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For a Sane Energy Policy
Editors, The Nation
… A serious energy policy would mandate an immediate reduction in the substantial US contribution to global warming. Such a policy would ante up real money to accelerate production of alternative fuels like E85 (85 percent gasoline and 15 percent ethanol). It would include much higher fuel-economy standards (CAFE) to prod the car companies to manufacture high-mileage, hybrid and flex-fuel cars and tax refunds to encourage consumers to buy them. (Representative Dennis Kucinich’s Gas Price Spike Act would use revenues from an excess-profits tax to pay for such incentives and to improve the mass transportation infrastructure.) Gas taxes should be raised to nudge consumers into buying these cars; the proceeds would go to an income support program for working-poor drivers who need their cars to get to jobs and are being hurt most by rising gas prices. Legislators should contrive long-range blueprints–along the lines of the Apollo Alliance’s ten-point plan–that would promote renewables, upgrade the energy infrastructure, improve efficiency in the transportation and building industries, finance more clean technology and institute “smart growth” programs for cities and suburbs (see www.apolloalliance.org).
A comprehensive energy policy would also declare energy independence from unstable oil suppliers with autocrats who skim profits while tyrannizing their people. The hypocrisy of our claims to promote democracy is revealed to the world when Dick Cheney chastises Russia for suppressing democracy, then hobnobs with the corrupt rulers of oil-rich Kazakhstan and Azerbaijan.
Also on the energy agenda should be laws and antitrust actions against Big Oil’s economic tyranny at home. A decade of mergermania has restructured the industry into a few giant cartels that can manipulate supply and demand (for example, by cutting domestic refining capacity to create gasoline shortages). These companies are so powerful, they dictate energy policy to their man in the White House and buy off lawmakers with lavish donations ($33 million in 2005, according to politicalmoneyline.com). We need public shaming of the oil companies before Congressional committees for their excess profits, fat CEO pay scales and bloated returns on capital. The Justice Department should launch an antitrust inquiry into the oil giants’ pricing policies.
The first step toward curing America’s addiction to oil is to admit that the problem is much worse than high gas prices. We face a long-term energy and environmental crisis, and to address it we need reality-based leadership that will map a clear route to sustainable energy independence and a nonpolluting future.
(29 May 2006 issue)
Let’s Raise Gas Taxes and Lower Income Taxes
Lester Brown, Earth Policy Institute
Now that the $100 tax rebate proposed by the Senate Republican leadership as a response to rising gasoline prices has been discarded, it is time to get serious. Any effective response to climbing gas prices must recognize a geological reality, namely that the earth’s oil reserves are shrinking.
The amount of oil pumped has exceeded new discoveries since 1980. And the gap is widening. In 2004, for example, the world pumped nearly 31 billion barrels of oil while discovering fewer than 8 billion barrels of new oil.
Instead of encouraging gasoline use with tax rebates or gas tax holidays, we need a way to reduce gasoline use, one that is practical and politically acceptable. We need a higher gas tax, but the only way to get a gas tax rise large enough to wean us from imported oil is to offset the rise with a reduction in the tax on income.
The gas tax boost should be substantial-a rise that will send a strong, clear signal to consumers-and it should be gradually phased in. A gasoline tax hike of 30¢ a gallon per year for the next 10 years would send the right signal. This eventual increase of $3 per gallon would be offset at every step of the way with a reduction in income taxes.
A $3 per gallon tax on gasoline in addition to the existing federal tax of 18¢ sounds like a lot. And it is, but our economic future is at stake. Such taxes are not unheard of. Motorists in Germany pay a tax of $3.76 per gallon, French drivers pay $3.46, and in the United Kingdom the figure is $4 per gallon. Prices at the pump in these countries typically range between $5 and $6 a gallon.
A number of countries in Europe have been shifting taxes in recent years-lowering the tax on income and raising those on energy. Sweden, now the leader, is in the middle of a 10-year shift of $1,100 per household from income taxes to energy taxes. This is an integral part of Sweden’s plan to be oil-free by 2020.
