Wednesday, June 25, 2008

The Ne Green Revolution

Cnn has a slideshow featuring innovations in eletric cars and home building. $4 gas prices gave these progresses a chance. And gas prices should not be allowed to fall back, even if Saudis would rather they do.

Saturday, June 21, 2008

China cut gasoline subsidies

On 6/19, oil price took a tumble for $5. The reason? China cut gasoline subsidies, following the example of other oil consumer countries. Imagine what will happen if all oil consumer countries unite to not only cut subsidies, but also hike taxes. The pain for businesses and commuters will be temporary, but the shift away from oil guzzling practices will last years and even be permanent as city infrastructures realign.

If you ever visit China, you'll probably land in Beijing or Shanghai. Both are booming metropolises w/ huge and inreasingly middle class population. Yet one look at their roads you will be able to tell the difference. Beijing streets are vast traffic jams filled with noxious fumes, while Shanghai roads are mostly populated with smooth-running clean buses and very few private cars. The reason? In Beijing, you can get a private car license for $10, while in Shanghai, it costs hundreds to thousands of dollars.

The Libertarian ideal says that the government is ideally small and little involved. Yet there are cases that government taxation make a critical difference in the pattern of market behavior, for better or for worse. Taxation on car licenses and gasoline is one of these.

Sunday, June 15, 2008

Betting on Spain Updated...

My source from the Spanish island of Majorca tells me that as result of the trucker strike, there has begun widespread shortage of food from supermarket shelves.

Here's the gasoline price he gave me:
1.2 Euro/Gallon = $6.8/Liter

This is lower than gas prices in England, France and Germany. Yet Spain is the first to strike over gas tax. What does that mean?

Friday, June 13, 2008

State taxes on Gas

Seattle Times reports on gas taxes by states and local government.
Highlights below:
  • State gas taxes average $.28/gallon. 10 cents more than the federal tax $.18/gallon, which McCain proposes to do away with
  • Some states like Washington, levies a fixed dollar amount on gas per gallon; these states faces a revenue shortfall, as people cutting back on gas consumption
  • Some states like California, levies a percentage on gas sales; these states get an unexpected windfall of gas revenue
  • Some states are moving to reduce gas tax: Georgia
  • Other states are moving to hike gas tax: Minnisota (of the collapsed bridge fame), Florida, North Carolina and West Virginia, Kentucky and Maine, Connecticut and Nebraska
The states hiking gas prices are getting the right idea. If they could band together, they would be a force to wreckon with. It's also important that they put the gas tax revenue to income tax rebates and uses that promotes public transportation alternatives and energy conservation, otherwise middle class and low income people will be disproportionally affected.

Betting on Spain

Spanish truckers are striking over high gas prices. I'm trying to find out how much the Spanish gas tax is. I'm willing to bet $100 that the Spanish tax is lower than the non-striking European countries England for example. My thesis is that the lower the gas tax, the more vulnerable the businesses are to the volatility of gasoline.

In fact, to be fair, I'd wager the Spain is in the lower range of major european countries in terms of gas tax: England, Germany, France, Italy, Spain (Maybe others? I don't know which other European economies are major). The $100 wager will go to a charity specified by the winner.
Thank you.

If this is what they do w/ our money...

If this is what they do w/ our oil money...then maybe it's not so bad at all. After artificial islands that mirrors continents of the world (and others), Dubai is building a wind-mill-skycraper that is energy positive. Very cool! It's long time that our own country does crazy-wonderful things like this, and instead we wasted our money on wars and pork.

Sunday, June 8, 2008

Guest Contributors Email Me!

I'm looking for likeminded people to contribute posts to this blog. Your posts could be on any related subject, alternative energy, taxation legislation, energy impact on business etc. Please contact at gmail com. Thank you!

Gas Price at $4 per gallon now

Whether Americans know it or not, gas prices (a majority part of which is oil price) in America is at the mercy of global demand and cartel practices by less-than-friendly foreign powers. Americans can not lower oil price, except by taking control through raising the tax on it and/or reduce their dependencies.

