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Pound Fuelish

In all the hysteria about the price of oil and gas (and I'm one of those hysterical ones -- Big Oil just sucked $75.00 out of my wallet via Mongo's gas tank), there's an abject lesson in the power of economics -- and the powerlessness of politicians.

A few years ago, I seem to recall there was a big push in Congress to get Americans to conserve gas and wean us off of foreign oil. The most prominent plans, to me at least, were the ones being pushed by the Democrats. The main points, as I recall, were:

1) Increase the federal tax on gasoline to induce people to use less.

B) Give tax subsidies to companies that worked on alternative energy sources.

III) Increase the CAFE (Corporate Average Fuel Economy) standards on auto makers.

Not a hell of a lot came of it all. The CAFE standards were raised, to reach 35 miles per gallon by 2020, but that was about it.

Well, pretty much everything Congress wanted to do has come to pass, but without their consent -- and I don't see anyone happy about it.

The price of gas has shot through the roof, but most of the increase is not going into the government's coffers. Instead, it's going to the oil producers (mainly) and refiners ("Big Oil"), giving them record profits. This has Congress in a tizzy, and they're demanding that Big Oil not only cut the price of gas, but they are also threatening to repeal the very tax breaks they championed -- the ones that encourage Big Oil to explore forms of alternate energy.

And the American people are saying "screw 2020, we want better gas mileage NOW" and automakers who've grown fat and lazy selling multi-ton SUVs that get seven gallons to the mile are killing themselves unloading those monstrosities and are trying to push out the door vehicles that get better gas mileage.

I've always said that CAFE was a dumb idea. It requires the auto makers to sell a certain mix of vehicles, and they really don't have that much control over what they sell. They can control what they make, but they can't make people buy vehicles that get good mileage. If a buyer has other things they value besides fuel economy, then they'll buy a gas guzzler in exchange for the safety, versatility, or performance that they value more -- and if Ford won't sell it to them, then they'll buy it somewhere else.

And this just helps me prove my point. Now that gas prices are north of $4.00 a gallon (I paid $4.07 a gallon yesterday), fuel economy has suddenly become very, very important to drivers. And that is pushing the CAFE number higher all on its own, without the government telling carmakers to do it. And those makers that don't listen to what their customers want will be punished far more thoroughly -- and quickly -- than Congress threatens.

This is how it works. This is how it's SUPPOSED to work.

And there are those people who will look at the general trends and see how working against that trend will be to their benefit.

For example, me.

Mongo, my loyal SUV, is an elderly beast. He's an SUV from the early 90's. He's got high miles, numerous mechanical problems (a minor -- but expensive -- exhaust leak by the engine, his four-wheel-drive crapped out last summer, the AC hasn't worked in years, and a fwe others), and I have doubts that he'll pass another inspection. So I'm kicking around ideas (and, occasionally, salting away a few pennies here and there) for his replacement.

And I'm thinking of another SUV.

My reasoning is simple. Yes, SUVs get bad mileage. But I don't drive that much. With a little careful planning, I can probably cut my driving to about 50 or 60 miles a week on average. Even if I get 15 miles a gallon, that means one Mongo-tankful will last me almost a month.

Winters in New Hampshire can be rough. There were several times last winter when I was very, very glad that Mongo had four-wheel-drive (while he did). I don't expect this winter to be considerably better.

Finally, as I said above, SUVs are growing more and more unpopular. That means when I start looking for a used one, it'll be largely a buyer's market. I'll be able to get "more vehicle" for my very limited funds.

In my mind, I've already got my next vehicle picked out -- a late-model Oldsmobile Bravada. It's almost a leper of a vehicle -- an SUV, a discontinued model, from a now-dead brand.

On the flip side, they were pretty reliable vehicles, from what I've read. Further, they were largely re-badged Chevrolet Trailblazers, so parts and service shouldn't be that big an issue.

Their mileage, of course, will be bad. I'd be lucky to see 18 MPG in one. But that's all right with me. I'm confident I can more than make up the cost of gas in what I'd pay for a smaller, more fuel-efficient car.

That math works for me. And I came to that conclusion without Congress telling me what I should do, what choices I can and can not make, what I can and can not buy.

Funny how that works out, isn't it?


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Comments (24)

You really have no intentio... (Below threshold)
Eric:

You really have no intention of finding a woman and settling down, do you? An Oldsmobile is chick repellent.

