“Be kind, for everyone you meet is fighting a hard battle” - Often attributed to Plato but likely from Ian McLaren (pseudonym of Reverend John Watson)

## Tuesday, July 16, 2013

### Senators Grill Refiners Over High Prices Amid Oil Boom - Bloomberg

'via Blog this'

My dismay with our elected representatives comes again to the fore. In the linked article above, we find Ron Wyden, Democratic Senator from Oregon and Chair of the Senate Energy and Natural Resources Committee saying "Our people want to know why the flood of new domestic crude oil isn't lowering prices at the pump. There is no question that the lower oil costs are not getting through to Americans' wallets."

To the left is a plot of oil prices (WTI) over the last five years. I'm having a very difficult time spotting Wyden's "lower oil costs." There are so many supply and demand issues that play into not only the price of crude oil (which is a world wide market and cannot be affected in any reasonable way by the Senate) but on the price of finished products from oil such as gasoline. These sorts of speeches constitute pure political pandering. But he's a politician so I guess it's to be expected (a la the scorpion in the fable of the scorpion and the frog)

Do I enjoy paying $4.099/gallon for my gasoline? No, but I'm averaging 51 m.p.g. so it doesn't hurt me as badly as many others and, were I King, I'd increase gasoline taxes by$0.25/quarter for the next three years. Many who read this will be relieved that I'm not King.

Arezoo said...

The problem with the current federal gas tax is that it's not a percentage of what you pay at the pump; it's a fixed amount: 18.4 cents per gallon. So, higher gas prices do not translate into higher revenue for maintaining the roads. The increased popularity of EV's and fuel efficient vehicles does not help with the revenue either. So, I'm with you if you happen to become the king!

Rob Ryan said...

Yes, a tax based on percentage would be more effective in one way but would also encourage policies that lead to higher prices.

There are many plans being floated to tax vehicles by miles driven to mitigate the revenue lost to EVs and other high mileage vehicles. There are, of course, many pitfalls to such policy proposals. Many, including I, wouldn't want a black box in my car logging my miles autonomously for transmission to a government agency. This could be overcome by having the odometer ready at registration renewal but there are problems there as well.

Philosophically the impact of such vehicles in comparison to the real culprits in highway maintenance requirements, heavy trucks. That said, high mileage vehicles certainly make use of new facilities built with gasoline tax funds and so some sort of scale based on impact to existing facilities and potential use of new facilities would be acceptable to me (I get 51 m.p.g. in my hybrid).

Having EVs pay nothing is not going to work in the long run, though I don't have a problem with it now since the numbers are so low and I support encouraging their adoption.