Congress' proposal of a complicated carbon tax is a hidden way of taxing gasoline. But it does not go all the way, and its complication is itself an invitation for corruption. Worse once put into execution, if it does not work, it's hard to roll back. A simple gas tax hike (rolled out over several years), with corresponding public transportation/alternative energy investment and income tax rebate, will do a much better job.

Friday, May 23, 2008

Oil Market Is NOT a Free Market.

After threatening the Saudis with blocking arms deals and getting laughed at, after Bush begged the Saudis and was rebuffed, the House is sueing OPEC for cartel practice.

So, after 30 years, the smartpants in the House finally realized that OPEC is a price fixing cartel. And when are the free-marketers going to figure out that a market where the OPEC calls the shot is NOT a free market?

To get a free market, you got to destroy OPEC first. I can't repeat this enough: OPEC must be destroyed. Whether by sueing OPEC or by banding up with fellow oil consumer nations, I do not care. Consumers have consumer advocates, it's time that oil consumer nations work together to safeguard their own rights.

Sunday, May 18, 2008

"...No one ever really does anything about it"

But everyone's talking about it. Brian Lafave, a guy from Wisconsin decides to not to use gas for 31 days, starting May 11th. Instead of logging 300 miles on his pickup truck, he's going to bike. This switch has already quietly happened for many Americans. Byebye exercise bike, hello real bike.

George Bush went begging Saudi Arabia and was rightly rebuffed, but it will be Americans like LaFave will one day turn the supply/demand table. They will not care if gas price goes up to $10/gallon, or if Saudi Arabia falls off the face of earth, they will be glad that they get to spend their gas money anywhere they liked.

Wednesday, May 14, 2008

An article appeared on Christian Science Monitor today advocating higher gas tax. It cites the example of Sweden's carbon tax and particularly mentioned the proposal by a Democratic law maker John Dingell to increase gas tax.

In this era of farm subsidies for $1M/year farmer families and 2 out of 3 presidential candidates proposing gas tax holiday, there's this one guy who dares to buck the peer pressure and say the obvious. Good luck to him and I mean it!

Saturday, May 10, 2008

Gasoline Price Level vs Volatility

Gas tax hikes may not affect lower and middle class people so much if gas tax revenue is used for tax rebates. But another question is: would raising gasoline tax to $1, $3 or even $7 cause a lot of suffering among businesses?

The answer is no. Here's why: business will always try to pass the gas price hikes to consumers, whether that price hike is due to OPEC's manipulation, speculator's bidding frenzy or government taxation. What business really care about is not the level of gas price, but the volatility of gas price.

If a business has an Oracle that tells him, that gas price will stay at $10 +/- 10% in the next year, he will devise a strategy based on this number, decide how much product to manufacture, how much inventory to carry, how many delivery trucks to deploy, how many people to hire, and ultimately, the price he's going to charge. He has certainty at least about one thing, gas price, and it's valuable.

If on the other hand, a business has no such Oracle, the price of gas can double or half in a year. Then he'd have to guess: if he guess too low, he ends up charging too little, losing money if gas prices skyrockets; if he guess too high, he may charge too much and then lose customers to competitors who may have guessed better or may have just lucked out. Look at GM and Ford with huge inventories of SUV and other gas guzzlers sitting unmoved in the lot. Gas prices moved on , so Americans passed them by.

So when untaxed gasoline prices in America moved from $1.5 to $3.7, the heavily taxed gasline prices in Europe only moved from $6 to $8/gallon. In absolute terms, European businesses are paying more. But in relative terms, their businesses are better positioned strategically and can better absorb this hike.

Friday, May 9, 2008

Income Tax or Gas Tax? Your choice!

We are paying $3.7/gallon currently. CNN cited a survey that 8-9 out of 10 Americans now expecting to pay $5/gallon at the pump in future.

