext will do. Actual outcomes, and objective analysis, is irrelevant.
It is more of a new quasi-religion than anything else, and people like us are Galileo.
In fact it is hard to blame religion per se for its past irrationalities, because humanity always seems to have some completely false system, whether religion or politics, on which the ordering of society by megalomaniacs, is based. Was Communism a religion, or politics? Was the Inquisition religion, or politics? It is hard to tell where one ends and the other begins.
One thing I believe, is that it is rare for a megalomaniac mind to also be one that understands basic economics, or as the philosophers called it before it was economics, “dialectics”. That is, “how things work and act and react on each other in the real world”.
I am pretty much new to this forum; my specialty is urban and transport economics. But I am impressed with the economic intuitions displayed by the CAGW skeptics on here – there seems to be a certain inherent soundness of mind in these people.
wodehouselee says: @ July 11, 2013 at 5:50 pm
….One thing I believe, is that it is rare for a megalomaniac mind to also be one that understands basic economics, or as the philosophers called it before it was economics, “dialectics”. That is, “how things work and act and react on each other in the real world”…..
>>>>>>>>>>>>>>>>>>>>>
From what I have seen, read and experienced first hand, the megalomaniac mind does not see other humans as anything other than ‘objects’ there for their use. If you are not ‘useful’ to them at best they will drop you like a stone or more typically retaliate because you would not be their slave. They will protect what is ‘theirs’ including other humans but it is from a sense of ownership not from a sense of loyalty or affection.
These people can be quite charming because they know charm is useful for manipulating others. If intelligent they can climb high in corporations, academia, or politics. Lying is just a tool and concern for others is completely outside their understanding and seen as a weakness to be exploited. Power and money are their goals and unfortunately they are often well qualified to reach those goals. Their lack of human warmth makes them very very good at climbing the social/political/corporate ladder and reaching high levels of power. They will often surround themselves with like minded individuals because those are the type they understand. Democide – DEATH BY GOVERNMENT is much too often the result.
Todd Litman says:
July 11, 2013 at 7:25 am
Thanks for your reply, Todd.
You cite a variety of factors such as “demographic and economic factors” and “age, income, employment rates, and the quality of transportation options” and “demographic, economic and geographic trends during the last quarter of the twentieth century which stimulate automobile travel demand” that you claim are important. However, if they truly made a difference, then it would not be possible to estimate the driving habits of Americans with a simple formula using only two variables.
I have no problem with your analyzing all of those other variables. My point is that my analysis clearly shows that you DON’T need to consider a single one of those factors to make an estimate of American driving habits. You can make a very, very accurate estimate by just considering the fuel price and the American per capita GDP.
Given that success with a very simple formula, Occams razor suggests that considering “demographic, economic and geographic trends during the last quarter of the twentieth century” may be interesting, but it is an un-necessary multiplication of causes.
Finally, you say that:
I’m sorry, but that claim is simply not true. Here’s the actual data, as shown in Figure 2:
I’d use a lot of different words to describe that historical record, but “nearly constant year-to-year growth” is not among them …
w.
I was surprised that it really is so simple, but accepting it doesn’t turn my world upside down. Obviously the fuel price and GDP per capita is the mechanism by which most of the “demographic” (and other) effects are transmitted into VMT.
It would be possible for another nation with higher petrol prices and lower GDP per capita than the USA, to have very similar demographic factors that were NOT being transmitted into VMT.
For example, the following nations have a higher percentage of women in the workforce than the USA: by Litman’s theory, should this mean a more pronounced VMT effect in those nations?
Angola
Azerbaijan
Benin
Butan
Bolivia
Botswana
It would take too long to go right through the alphabet. Point made, I think?
I think it quite possible for “saturation” to be reached in VMT and the response to rising GDP per capita and falling petrol prices to weaken – but if this point has not been reached yet even in the USA, this finding does not turn my world upside down.
I also agree wholeheartedly with Eschenbach’s point about the absurdly cost-inefficient nature of most of the politicians favourite policy responses to “CAGW” so far, which all goes to show how insincere and/or ignorance-driven the whole racket is anyway. Attempting to change urban form and increase public transport mode share is probably the most absurdly cost-ineffective approach of the lot. Outside of Manhattan, most public transport systems in the USA are less efficient by all measures, than cars with a single occupant. Chicago and Washington are “marginal”. All the tokenist “investments” in public transport in cities like LA and Boston and Atlanta are not just a waste of money, they are a fraudulent waste of money, the actual outcomes being the opposite of the alleged basis for the “investments”.