I have mid-sized SUV that I... (Below threshold)
Sara:

I have mid-sized SUV that I bought new as a year end 2004 model in early Feb. 2005. It is an all wheel drive Endeavor and on a cross-country trip between Calif. and Pennsylvania in the wintertime, I averaged 30 mpg. When I got back to those icy and hilly roads in and around Pittsburgh, I was very happy to be driving the car I was driving as I watched cars around me slippin' and slidin' all over the place. The other thing I like about it is that I can drive it as an automatic or switch over to clutchless manual shift. A very handy feature on mountain roads or inclement weather.

I bought it new and fully expect to drive it for the next ten years or more, since now that I'm living on a fixed retirement income, I don't see myself able to buy a new car any time soon, no matter how much gas goes up, it still can't equal what a monthly car payment would cost me.

I'm confident I can more... (Below threshold)
wolfwalker:

I'm confident I can more than make up the cost of gas in what I'd pay for a smaller, more fuel-efficient car.

I'd run the numbers first if I were you. All the numbers: car price, gas price, your habitual driving, gas consumption, fuel economy. If you haven't already, keep track of your mileage for a couple of months and see what it really is. It's probably more than you think it is. Consider that unless you get it really dirt cheap, the same money you pay for that Bravada could also buy you a somewhat-higher-mileage used Subaru, which is supposed to be as near as you can get to an SUV on a car chassis ... with a car's fuel efficiency. If you don't need 4WD or heavy-going ability, then there are probably many other car models you could also get.

My friend has a 2-year-old ... (Below threshold)
Bob:

My friend has a 2-year-old Honda Pilot, which he estimates is worth $4K less than it was before gas prices skyrocketed. Yet Honda has a huge campaign for their new Pilot, with full-page cover ads in two magazines we received in the past couple days - National Geographic and People. Go figure?! The funny thing is that the Democrats in Congress think they can lower prices by (1) passing a windfall profits tax, (2) continuing the ban on off-shore and ANWAR drilling, and (3) cutting oil companies' tax breaks. Fat chance any of those actions will do anything but RAISE the price. We'd probably be getting 1 million bbls of oil a day from ANWAR if Bubba hadn't vetoed the 1995 repeal of the drilling ban. I'm not a big McCain fan, but at least he's come around on costal shelf drilling. As usual, the Democrats just want to demagogue the issue - e.g., grilling oil execs on capital hill to make headlines - but propose nothing to effectively address the issue.

I traded a 10 year old Expl... (Below threshold)
bobdog:

I traded a 10 year old Explorer in for a 1 year old used Explorer, and it was one of the best deals on a car I ever made. 2005 Explorer new - $35,000. 2000 Explorer used, with a pathetic trade in, $15,000 cash. $20,000 buys me a ton of overpriced gas. The deals on barely used SUV's must be terrific right about now.

I see your logic, Jay, especially if you don't drive much. It's all good. Screw those effeminate little Prius sedans. Next thing you know, you'll stop leaving up toilet seats at your house and voting Democrat.

Typo - that's a 2005 Explor... (Below threshold)
bobdog:

Typo - that's a 2005 Explorer I bought, not a 2000.

"Increase the federal ta... (Below threshold)
Herman:

"Increase the federal tax on gasoline to induce people to use less." -- Mr. Tea

Uh, Jay, could there possibly have been additional reasons for an increase in the federal gasoline tax besides conservation? What do you think the government would have done with the increased tax revenue? Would it have began funding mass transit to a greater extent? Or the funding of scientific research on alternative means of transportation? Bridge and road repair? Providing states with increased funding for smog inspection compliance? (As a bicyclist, I can tell you that a lot of motorists are getting away with shit). Maybe use some of the new tax revenue to decrease the federal deficit (we used to have a surplus, but then Bush took over)?

"they [members of Congress] are also threatening to repeal the very tax breaks they championed -- the ones that encourage Big Oil to explore forms of alternate energy." -- Mr. Tea

Companies involved in transportation should be doing this anyway, with or without tax breaks.

"They [automakers] can control what they make, but they can't make people buy vehicles that get good mileage." -- Mr. Tea

Yes, they can, if the only cars manufactured are those that get great mileage, because the government won't allow any other type to be manufactured, even going so far as to refuse low-mileage imports from entering the country. Used cars can't last forever.

"This is how it works. This is how it's SUPPOSED to work." --Mr. Tea

No, Mr. Tea, this isn't how it's supposed to work, the only thing getting people to buy high-mileage cars is that the price of gasoline has become high FOR NOW. CONSERVATIVES: HAVE YOU EVER HEARD OF SOMETHING CALLED GLOBAL WARMING? It's been going on for some time now, threatening our future. Automakers aren't going to give a damn about it, all they care about is their profits. Many motorists (particularly those SUVers with the Bush-Cheney bumperstickers) aren't going to give a damn either; the main hope rests with the Democrats in Congress.