So let's say they are right, they do pay $5/gallon, but instead they start paying it now, with 30% of $5 going towards gas tax. So how much are we talking about?

Americans consume 140B gallons gas a year. So gas tax revenue comes at $200B. This is enough for an income tax rebate for every American of $600. Or it can be used as public transportation credits and investment, energy conservation credits and green energy credit.

Now if Americans are willing to pay the European rate of $7-8 starting today. Gas tax revenue becomes $400B. That's enough for income tax rebate of $1200. And if Americans are willing to pay $10/gallons, gas tax revenue becomes $800B, almost enough to give an income tax holiday for lower/middle class Americans for a whole year.

Interestingly, there are already talks of $10/gallon. People increasingly expect it, the only difference is you will be paying the $10 all to OPEC and refiners, and still have to pay Uncle Sam. You do the math.

Sign our petition if you would like to see our gas tax hiked

Thursday, May 1, 2008

A Real Stretch

Following from CNN article " Food Inflation Hits Families Hard":

A new bill would cut the 51-cent-a-gallon ethanol subsidy to 45 cents, according to news reports. Farmers who make up to $2.5 million are eligible for subsidies, but the bill would drop eligibility to $1 million or less.

Tom Buis, president of the National Farmer's Union and a former corn farmer from Indiana, defended farmers before the committee.

"Everybody seems to be wanting to blame the farmer for everything bad happening in America and around the world," said Buis. "Some people think that profit should be a dirty word only for American farmers."

- YaoYao: Profit is not a dirty word. But profit on the back of a massive taxpayer subsidy by people earning more than $1Million a year, is dirty.

Corn farmers have been blamed for everything from the rising price of beer in the United States to pasta riots in Italy, Buis said. But, he added, half of all corn is used to cattle feed and much of it is used for soda syrup.

"To make the equation that corn is taking food out of people's mouths is a real stretch," Buis said.

- YaoYao: Right, so the cattle aren't destined for people's mouths either. The price of both meat and grain are shooting up because corn is planted instead of other grains, and corn ends up as ethanol. The real stretch is this man's believability

Alternative Universe Of Europe

CNN today has an article about International Gas Tax

Relevant quotes here:
"Out of 155 countries surveyed, U.S. gas prices were the 45th cheapest...

As of late March, U.S. gas prices averaged $3.45 a gallon. That compares to over $8 a gallon across much of Europe, $12.03 in Aruba and $18.42 in Sierra Leone."

"But those cheap gas prices - which Americans have gotten used to - mean they feel price spikes like the ones we're experiencing now more acutely than citizens from other nations which have had historically more expensive fuel.

Cheap gas prices have also lulled Americans into a cycle of buying bigger cars and bigger houses further away from their work - leaving them more exposed to rising prices, some experts say."

"Revenues from Europe's high gas taxes are used to fund a variety of things. One thing they have built is better public transportation"
"Europe's stronger social safety net, including cheaper health care and higher education, is paid for partly through gas taxes"

"Oil use in the United Kingdom has basically stayed flat from 1980 to now, while in France it's dropped 17%, according to figures from the Energy Information Administration.

In the U.S., meanwhile, oil use is up 21% over the same period, although the country has added more people and seen its economy grow slightly faster."

Wednesday, April 30, 2008

The Original Clean Energy Bill Voting Record 1/2007

Following is from WashingtonPost Votes DataBase:

"Vote 40: H R 6: This bill would repeal tax cuts to oil companies and mandate that they pay a fee to remove oil from the Gulf of Mexico. It would also fund renewable energy programs. The act would repeal a tax break that oil and gas firms received in 2004. That break effectively lowered their corporate tax rates. It would also bar oil companies from bidding on new federal leases unless they pay a fee or renegotiate improperly drafted leases from the late ‘90s. Those leases did not require royalty payments on Gulf of Mexico oil production. Oil firms would pay a “conservation fee” for oil taken from the gulf.

Additionally, the bill would set aside an estimated $13 billion to $15 billion in revenues over a five-year period for tax breaks relating to renewable energy sources, according to The Washington Post.

