[0mar]

$this->bbcode_second_pass_quote('emersonbiggins', 'W')hat the public sees today: high gas prices.
What the public sees 5 years from now: potholes and surface deterioration on major interstates and highways, with recent projects never completed - all because the gas tax failed to keep up with rising costs and the advent of PO.

I'm not lamenting the public's decision. Their death grip on the cheaply-fueled automobile will ultimately end in tragedy. Few, if any, have the foresight to see the writing on the wall and are gladly trading the very future of the motorized utopia for a few months of affordable gas. Perfect irony, I say.

[XOVERX]

Borrow and spend is going to be the end of America.

[emersonbiggins]

The money isn't there for the roads even with the gas tax in place. Eliminating gas taxes will ensure a quick demise of the existing highway system, as budget shortfalls for the FHWA cannot possibly be made up out of general appropriations.

With the current gas tax, there will still be a projected shortfall of $2.3 billion in FY2009 for the Highway Trust Fund. It gets much, much worse from there. If the tax is eliminated, well we're obviously already in negative territory.

$this->bbcode_second_pass_quote('', 'H')ighway Trust Fund Shortfall Projected;
ACEC To Identify Solvency Options
Experts testifying before a House subcommittee last week indicated that the balance in the Highway Account of the Highway Trust Fund is expected to drop below levels authorized in the final year of SAFETEA LU, resulting in significant reductions in highway funding to the states.

The hearing before the House Highways, Transit and Pipelines Subcommittee focused on how government agencies track future tax receipts into the Highway Trust Fund.

The U.S. Department of the Treasury has found in its latest projections that the Highway Account of the Trust Fund will have a $2.3 billion negative balance in F.Y. 2009, the last year of SAFETEA LU. The Transit Account is projected to have a $6.9 billion positive balance. The Congressional Budget Office (CBO) used different economic assumptions that show a slight positive balance in the Trust Fund in F.Y. 2009.

CBO and Treasury Department officials said that the different projections were normal and fell within an acceptable margin of error. But both agreed that insolvency was imminent, either in F.Y. 2009 or F.Y. 2010, unless Congress acts.
more at link

[joewp]

This reminds me of what Jim Kunstler said in "The End of Sururbia" about when the road repair gets too expensive and 18-wheelers start to break axles being the end of the cross country salad. My township is struggling to pay for road repair too, because the cost is going up at around 30% a year.

It seems we're already living the early stages of the peak, as well described in "The End of Suburbia", "The Long Emergency" and "The End of Oil". BLS lies... er, statistics aside, prices are rising all over. People are getting squeezed at the gas pump and at the grocery store. Utilities and services are more expensive this year over last. The rise to over $60/bbl is finally starting to move through the economy, and businesses aren't trying to absorb the cost increase anymore.

Whatever the oil production figures say, we're already in "The Long Emergency" and it's only a matter of time before we're forced to re-localize or else.

[0mar]

I heard on the radio today that here in Chicago, the Highway Commission is contemplating moving towards an emergency only repair situation in the next few years.

Basically, the guy said that if fuel prices stay high, then the only repairs the HC could conceivably afford is fixing potholes and major cracks. Both the cost of asphalt (tied to the price fo crude) and the actual cost of transporting the materials and workers there is becoming too cost burdensome for them to handle.

[Doly]

$this->bbcode_second_pass_quote('0mar', 'I') heard on the radio today that here in Chicago, the Highway Commission is contemplating moving towards an emergency only repair situation in the next few years.

[Wildwell]

You really don't like the 'C' word over there do you? lol

[mekrob]

Don't you just love these idiots, thinking that they can overturn a free market? Unless they force everyone (oil companies, gas stations) to have their prices lower than what would be otherwise expected (based on their relation to national average) which is doesn't seem like they are going to do, then the market will just kick in and the prices won't go down. No gee, why wouldn't the price go down? Well, maybe because supply didn't change and neither did demand. How can these guys be so clueless? The price is going to stay the same, and the oil companies/gas stations will just make mroe money while the state governments go even deeper into debt.

[DarkDawg]

The only comment I have on this is that here in NY State, the gas tax was already extremely unfair for a long time because it was percentage based.

So, at least they now have the right idea about capping it instead of allowing the higher gas prices to force higher taxes also. Why it took a crisis like now to see the stupidity is beyond me. Our state government taxes and spends more than any other with the possible exception of California and we know that the extra revenues from the higher taxes are not being spent on intelligent programs like alternative energy incentives. Instead they go to fund more and more political pork, ridiculously huge highway and bridge contracts, and other waste. So, although I agree that RAISING gas taxes is a better idea than cutting taxes, we also need to demand that those taxes are NOT percentage based and the revenues are going to be spent wisely.

The same goes for cigarettes in my opinion. TAX the HELL out of them and people WILL quit. There is no reason NOT to do this and spend the revenues on Health Care for all.

There is no reason NOT to tax gasoline and force consumers to find alternative solutions NOW.

[Tyler_JC]

*Warning, I do not reach a conclusion in this post. I have merely thrown some data together for analysis*

I often hear Europeans on this forum claim that higher gasoline prices do not effect them because they are already paying $4, $5, or even $6 per gallon.

The rise in gasoline prices from $2/gallon to $6/gallon did not happen overnight in Europe. Petrol taxes were raised slowly over the course of many years in many European countries. This gave time for consumers and businesses to adjust to the new fuel costs. I know that the UK used a mechanism called the "Fuel Price Escalator" which automatically increased fuel taxes in order to rise the cost of petrol by ~5% more than the rate of inflation from 1993 to 2000. This allowed consumers to adjust to gradually increasing prices rather than be forced to deal with a sudden, massive price upswing.