Speaking of extremely short-sighted motorists with Bush-Cheney bumperstickers:
"And I'm thinking of another SUV." -- Mr. Tea

No surprise there.

Oh, wow, it's a cornucopia ... (Below threshold)

Oh, wow, it's a cornucopia of dumbness. Must be Herman.

"Yes, they can, if the only cars manufactured are those that get great mileage, because the government won't allow any other type to be manufactured, even going so far as to refuse low-mileage imports from entering the country. Used cars can't last forever."

"...the government won't allow any other type to be manufactured..."

How refreshingly honest. Absolute government control. Never mind what people want to buy, what companies want to make, the government knows better and will simply NOT ALLOW any deviance from what the government knows best.

"Uh, Jay, could there possibly have been additional reasons for an increase in the federal gasoline tax besides conservation? What do you think the government would have done with the increased tax revenue?"

Herman, I fully expect that the government would do with the money what it does every time it gets more money: spend it on whatever they want. I don't recall a single time when a "targeted tax" actually stayed dedicated to its goal for very long. It all gets lumped into "general revenues" and then disappears down the bottomless maw that is government spending.

Unlike you, Herman, I don't have a great deal of faith in the government's ability to keep promises and spend money wisely, in the manner in which it pledged to when it instituted the tax hike. I also don't recall any "temporary" taxes ever going away without a massive fight.

And unlike you, Herman, I have considerable examples that I can cite to back it up. For example, the "temporary" telephone tax passed to finance the Spanish-American War was finally repealed just a few years ago.

J.

Excellent post Jay.<p... (Below threshold)

Excellent post Jay.

A couple of comments.

And that is pushing the CAFE number higher all on its own, without the government telling carmakers to do it.

Exactly.We have been here before and I recommend that everyone read David Halberstam's excellent book The Reckoning. Domestic auto makers in the early seventies refused to respond to higher gas prices (there was no CAFÉ then, nor was there enormous pressure from Congress) with more efficient models and thus began the process of surrendering more than 35% of the domestic auto marketshare to the Japanese manufacturers.

Second, a comment about the oil companies. Domestic oil companies are owned by individuals, not some rich and powerful entity that manipulates prices and screws the little guy. This cannot be said often enough. Take for example Exxon/Mobil, which is owned by institutions that represent small investors. See link below:

http://moneycentral.msn.com/ownership?Symbol=XOM

Any attempt by Congress to raise taxes on oil companies, restrict drilling and otherwise interfere in their operations is nothing less than an attempt to take money from small investors and savers.


Herman - "What ... (Below threshold)

Herman -

"What do you think the government would have done with the increased tax revenue?"

Throw it at something completely unrelated, but of far more politically expedient importance. Besides - looking at things like the Luxury Tax (which was actually revenue-negative) I have little hope that a political system which sees only ONE possible acceptable course of action (IE tax the s**t out anyone making money) no matter the situation situation will actually have any positive effect on the matter.

Might not like it - but it may be time for government to stand back and let the private sector come up with solutions. Do an X-Prize contest, say with a $1 bil award, for an easy, economical way to retrofit our current transportation inventory (from Mongos down to ancient Ford Fiestas) so you have triple the mileage with no emissions impact.

Put out a second $1 bil for a turnkey feasible electrical automobile power plant. If you can yank out a standard car engine and put in a total package, including batteries (or ultracapacitor) and a high-torque, moderate RPM motor in the same space - you get the Billion.

But those two things would be awarding capitalistic innovation - therefore we ain't gonna see it from the folks inside the Beltway.

Instead, we'll just tax the folks providing oil. And the folks making cars. And the drivers. I'm sure THAT will make everything just fine!

Jay Tea,You made a... (Below threshold)
BPG:

Jay Tea,

You made a great point that has not been coming up elsewhere. To wit: "If a buyer has other things they value besides fuel economy, then they'll buy a gas guzzler in exchange for the safety, versatility, or performance that they value more -- and if Ford won't sell it to them, then they'll buy it somewhere else."

I myself drive an 02 Jeep Grand Cherokee.

1) Having 2 little ones, with all the associated carseats, strollers, etc means I need the space.
2) my employment is such that I have to be able to reach my worksite regardless of weather or obstacles year-round.
3) I own the car outright and always intended to drive it into the ground.
4) I have been well aware for about a decade now that I pay probably 2x as much in fuel as I did with a car, and I deliberately eat the cost because of items #1, #2, and #3. If it becomes untenable, then I will probably have to try to get a Subaru or something smaller and make it work.