(11 May 2006)
A sure cure for oil addiction
Roger Ibbotson, MSN Money
Americans guzzle gas faster than anyone else in the world. But there’s a cure: paying full price, for both the direct and indirect costs of oil. Why not a significant gas tax?
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In President Bush’s State of the Union address earlier this year, he talked about America’s “addiction to oil.” The United States accounts for a little more than 4% of the world population but consumes about a quarter of its oil. Even by developed-nation standards, we consume a disproportionate amount of energy. The U.S. has around the same size population as Western Europe, but it uses twice the oil.
Western European and Japanese leaders have successfully reduced oil consumption in their countries, while the U.S. has continued to guzzle.
The reason the Europeans and Japanese have been successful where we have failed is that they realized you don’t cure an addiction to oil by subsidizing it. You cure an addiction to oil by making people pay full price — both the direct and indirect costs.
Roger Ibbotson, Ph.D., is founder of Ibbotson Associates, a Morningstar company, and a professor of finance at the Yale School of Management.
(12 May 2006)
The Long and Grinding Road
Keith Naughton, Newsweek
The rat race is turning into a marathon. Inside the lives of ‘extreme commuters.’
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…The drive to get away from it all is turning us into a nation of nomads. As we’re pushed to the edge of civilization by runaway home prices and a longing for wide-open spaces, the daily rat race is turning into a marathon. “Extreme commuters” who travel more than 90 minutes to work, one way, are the fastest-growing group of commuters, according to the U.S. Census Bureau. More than 3.4 million commuters take that long road to work every day, double the rate of extreme commuters in 1990. And the fastest-growing departure time is now between 5 and 6 a.m. Even $3-a-gallon gas and growing gridlock aren’t slowing the rise of this group, which is changing the way we live as we spend more time in our cars and less time in our communities.
This endless commute is becoming the defining characteristic of the 21st-century working stiff. So much of what we worry about today-volatile real-estate prices, sleeplessness, our overstressed lives-all merge together on the road, as we search for the elusive simple life in some suburban Shangri-La. “We’re obsessed with the commute,” says Joy Mander, 42, a nurse who drives 45 miles to work the over-night shift at Children’s Hospital in Oakland, Calif. “How much is it worth to own your own home if you end up spending four hours on the road and not playing with your kids, not sleeping enough and rotting in traffic?”
It’s apparently worth plenty, because more people than ever are willing to trade time in their car for the American Dream: big house, big yard. Nearly 10 million people now drive more than an hour to work, up 50 percent from 1990. The average commute today is 25 minutes, up 18 percent from two decades ago. What drives us to drive so far? Many are doing what California real-estate agents call “driving ’til you qualify.” New-home prices have nearly tripled in the past 20 years and now average almost $300,000, according to the National Association of Home Builders. In places like southern California, each exit along the interstate saves you tens of thousands of dollars.
(1 May 2006)
Gauge Match
Push to raise fuel-economy standards gaining new support
Amanda Griscom Little, Grist
Cringe as we might over record-high gasoline prices, they could be the best thing to happen to automobile fuel economy since the Arab oil embargo.
The soaring cost of oil in recent weeks has sent Washington lawmakers into an election-year frenzy. Some of their proposals — like one from Senate Majority Leader Bill Frist (R-Tenn.) to offer Americans $100 checks to defray the rising cost of gasoline in exchange for consent to drill in the Arctic National Wildlife Refuge — were dead on arrival. (“What kind of insult is this?” scoffed Rush Limbaugh on his radio show.) But efforts led by Rep. Sherwood Boehlert (R-N.Y.) and Sen. Dianne Feinstein (D-Calif.) to raise CAFE (corporate average fuel economy) standards are drawing increasing support from politicians suddenly anxious about U.S. oil consumption.
President Bush is not among the backers of the Boehlert plan, but he is partly responsible for CAFE’s current moment in the spotlight. Speaking at a gas station in Biloxi, Miss., two weeks ago, the president said Congress was considering several responses to high fuel prices, “and one idea is to give me a capacity to raise CAFE standards on automobiles.”
That elicited jeers from Democrats, who pointed out that Bush already has the power to raise the standards.
(11 May 2006)
