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Politics and Economics

It’s a gas gas gas tax

Clark Williams-Derry, Gristmill
I’m a bit late on this one — but, wouldn’t you know it, as soon as The New York Times puts its editorials behind a subscription-only wall, they publish something worth reading: semi-libertarian John Tierney waxing rhapsodic about gas taxes (sorry, the link is subscription only).

To summarize, Tierney argues for a 50 cent per gallon gas tax, with all receipts used to fund private Social Security accounts. This, he says, would reduce gas consumption, pollution, congestion, and all the other costs that drivers impose on the rest of society, while enhancing retirement revenue. And if gas-tax revenues are split evenly among all citizens, the poor (who drive little) will get far more out of the deal than they put in.

I’ll ignore his Social Security proposal — which isn’t a real proposal, just a sketch of an idea — except to say that I’m skeptical, but (hopefully) open-minded. But what’s important to note here is this: Tierney is calling for gas taxes to be used for something other than transportation. And that seems like a really big deal to me.

Traditionally, gas taxes are earmarked for roads and highway spending: The federal gas tax is devoted almost entirely to transportation projects. Likewise, Washington state’s gas tax receipts must be spent on highways. It’s in the state constitution, even.

All of which means that gas taxes are mostly used to build new roads and “improve” old ones — which encourages more driving. That’s good news for oil companies, auto manufacturers, and for people who really like to spend time in their cars; but obviously bad in lots of other ways.
(9 October 2005)
Related article on gas taxes: The freeways aren’t free.

Oil-rich countries tap into new political power

Barbara Slavin, USA TODAY via Yahoo! News
A financial windfall brought on by rising energy prices has emboldened several oil-rich nations to challenge U.S. foreign policy and given them more leverage with U.S. allies that rely on oil imports.

Challenges are coming from an increasingly assertive Venezuela and
Iran and a Russia no longer dependent on Western handouts. “Oil is the new currency of foreign policy,” says Senate Foreign Relations Committee Chairman Richard Lugar, R-Ind. Iran and Venezuela are “not only less cooperative but almost gleeful that they are able to make trouble for us,” Lugar says. “These are huge changes that have not been comprehended by most of the U.S. public.”
(10 October 2005)

Bolivia orders foreign firms to up gas production

Associated Press via CNN
LA PAZ, Bolivia (AP) — The Bolivian government on Friday ordered foreign oil companies operating in Bolivia to increase their liquid gas production to end shortages that have triggered unrest and protests.

The companies were told to “operate their facilities at maximum capacity and improve the output of products that are in short supply,” according to a decree signed by President Eduardo Rodriguez that came into effect Friday.

The shortage of gas for domestic use — cooking and heating — has turned into a political problem for the government, as hundreds of residents, especially women, block streets in La Paz and a neighboring city. Long lines appear every day at the few sites that have gas to sell.
(7 October 2005)

Don’t Cry for Me, Venezuela

Alma Guillermoprieto, NY Review of Books
On the reality show that Hugo Chávez, President of Venezuela, stages at irregular but frequent intervals for the benefit of his nation, he is the only star. Most Sundays, he can be seen on the all-day program Aló Presidente, which is obligatory viewing for anyone who might be interested in knowing what will be on the political agenda the following week, but there are also unscheduled interruptions to the evening newscasts and telenovelas, when the President takes over the networks to discuss whatever might be on his mind.

Television is his natural medium: articulate, artless, more than a little hefty, completely at his ease, open-faced and just-folksy even when he is denouncing the press or a laggard member of his own cabinet, Chávez is indisputably fascinating, and often even endearing, when he takes over the airwaves. On Aló Presidente, which tends to start around 11 AM, he might reminisce about an episode of his past life, like the failed military golpe, or coup, that first brought him to public attention back in 1992, when he was an idealistic lieutenant colonel. (At times like this, he is likely to recite a poem, or sing.)

The President also briefly shares the screen with the studio guests. He asks beneficiaries of a particular government program to describe their part in it. Visiting intellectuals and ambassadors are asked to greet the crowd. Members of his cabinet give an accounting of themselves.
(6 October 2005)
The second part of this long sketch is also online.

Energy costs take a bite out of business

Ann Johnson-Stromberg, Times-Standard (N. California)
EUREKA — For many of us, increased fuel prices mean fewer unnecessary shopping trips or less entertainment money. But for fuel-dependent businesses it boils down to a matter of jobs, profits and sustainability.

Dwindling natural resources peppered with a few natural disasters have shaken up the U.S. economy, and North Coast businesses are feeling the pinch. John Gierek, president of Humboldt Moving and Storage, said he spent $13,000 on diesel in September to fuel his 25 business vehicles. In September 2004 he estimated his fuel costs were between $6,000 and $8,000.

”It’s difficult. We are having to cut back because people can’t afford to move like they were with prices like they are now,” Gierek said. “If the trucks don’t roll, then the guys that drive those trucks don’t work.”

So Gierek and other business owners like him have begun trying to figure out the delicate balance of how much customers are willing to pay for the services.
(10 October 2005)

FedEx May Hit The Wall

Tom Van Riper, Forbes
NEW YORK – Are high fuel costs set to ground FedEx and UPS? Probably not, though investors may want to fasten their seat belts for a bit of turbulence.

Both overnight delivery giants have seen their share prices tank for most of this year, as $60-per-barrel oil has spooked some on Wall Street concerned about their near-term profit outlook. Now FedEx (nyse: FDX – news – people ) is set to report its latest quarterly profit on Sept. 21, which should give investors an even better insight into the health of the company and its industry.

“It is beginning to impact demand,” says analyst Jim Corridor of Standard & Poor’s. He explains that newly budget-conscious customers are beginning to cut back on one- and two-day shipping as prices crawl up. Even though higher gas prices make driving to stores more expensive, quick shipping is often a luxury that people can do without in some cases.

FedEx and UPS (nyse: UPS – news – people ) have built their business models on the premise that they could pass along fuel-cost increases to their customers in the form of a surcharge. That’s been mostly successful this year in keeping revenue moving in tandem with expenses. But firms so heavily reliant on fuel to power their fleets of planes and trucks are bound to hit a wall when oil prices continue to rise for months on end.
(19 September 2005)

Gap between heating bills, emergency aid will widen

Gail Kinsey Hill, Portland Oregonian
Forget the pain at the gas pump. Soaring home heating costs are creating dismal conditions for hundreds of thousands of Oregonians who will struggle to pay their bills this winter. Record numbers are expected to compete for emergency government aid that already falls far short of demand.

Utility costs have risen far faster than paychecks. Between 2001 and this heating season, Northwest Natural Gas bills have vaulted 53 percent, Portland General Electric bills an estimated 39 percent and heating oil bills 93 percent. Meanwhile, the median income for a family of four has crawled up just 10 percent.
(9 October 2005)
Related article: Families try to conserve, still feel pinched.