And note to Herman: What the government will do with all that extra gas tax revenue is spend it on something totally unrelated to the problem at hand. Nancy Pelosi's private jet fuel, or a study by the University of Louisiana on the number of times two hummingbirds can hump in a minute, or to hold hearings on steroids in baseball.

"No, Mr. Tea, this isn't ho... (Below threshold)
Mike40-11:

"No, Mr. Tea, this isn't how it's supposed to work, the only thing getting people to buy high-mileage cars is that the price of gasoline has become high"

You see, this is illustrates exactly the Dem position. Free markets work. They are well aware of this. They just don't like it because THEY are not the ones making the decisions and controlling things.

I've been saying this for months. Less than a year of market forces in action are accomplishing what decades of government regulation and idiocy has not. Now, tell me again which is more efficient?

That means when I start ... (Below threshold)

That means when I start looking for a used one, it'll be largely a buyer's market. I'll be able to get "more vehicle" for my very limited funds.

Funny you should do this article today. We just bought a 2008 Honda Pilot EX-L yesterday (yup, yesterday!) and scored a very nice deal because, like you said, this is a buyer's market for SUVs. We were able to negotiate--OK, more like demand (muhahahaha!)--down to just about the inventory price. We were aiming for the true market value of the car that we plucked off of edmunds.com. We didn't quite get there, but we certainly got more car for our money.

We had a lot of factors that went into buying an SUV, but the mileage of the Pilot (16/22/avg. 19; 20.5-gal tank) really wasn't a factor in our buying decision. My truck (aka: Putty), totaled in a t-bone accident about 5 weeks ago (not my fault,), got about 19.5MPG on a 15-gal. tank. The difference between the two is really negligible since I maybe filled it once a week thanks to my short, reverse-commute commute.

Two little suggestions in case it hasn't crossed your mind: Look at Certified Preowned SUVs at dealerships; they're dying to move those off their lots. Second, considering where you live you might want to look at a Toyota 4Runner. Toyotas are just built so darn well that even if you found like a '98 4Runner w/100K+ miles on it, you can almost bank on the engine making it to 200K without too much trouble. That, and they're made for those bad northeast winters.

Anyway, happy hunting and replacing Mongo!

Get the 4WD TrailBlazer. B... (Below threshold)
JohnS:

Get the 4WD TrailBlazer. Bravadas come with full time all wheel drive which just sucks the gas down. Trust me on that one...

Why not look around for a 1... (Below threshold)
hyperbolist:

Why not look around for a 10 year old Volvo with relatively low mileage? Better fuel economy, AWD for winter, safer than an SUV...

One minor adjustment for yo... (Below threshold)
RicardoVerde:

One minor adjustment for your post in regards to refineries: most independent and even major refiners that depend on foreign oil have been losing or at best breaking even on refined products over the last nine months. The cost to purchase crude oil amounts to over $3 per gallon. Taxes average around 40-70 cents a gallon so that leaves about 40 cents a gallon for the refiners, terminals, wholesale distributors , and retailers. They made good profits a year or two ago, but not now.

RicardoThat is a goo... (Below threshold)

Ricardo
That is a good point. Refineries historically have made more money in market price declines than increases because they can sell inventory at currently high prices and replace it with lower cost product as the market declines.
In volatile markets experiencing rapid price increases they cannot pass the cost downstream as quickly.

Unlike you, Herman, I do... (Below threshold)
Brian:

Unlike you, Herman, I don't have a great deal of faith in the government's ability to keep promises

Uh, Jay, yes you do. Even "if you have your doubts, then -- in most cases -- you should be able to rely on their assurances". Sez you. Or the alternate reality you.

Brian, it's very simple, so... (Below threshold)

Brian, it's very simple, so I'm not surprised you missed it. In the FISA case, there is an unspoken part to the government's word -- "it's not illegal, and we are saying that as the people who would be in charge of prosecuting you if it were, so you can count on us not prosecuting you." Then it would qualify as entrapment, and it has a long history of being upheld as wrong.

In the cases of "dedicated taxes," there is such a long history of the government ignoring such pledges -- and those who have tried to sue the government into keeping their word have been laughed out of court.

J.

"it's not illegal, and w... (Below threshold)
Brian:

"it's not illegal, and we are saying that as the people who would be in charge of prosecuting you if it were, so you can count on us not prosecuting you."

So the government has carte blanche to permit people to do illegal things just by promising to not prosecute them? Are you really saying this?

