Thursday, April 21, 2011

Let's Get Ready to Grumble

So, finally, people are starting to notice that gasoline prices are increasing ... at least, the news media has started to pick up on and report on the increasing prices (although the price has been steadily and slowly increasing for the past two years - and no one has, apparently, been paying attention), and so the collective consciousness is just starting to comment on it.

I love the off-the-cuff suggestions on how to fix the problem, though.

LESS GOVERNMENT REGULATION.

LOWER THE GAS TAX.

INCREASE US OIL PRODUCTION.

So, let's take a look at those solutions from a global perspective.

The lowest gasoline prices in the world are in Venezuela and Saudi Arabia. In Venezuela they pay less than 15 cents per gallon for gasoline, but low gasoline prices are seen as a national RIGHT, and they're gasoline prices are heavily subsidized by their government. By some reports, Venezuela, has the world's largest oil reserves, and they are the eleventh largest producer of oil in the world. In Saudi Arabia, they're paying around 60 cents per gallon for gasoline (up a few cents from their 2008 prices of under 50 cents per gallon). Saudi Arabia is the world’s second top producer of oil. The price of gasoline in Saudi Arabia is set by the royal family. So, essentially, the two countries with the lowest gasoline prices in the WORLD have the most government intervention with regard to the price they pay.

Lowering the gas tax might lower our overall cost at the pump, but the reality is that only 48 cents of our per gallon price here in the US is for a gasoline tax, as opposed to $4.50 for gasoline taxes in France. Even if we eliminated the entire tax, we’d still be paying over $3 per gallon for gasoline. As such, the supposed high gasoline tax some think we’re paying here ... not so much, and eliminating that tax isn’t going to lower our prices enough to make any difference. Most of Europe (and Canada) pay a higher tax for their gasoline, which accounts for their much higher prices at the pump, but those taxes go to pay for things like state sponsored health care. On average, Europeans are healthier than Americans, not because they have State-sponsored health care, but mostly because of their lifestyles, which are not car-dependent and sedentary like ours. Cars aren't seen as an entitlement in Europe the way they are here, but good health is.

As for increasing production, the US is already the world's third largest producer. We have an estimated eight years left of oil reserves, compared to Russia, which is the world's largest oil producer and has an estimated seventeen years of oil reserves left. I guess I just wonder how we're going to increase production. And, yes, I do know that some believe we have these massive reserves in places like ANWR and off the Atlantic coast, and there's even the 200 BILLION BARREL oil reserve that has been discovered in North Dakota.

But all of those reserves combined might give us another 400 billion barrels total. We are burning 7 billion barrels of oil per year. At that rate, it would take us only about sixty years to burn through all of the oil reserves we have left to extract.

Canada produces one-third less than the amount of oil produced by the US. They are the sixth largest producer of oil worldwide and are, in fact, the top supplier of oil to the US. They have an estimated 180 years left of oil reserves. Given all of that, one would think that Canada's gasoline prices would be pretty reasonable. Think again. The price per gallon for gasoline in Canada is $5.66. Granted, they're paying some crazy tax, and eliminating the tax would reduce their per gallon rate, but only to about what we're paying here in the US right now. So, a net world exporter is paying per gallon what we here in the US (a net world importer) is paying. A better example of how increasing production doesn’t necessarily translate into lower costs is Russia. They are the world's top producer of oil, and yet, they still pay almost $3 per gallon for gasoline.

In short, the countries with most government involvement have lower prices, subtracting out the taxes would reduce the overall cost per gallon, but not enough to really make a difference, and with very few exceptions (Venezuela and Saudi Arabia), the top oil producing countries in the world pay prices that are very close to what we’re paying at the pumps here in the US.

So, what’s the answer? If we look to the world, the countries that produce the most oil and have the lowest gasoline prices also have a smaller demand. In Venezuela only 10% of the population owns cars. In Saudi Arabia about one-third of the population owns cars. In Mexico, where prices aren’t so rigidly controlled by their government, only one-fifth of the population drives, and their prices are a dollar less per gallon than we pay. Here in the US, half the population has a car.

We all know the rules of supply and demand, and if we use less, but maintain production, there will be more. If we really want to see a decrease in the cost of gasoline, we have to use less as a country, and import less. And if we were to decrease our overall usage to closer to what we are currently producing, perhaps we’d have some for the future.