A small shortfall in gasoline production would lead to dramatically higher prices in the matters of days, not years. The UK's average gasoline prices could rise 50% and this would be equal to a 100% rise in price for American consumers.

OK, so the % increase in cost to fill up one's tank would be higher in the United States than in the UK.

But what about the cost per mile?



As this chart clearly shows, European cars get better gas mileage than American cars. In fact, one could argue that their cars are twice as efficient as American cars.

Twice the cost of fuel and twice the fuel economy...The price per mile is the same!

But here's the real kicker that people keep forgetting. Europeans pay high gas taxes. This is money that European governments collect to spend on services.

Any increase in gasoline prices in the USA means that more money goes to OPEC's dictators. Europe's inflated gas prices reflect a redistribution of wealth from gas-consumers to friendly governments rather than unfriendly ones.

For whatever reason, I'm unable to find the actual % of European tax revenue which can be attributed to fuel taxes, but I know that they make up between %5 and 10% of total revenue.

US state and federal gas taxes bring in ~$60 billion a year.

The UK's fuel tax brings in nearly ~$45 billion a year.

So the US collects only a third more in taxes despite consuming nearly 11x as much oil.

If the US was able to create a tax mechanism simillar to the British model, the budget deficit would vanish tomorrow. (assuming a sudden doubling of gas prices didn't crash the consumer economy, which it might).

Just something to think about...

[Bas]

good post, tyler. The only thing missing, I think, is the masstransit equation. I think a higher % of europeans use masstransit and with a bigger system it will be easier for them vs Americans to take the bus/train/etc when the car becomes too expensive/when shortages occur.

I think you also forgot to say that with rising crude prices, the cost per mile will rise faster in the US than in western Europe. On the other hand, it will be relatively easy for US citizens to switch to more energy efficient vehicles the Europeans already have capitalized on.

Finally, most western European nations started the escalation on gastaxes in the eighties and continued that trend in the nineties when crude prices on average were going down. It would be much harder (if not impossible in the US with the kind of popular opinion that cheap gas is a US citizen's birthright;non negotiable) to raise taxes on gas in a time in which prices are already going up; In fact in Europe they stopped raising taxes on it while the price rises pretty much still follow the growth trend which was set by the fuel price escalators, only now the extra money is going to opec instead of government.

In a way you can say that Europe "Hedged" itself against PO; which led to lower growth in the late 80's and 90's vs the US but will ultimately lead to smaller economic declines when oil hits, say 200$/barrel. Pretty forward thinking actually (if this was a contemplation in the decisionmaking)

[TorrKing]

I have tried to get this exact thing through to a few of my fellow Europeans in a number of threads, but I guess patriotism grabs them...

[Bas]

$this->bbcode_second_pass_quote('Torjus', 'I') have tried to get this exact thing through to a few of my fellow Europeans in a number of threads, but I guess patriotism grabs them...

[Tyler_JC]

I'm glad that other people have noticed this too.

The gasoline tax issue is a major factor when discussing the effects of Peak Oil.

The purpose of taxes on gasoline (in theory) is to pay for roads.

The US Federal Highway and Transportation budget is $275 Billion while gas tax revenues (on the state and federal level) are only about $60 Billion. That means that general revenues must subsidize US highways to the tune of $215 billion dollars.

I don't know how much England spends on its highways and roads, but I'd be willing to bet that they don't need to subsidize their roads with non-gas tax revenue.

[Permanently_Baffled]

http://news.bbc.co.uk/1/hi/uk_politics/4610877.stm

Hi tyler

I dont know if you are aware , but on top of high gasoline taxes , the government are planning "road pricing".

$this->bbcode_second_pass_quote('', 'T')he maximum price would be £1.34 a mile on busy motorways like the M25 at peak times.

[lateStarter]

I'll try to find the exact numbers, but I seem to recall that one advantage some EU countries have that is often cited, is that when there is a spike in oil and subsequent fuel prices, due to some short-term 'news', the governments are often able to provide a bit of relief by backing off the required tax revenue %. This tends to keep the prices fairly flat. Anything to keep the illusion of non-stop prosperity going for a few more moments...

The US on the other hand has less latitude in this regard since their tax % on fuel is so low - no wiggle room...

[Twilight]

$this->bbcode_second_pass_quote('Tyler_JC', 'U')S state and federal gas taxes bring in ~$60 billion a year.

The UK's fuel tax brings in nearly ~$45 billion a year.

[Bas]

$this->bbcode_second_pass_quote('Permanently_Baffled', 'h')ttp://news.bbc.co.uk/1/hi/uk_politics/4610877.stm

Hi tyler

I dont know if you are aware , but on top of high gasoline taxes , the government are planning "road pricing".

$this->bbcode_second_pass_quote('', 'T')he maximum price would be £1.34 a mile on busy motorways like the M25 at peak times.

[Twilight]

$this->bbcode_second_pass_quote('Tyler_JC', 'B')ut here's the real kicker that people keep forgetting. Europeans pay high gas taxes. This is money that European governments collect to spend on services.

Any increase in gasoline prices in the USA means that more money goes to OPEC's dictators. Europe's inflated gas prices reflect a redistribution of wealth from gas-consumers to friendly governments rather than unfriendly ones.

For whatever reason, I'm unable to find the actual % of European tax revenue which can be attributed to fuel taxes, but I know that they make up between %5 and 10% of total revenue.

[Permanently_Baffled]

$this->bbcode_second_pass_quote('', 'I')f anything, we aren't paying enough yet because road use continues to grow. However I don't think a GPS-based road charging system is the way to go, I think restarting the fuel price escalator is a less controversial way forward.