Furthermore, the zero sum capital gains reaped by well-connected owners of large property portfolios who are endowed with powers of gouging “economic rent” by rigid “urban plans”, are considerable, and are probably a major underlying vested interest driving the whole racket. As I have been saying, there is nowhere that better illustrates all this than the UK’s cities, which have been in the grip of the “planners” for several decades – and the rents charged in CBD’s in nearly ALL UK cities regardless of how small or weak economically, are higher than those charged in Manhattan – the USA’s highest. Even as far back as 1984, Cheshire and Mills suggested that the difference in CBD rents between comparable cities in the UK and USA apart from their planning systems, was a factor of 325 – three hundred and twenty-five. The difference is almost certainly much larger now.
Of course US cities adopting similar planning approaches are tending to converge on the UK cities and diverge from the still relatively un-constrained US cities.
Hmmmmmmmmm? Move along, nothing to see here?
Joe Born says:
July 11, 2013 at 5:39 am
Say what? When you raise the price on caviar, Tesla automobiles, and diamonds, it doesn’t affect the poor more than the wealthy. The same is true about the cost of private schools, orthodontistry, and summer camps, not to mention Manolo Blahnik pumps and ice-skating lessons and car-rental rates … in fact there are hundreds and hundreds of things whose price could triple without affecting the poor in the slightest. They hit the well-off the hardest, and barely touch the poor.
Energy, on the other hand, is the other way around. It hits the poor the hardest, because we all need heat and transportation. For the rich, most of their money is spent on optional purchases. For the poor, a much larger percentage is spent on energy.
So when the price of luxury items rises, it affects the rich more than the poor, more of their money is spent on that.
And when the price of energy rises, it affects the poor more than the rich, more of their money is spent on that.
As a result, your claim that it’s all equal, that “almost any time you raise a price” it affects the poor more, is simply not true. Any price for any given thing affects those that use more of that thing … and for the poor, that’s energy.
Best regards, always good to hear from you,
w.
Todd Litman says:
July 11, 2013 at 7:25 am
I still don’t understand this. I use the average elasticity over the last fifty years. How is that SHORT RUN elasticity?
Also, as I pointed out, since we know the average fuel economy of the US fleet, calculating miles drive is equal to calculating TOTAL FUEL CONSUMPTION.
Effectiveness? The Obama climate plan is supposed to cool the earth by two hundredths of a degree by 2050 … at a cost of billions, even if you could double the effectiveness it’s still a really, really crappy deal. You’re just putting a tutu on a pig—when the maximum possible benefit is hundredths of a degree in fifty years, who cares how it’s dressed?
But don’t worry that I haven’t really discussed this issue. I’m dissecting the BC carbon-based energy tax, and that issue is on the list … and I predict you likely won’t care for what I have to say.
w.
Mladen says:
July 11, 2013 at 5:39 pm
Thanks, Mladen. You seem to be under the impression that a reduction in miles driven is “significant” … see my post on the BC carbon-based energy tax to see how significant it might be. The short answer is … it’s not.
w.
Willis writes “I’d use a lot of different words to describe that historical record, but “nearly constant year-to-year growth” is not among them …”
But that’s because you’re misinterpreting him. He’s not saying the *rate* of growth was constant which is what you want him to be saying, he’s saying *growth* is constant and that is clearly shown in your graph. Most points by far are above the zero line.
Wodehouselee,
There is one light rail system that NY in fares per mile of track – Houston. Granted, almost all of the travel is between a single very large parking lot and the Med Center, but still. Light rail can be effective if it does a very specific thing, and moving the ~60k or so visitors out of the very crowded Med Center to an enormous parking lot ~2-3 miles away and located on a major interstate is one of the areas it works. My commute was almost 20 minutes less taking the rail the last few miles.
Let’s just hope that the leaders of Houston don’t take this as an excuse to build a rail system anywhere else in the city.
Very good point, I like it. I’ll take that on board.