Why doesn't Bush tell Exxon it's OK to begin drilling in ANWR immediately? Why don't state attorneys general announce that it's OK to bar entry to abortion clinics? Why doesn't the DoD just appropriate the EPA's budget and use it to fund the war?

The executive branch, constitutionally bound to "take Care that the Laws be faithfully executed", should be allowed to abandon that responsibility when it so suits them, without review of a court? Hell, why not do away with courts altogether? If the government approves of an accused's actions, they can just decline to prosecute!

And that's just saying it's OK to do those things, much less actually requesting they be done, as with the telecoms.

Jay, you are so desperate to support Bush on this, you've become a parody of your "libertarian" self. Nixon would be proud.

"it's not illegal... (Below threshold)
Tim:

"it's not illegal, and we are saying that as the people who would be in charge of prosecuting you if it were, so you can count on us not prosecuting you."

Brian, try reading that again. The government isn't saying it's OK to to do illegal things. It's saying that those things are actually legal. Therefore it's OK to do them, and we won't come back later and say, "you know what, maybe that was illegal after all. Sorry."

No, I didn't misread. There... (Below threshold)
Brian:

No, I didn't misread. There was no requirement in Jay's argument that the deeds actually be legal. All he requires is the government's assurances that they are, with no oversight to ensure that's true. And, in fact, he argues explicitly that even "if it were [illegal]", that's OK, because the government can give you a pass just by promising not to prosecute.

Dang, Brian, you're right. ... (Below threshold)

Dang, Brian, you're right. I wish I'd included some sort of caveat, some disclaimer, some clarifying details. Something like... I dunno... this:

"This is not to say that it creates any sort of legal obligation to do so, or that such requests should completely bypass the individual or corporation's own conscience and reason. But that should be reserved -- like illegal orders in the military -- for the most egregious examples. For example, if an FBI agent comes up to you and says "we need you to kill Bob down the street," then one should not bypass one's own judgment and just kill Bob, saying that "if this guy from the FBI told me to do it, it must be OK.""

Oh, yeah, I did -- in my very next posting, the one you cited above.

The legality of the taps was -- at worst -- murky. Especially since it had never been tested in a court before. It was nowhere near as blindingly obvious as you'd like to make it out to be. Some telecoms saw it as their civic duty to help the government. (Or, if you're of a cynical bent, saw it as their best interest to not refuse and irritate the government.) Others didn't see it quite that way. I don't think we should punish people or organizations for actions committed on the behest of the government, when told -- and with good reason to believe those assurances -- that what they are doing is perfectly legal.

If that turns out to be untrue, then the ones who should suffer consequences are those in government who made the decision, who benefited from the misdeeds, not those who acted with no criminal or malicious intent.

You wanna disagree with me? I'm so used to it, I almost use that as a barometer -- if you're criticizing me, then I feel more secure about my own position.

J.

I wish I'd included some... (Below threshold)
Brian:

I wish I'd included some sort of caveat, some disclaimer, some clarifying details. Something like... I dunno... this:

Followed by something that once again is unconnected to what I said. I asked if the government should be allowed to give people a free pass to do illegal things by declining to prosecute, and you respond by repeating your post about how those people aren't obligated to do those things (although when in doubt should defer to the government anyway). Your weekend of anger seems to really have interfered with your ability to focus.

The legality of the taps was -- at worst -- murky.

Gee, if only we had a branch of government whose primary purpose was to adjudicate on the murkiness of laws. Wouldn't that be nice?

Especially since it had never been tested in a court before.

And now it never will.

It was nowhere near as blindingly obvious as you'd like to make it out to be.

And just where did I make it out to be so blindingly obvious? I think you're projecting. You're the one who advocates a definitive outcome of shielding the telcos. I'm advocating to let the courts decide. Isn't that what the courts are for, to decide things that aren't blindingly obvious? Or are you now going to claim that it is obvious?

(Or, if you're of a cynical bent, saw it as their best interest to not refuse and irritate the government.)

Oh, wonderful. Now you're going to compound your argument that it's OK for the government to ask you to do something illegal with the promise that they won't prosecute you, and you'll throw on top of that that it's an acceptable excuse to comply because you didn't want to irritate them.

By the way, this whole line of your argument is a red herring anyway, since the telcos were never going to be prosecuted by the government in the first place. The primary effect of that bill is to shield them from civil suits.

I almost use that as a barometer -- if you're criticizing me, then I feel more secure about my own position.

Actually, your real barometer should be the positions of the majority of the American people, Libertarians, and (in this case) the majority of Republicans. If your position is the opposite of theirs, then you're right where I'd expect you to be.




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