August 17, 2008

The shotgun approach - energy transition

Another of my responses from the Don Surber site:

There's something ‘wrong’ with every source of energy. There are people and interests against any and all of them. If you fly across the U.S., you can easily see that it is mostly uninhabited land, and plenty of space for wind, solar, nuclear, various & sundry refineries, mining and drilling. We need them all to reduce our dependency on dictatorial regimes like the House of Saud, the Ayatollah, Chavez and Putin. It’s not only an economic issue (oil ain’t cheap anymore), it’s a national security issue. It’s time the world stop empowering Putin and the rest of those thugs.


Nobody said...

If you are interested in this issue I have quite a lot of posts about this thing under this label: The Case for Fuel Tax

Muggins said...

I don't support taxation on fuel other than to pay for infrastructure. If people are genuine in their desire to wean the world of carbon spewing fossil fuels, they would invest in technology to make alternatives cheaper than burning fossil fuels. And they would support nuclear power for the electrical grid. Raising taxes hits the lower classes the hardest, and tweaks the economy in inefficient directions, and I don't want to be a part of that action.

Nobody said...

Muggins said...
I don't support taxation on fuel other than to pay for infrastructure. If people are genuine in their desire to wean the world of carbon spewing fossil fuels, they would invest in technology to make alternatives cheaper than burning fossil fuels

Unfortunately, "If people are genuine in their desire to wean the world of carbon spewing fossil fuels", they would rather try to make burning fossil fuels more expensive than alternatives. And if they are not ready to do it, then it's just another California. And it does not take a really big brain (though it's still way above the average Californian brain) to know where California and the rest of the US is going go end.

:D :D :D

Muggins said...

Energy is very expensive in California. I would be the last person to encourage fuel to be taxed and regulated like they do in California. My point is that to go green, entice people to go green because it's cheaper, with technology, not taxation. After all, it's not just the U.S. that we're talking about, it's 72% of the world population in India and China, who are going to make energy the cheapest way they can.

Nobody said...

We have a technology that we have. Throwing money on it is no guarantee that in five years we will have something cheaper than oil. What cheaper means anyway? Oil can be as cheap as $30 per barrel.

And anyway, fuel tax implemented through tax swap with, say, payroll taxes benefits the taxpayer since unlike payroll taxes, fuel tax is something about which consumers can make choices by driving less or by buying hybrids or smaller cars. Slap tariff on imported oil or $1 tax on gas. The US consumes roughly 140 billion of gallons each year. If it's $1 gas tax, clear the same $140 billions in payroll and other taxes for 90% of the taxpayers. No need to compensate rich people, no need to compensate companies. You simply take money from these and give it to the middle class.

The debate we are having here only demonstrates again why America can no longer make intelligent choices about anything and is on the way to become a huge California. It's a culture of greed that by now has become irrational. It can no longer make even the most basic arithmetics.

Muggins said...

Every year solar energy becomes cheaper. It's developed by university researchers who are on limited budgets, and could use more funding. We might consider tax breaks for companies to develop solar technology. Offer billion dollar prizes for affordable solar collectors of various types.

Governments and green organizations could divest themselves of the taxation mindset, and instead invest in technology that could scrub the CO2 from coal burning power plants, and finding ways to convert the CO2 into a resource, instead of a waste product.

Raising taxes punishes the working poor and those on fixed incomes. Are the poor being greedy? What poor folk can buy $35,000 new cars that get good gas mileage? And to what end, if the Orient, Africa and South America aren't with the program? It's a futile endeavor accomplishing little more than higher taxes, slowing the economy, ensuring that fewer individuals and companies can afford to make the costly switch to contemporary energy efficient technology? Incentivize research and development instead.

Nobody said...


It's very difficult to have any meaningful discussion of the matters related to economics or technology with people who are not friends with basic arithmetics. It really is. Try to approach it from a different perspective. Say how much is 2 + 3? It makes 5, right? And 3 + 2?

Lets make another try. How much is 4 + 1? It makes 5, correct? And 1 + 4 ?

If the government swaps taxes on the assumption that this is going to be a revenue neutral tax, then it cannot hurt poor people. Since you rebate your taxpayers by the same amount you take from them. In fact, taxpayers can only win from such tax restructuring because payroll and VAT they cannot avoid paying, but gas tax and its likes are "don't pay me" taxes. Taxpayers simply drive less or find a job closer to home, or do car pooling or start using trains and you finish with the rebate but without paying the tax.