The bill was designed to reduce the United States’ dependency on foreign oil by investing in alternative energy sources. However, critics say it actually would decrease domestic oil production so the country would rely more heavily on imported oil.

The House passed the bill on Jan. 18, 2007, with a vote of 264-163. All House Democrats except one favored the bill. They were joined by 36 Republicans. The Senate must debate the bill.

The Washington Post reported that the Bush Administration opposed repealing the tax break for oil companies when other manufacturing industries benefited from the 2004 reductions. It also frowned on forcing companies to renegotiate their Gulf of Mexico leases"

Here's WashingtonPost breakup of votes by party:


Not Voting







Votes are mostly by party lines. Here's the list of the congressmen who voted "No" on this bill.

John Barrow, Dan Boren, Nicholas Lampson, Jim Marshall

Todd Akin, Rodney Alexander, Michele Bachmann, Spencer Bachus, Richard Baker, J. Gresham Barrett, Joe Barton, Judith Biggert, Brian Bilbray, Gus Bilirakis, Rob Bishop, Marsha Blackburn, Roy Blunt, John Boehner, Jo Bonner, Mary Bono, John Boozman, Charles Boustany, Kevin Brady, Henry Brown, Michael Burgess, Dave Camp, John Campbell, Chris Cannon, Eric Cantor, John Carter, Steve Chabot, Howard Coble, Tom Cole, Michael Conaway, Ander Crenshaw, Barbara Cubin, John Culberson, Jo Ann Davis, Geoff Davis, David Davis, Tom Davis, Nathan Deal, Mario Diaz-Balart, Lincoln Diaz-Balart, John Doolittle, Thelma Drake, David Dreier, John 'Jimmy' Duncan, Philip English, Mary Fallin, Tom Feeney, Jeff Flake, Randy Forbes, Vito Fossella, Virginia Foxx, Trent Franks, Rodney Frelinghuysen, Elton Gallegly, Scott Garrett, Paul Gillmor, Phil Gingrey, Louie Gohmert, Virgil Goode, Bob Goodlatte, Kay Granger, Sam Graves, Ralph Hall, J. Dennis Hastert, Doc Hastings, Dean Heller, Jeb Hensarling, Wally Herger, David Hobson, Peter Hoekstra, Kenny Hulshof, Duncan Hunter, Darrell Issa, Bobby Jindal, Jim Jordan, Ric Keller, Peter King, Steve King, Jack Kingston, John Kline, Steven LaTourette, Doug Lamborn, Tom Latham, Ron Lewis, Jerry Lewis, John Linder, Daniel Lungren, Connie Mack, Donald Manzullo, Kenny Marchant, Kevin McCarthy, Michael McCaul, Thad McCotter, Jim McCrery, Buck McKeon, John Mica, Gary Miller, Jeff Miller, Jerry Moran, Tim Murphy, Marilyn Musgrave, Sue Myrick, Randy Neugebauer, Devin Nunes, Ron Paul, Stevan Pearce, Mike Pence, John Peterson, Chip Pickering, Joe Pitts, Ted Poe, Jon Porter, Tom Price, Deborah Pryce, Adam Putnam, George Radanovich, Ralph Regula, Dennis Rehberg, Rick Renzi, Thomas Reynolds, Cathy McMorris Rodgers, Mike Rogers, Hal Rogers, Dana Rohrabacher, Peter Roskam, Edward Royce, Paul Ryan, Bill Sali, Jean Schmidt, Jim Sensenbrenner, Pete Sessions, John Shadegg, John Shimkus, Bill Shuster, Michael Simpson, Lamar Smith, Adrian Smith, Mark Souder, Cliff Stearns, John Sullivan, Tom Tancredo, Lee Terry, Mac Thornberry, Todd Tiahrt, Pat Tiberi, Michael Turner, Fred Upton, Timothy Walberg, Greg Walden, Zachary Wamp, Dave Weldon, Jerry Weller, Lynn Westmoreland, Ed Whitfield, Roger Wicker, Joe Wilson, Heather Wilson, Don Young,Bill Young