Personally, I think a better option would be to change our tax system to a pay-to-play system, and tax the heck out of gasoline. Our culture, our leaders, and most of our citizens will emphatically declare that we need cars, but I don't believe that's true at all. We like cars, cars are convenient and comfortable (especially when it's cold or raining), and they allow us to have a sense of freedom that's actually a fallacy (many of us are tied to jobs we hate in communities where we have no connection so that we can afford to pay for those cars). If gasoline were taxed at the rate that the French do, we could use that tax money to fund a build-out of a mass transit system and/or the development of better sidewalks/bike paths. Or perhaps we just need to be a less mobile society.

Gasoline prices will continue to rise, and nothing our government can do will fix it. The control lies with us, as individuals, and we can decide to continue guzzling like there will be no after-party clean-up … or we can change our lives, live more locally and use less, become more self-sufficient and live more sustainably.

Native American wisdom cautions that when it comes to resource use, we need to plan for the next seven generations. In the last seven generations (starting around the time of the Civil War and ending with mine), we have squandered the amazing resource that is fossil fuels. Maybe there’s enough left for the next seven generations, if we conserve starting now. If we don’t there won’t be enough for the generations that are here, and by the time my granddaughter meets her grandchildren in sixty years, it will be gone. We’ve been having this huge orgy of gluttony, consuming as much as we can without any regard for the mess we’ll need to clean up in the morning. Well, it’s morning. Time to wake up and start sweeping.

6 comments:

  1. Nice dose of reality! I wish everyone could read this.

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  2. Well get a load of this! in the UK, fuel prices are about $12 a gallon! food is expensive, but the biggest cost is housing, 75 million people living in an area the size of Alabama! There are many more people than that....but are uncounted. We are so packed that we fight for space, food, light, etc. Food is expensive and fuel is really expensive. Sorry to burst your stats, but we are well because of our health care system. We have as many obese people in percentage terms as the UK, but health care is free and no more Brits walk that Americans, in short, we are as f***ed as you all are!!!! The biggest thing that kills Americans and Brits is capitalism!!! The French pay more for food, health care, travel, clothes, furniture, taxes which renders them all effectively poor! No one is rich, unless Parisienne. The biggest thing that keeps mainland Europeans healthy, is, in French terms 'le regime'.....sexism, French, Spanish, Italian (no experience of the rest) women are under social rules to stay slim, to the point of tiny!!! German, Nordic, North European women (UK and US genes) are bigger, big knockers, big bums, tall, strong and we put on weight! Southern Europeans are tiny in comparison to us. I feel like an obese giant on the numerous trips I have had to France, Spain and Italy, they are just little, and eat less and they are s**t poor compared to us, they wash their clothes by hand and walk every where because they have no money. The germans die of the same diseases as us.....as they have our incomes..........what kills us? Capitalism/Wealth! p.s Saudi have so few cars............as women are not allowed to drive/go any where on their own. Sorry to get on the Socialist rant...hey I'm a Brit, what do you expect, but wealth/choice and freedom is killing us. P.S I live 6 hours on a slow ferry from France and went three times a year for 10 years and French women live under constant media and social pressure not to eat! P.S The French pay less tax on fuel and booze than the Brits, but the Brits get constantly drunk and drive everywhere, because they are wealthy, it's about wealth and freedom, so is wealth and freedom bad.........probably, because some people make bad choices,

    Another thing.....France has huge drug and alcohol problems and it causes massive crime, don't think that Europe has the answers, it's not all that good

    p.s still loving your blog xx

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  3. It all boils down to individual choices. Too bad more people don't see it that way, and keep waiting for someone to figure out a way to "save" them....

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  4. Interesting.
    I'm in agreement with you, the fossil fuels were defiantly a squandered gift, I really recommend the film 'the end of suburbia', but I'm guessing you've already seen it. If you'd like to see something a little more positive/inspiring I went to see 'The Power of Community: How Cuba Survived Peak Oil' the other night and the power of people to do small things that make a HOOJ difference really spoke to me

    I'm not really sure where to start with Frugal Queen's rant - as although we, purportedly, both live on the same island I don't recognize the europe she talks about - although I make her right on a few few points

    SBW

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  5. Hey, Suburban - I've seen both of those great films. The latter got me started on this path, and the first inspired my book :).

    And, by the way, I'm always interested in hearing differing views, which is one reason I love the Internet ;).

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  6. I used to find these figures horrifying (well, I still do, really), but I also now see them as a rallying cry or a push to try to get in gear. They're not necessarily the most positive motivator in the world, but they push me to get things done.

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