As to the government, green organizations and other perephernalia of a nunny state... The US is bankrupt. The US government went bust. There will be soon more taxes, because one should live within one's means. There will be no money for all these fancy researching and innovations. The era of free lunches is over. Repeat after me: There are no free lunches. We will have to pay more taxes. Taxes, taxes and taxes. Because one should live within one's means.

Muggins said...

Your frustration aside, the overriding issue with worldwide pollution is the inefficient technology that is being used in Asia (which holds 72% of the world's population) and Africa and S. America. If pollution is your concern.

If it's availability of fuel in the U.S. that's your concern, then raising the price of energy is not correct, either.

I agree that people should buy more efficient products, and there's a trend in that direction. I've bought a hybrid and change over my light bulbs. But there should be vast improvements in the public transportation before we raise the price of energy on the poor.

If you disagree with me, ride the bus tomorrow and get a dose of what America offers those who do not drive. I'm assumming that you live in the U.S..

In the U.S., there is plenty of energy out there to use during our transition from petroleum to alternative energy. But government policy prohibits exploiting that energy. That's a hurt on our fragile economy, and I think it's immoral to do such a thing. For Europe, it's may be another matter. They live in the shaddow of Putin, who will use the pipelines to acheive higher prices and political amibitions.

Muggins said...

As for taxes in general. It's a false economic notion that thinks there is a one to one correlation between raising taxes and raising revenue. If you want more revenue, grow the economy. Raise a tax, and the businesses will find a way around it. The individual tax payer will spend less. Both of which slows the economy.

Nobody said...


I am making the last try to explain this tax swap thing to you because you seem rather hopeless. There is nothing sacred about taxes. They are not god given, so taxation system can be structured efficiently or inefficiently. You don't have to increase overall taxation to impose oil or gas tax. You just switch taxes. Or you can use proceeds from the gas/oil tax to automatically refund taxpayers. Just like the Gulf Arabs distribute oil revenues between their citizens, so you can distribute the tax proceeds between 90% of the population. As such your point about public transportation just does not make sense. People can continue driving as before if they wish since the amount of taxes they pay will not increase. The only difference is that you create incentives for them to drive less or to drive better.

And the nanny state is gone. It went bust. You simply did not notice it. It's over, man. OVER !!! Only private sector can increase spending on these technologies you are betting on. But for this to happen the private sector should be sure that the price has a floor. That everything won't be thrown to dogs again next time the price collapses.

As to false economic notions, the most false of them is one about the dollar being naturally the reserve currency of the world and another one about the bond market willing to swallow whatever amount of debt the US government decides to rain on it. The day these two false notions are debunked, and this day may not be far away, todays' crisis will pale in comparison.

Muggins said...

I don't care about reserve currency standard.

To contend that the U.S. debt can be significantly lowered by raising taxes on energy (whether you rebate some or all of it) is not realistic. I don't see where the revenue gain is.

I don't want to make energy more expensive because that would hurt the economy, and that's exactly what we don't need now.

I'm happy the nanny state is now over, but I think Pelosi, Reid and Obama have another opinion about that.

Nobody said...

I don't care about reserve currency standard.

Ever considered what will happen to the same price of oil if the status of reserve currency is lost? Or what various holders of bonds and treasuries will do if they feel that the dollar starts wobbling? Trust me you don't want to see a tsunami of returning dollars to make a landfall on US shores.

As to the gas tax if you don't rebate it, then the gain is obvious. If you rebate it, then it all depends how much it can depress the consumption and the global price of oil. If it does, then the obvious savings will come from defunding rogue states and stopping to need to have foreign policy.

In general, the problem is not economy, it's the culture. And this is a culture based on the sense of entitlement, on the belief that life is all about getting free lunches, refusal to understand that everything has its price. It's pointless to sloganeer against the nanny state if one is then expecting the very same bankrupt nanny state to develop alternative energies and such stuff. It's the same mentality that got America to where it's now in the first place. That the nanny state will pay for research of alternative energies and then some silver bullet will be found and Americans will start growing rich and making the world a better place at the same time. Nobody will have to move an ass to achieve this. The nanny state will do it all, while ordinary Americans will keep smiling to each other.


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