Obama earns my respect

While hillary jumps on McCain bandwagon, Obama has earned my respect by coming out against the gas tax cut. Hillary claims that gas tax cut can be financed with oil company's windfall tax. That would do essentially the same thing as a gas tax hike (as my proposal, with possibly a tax rebate to consumers) except 2 key points:

1. Americans essentially get a gas tax rebate under her proposal vs Americans get a gas tax hike but a general tax rebate (or specific energy conservation tax rebate) under my proposal. Demand for gas will be stimulated under her proposal vs suppressed under mine.
2. Refiners are free to hike prices any how to make up for the windfall tax. While OPEC is not affected and can hike prices more because of increased demand for gas.

Now if Obama comes out to actually want to hike gas tax or start OPIC organization, he will get my vote too.

Monday, April 28, 2008

Tax My Gas, Please!

I'd support either of the 2 democratic candidate, I'd even support a republican, for almost any one is a big improvement over our current Liar-In-Chief. That is, until McCain, the candidate who I thought is the candidate closest to my free-market ideals, starts spouting "Gas-tax Holiday" proposal.

Let me try to get his logic correctly. We Americans are addicted to oil (as the Liar-In-Chief pointed out, not lying for once), so Senator McCain will kindly give us a Gas-tax-free summer so that we can become more addicted, until of course the OPEC or the refiners decide to take that 18cents government put up for grabs and put it into their own pockets instead. After all, it's clear that the public could afford that same 18 cents before and the demand for gasoline is inelastic in the short term.

But why stop with oil? Why don't we give smokers a cigarette-tax holiday or drunks a liquor-tax holiday? Heck, how about Senator McCain give drug addicts a legal-drug holiday at the same time? Aren't these Senator McCain's constituency too?

Ok, I got it. Gasoline is essential to our daily commute, to the American economy. It's the sworn duty of every politician especially every self-respecting candidates to attempt silly antics in the name of making this American addiction more affordable to his constituent addicts. One day McCain proposes Gas Tax Holiday, the next day more democratic congressmen try to talk America's dearest allies into cutting oil price by threatening they will block American Arms export deals. I'm sure the middle-eastern drug-cartel king, Oops, Saudis are losing sleep about it.

If Americans really want gas prices to come down, there's one way to make it happen for sure.
That one way is not complicated, it will not add to national debt (not that the congress really cares about it, but the taxpayers will care, one day). But it requires sacrifice across board, painful adjustments. Americans were ready to sacrifice after 9/11, but their LIC told them to go shop (bigger cars, bigger houses, bigger energy bills), and then go to Iraq. Now Americans do not want to sacrifice any more, they still have to pay.

What is that one way? Well, instead of lowering gas-tax, raising it; double it, triple it, better ten-times it, make it $1.80 instead of $.18; put a 30% sales tax on gas, the revenue from gas goes to train, public transportation, energy conservation investment, alternative energy investment, R&D on hybrids, electric and hydrogen cars, even given back to consumers ( or manufacturers) as energy conservation (R&D) tax credits. Better yet, the world's biggest oil importing Nations, USA, EU, China, India, Japan join in this effort, forming the new cartel OPIC (Organization of Petroleum Importer Countries). Gas prices will be higher immediately, but within 1 year, gas prices will come down and come down permanently.

You say, 1 year is surely not long enough to see results from our investments. You are right, but 1 year is long enough to change habits of a nation, and send a message to our OPEC friends (as our LIC never tires of saying). This message reads like this: OPEC is no longer the only cartel in town. It can cut production manipulate prices all it wants, but the golden goose will just die faster (accelerated with the help of us the OPIC), for once oil demand fall, it will fall permanently. And when the demand falls, the price follows.

Will this work? if any of the candidates has the guts to put this to test, he/she has my vote.