Oil and gasoline are at record prices. The reason is mostly because the world is approaching peak oil (which stands for the PEAK in world OIL production). It is the date where oil can't be sucked out of the ground any faster. Don't let the media fool you; finding big oil reserves doesn't really change the approach of peak oil, because peak oil is about production rates. Imagine a huge milkshake but a small straw.
So now that we know oil and gas prices will likely continue to rise in the long term, what do we do? The most effect strategy is a carbon tax (for example, a gasoline tax). Europe has had very high gasoline taxes, and as a consequence, they have less urban sprawl and drive smaller, more efficient cars. North America doesn't have very high taxes, and has lots of urban sprawl. 1-in-4 vehicles in Alberta are trucks. We are in for some pain.
Hillary Clinton suggested a gas tax holiday as a way to reduce the cost of gasoline. Here's a quick example to show why this is short-sighted, at best. Imagine gas costs $1.20/L and there is a $0.20/L gas tax. That leaves $1.00/L going to Big Oil. If we eliminate the gas tax, gas is now $1.00/L. Basic economic theory says if price goes down, demand goes up, and when demand goes up, price goes up. The price will rise, but maybe not back to $1.20/L, maybe just $1.10/L. So we do save some money, but Big Oil is now making $1.10/L and government revenue has gone down (which they will have to make up by increasing taxes).
If we introduce a gas tax, it will do three things:
1. Increase government revenue (which will allow them to reduce taxes on other things, or maybe use it to make transit better).
2. Reduce the insane profits Big Oil makes.
3. Encourage behaviours that we're going to have to adopt anyway. The reality is, in 50 years, the combustion engine will be dead and gone. Oil will be $500/barrel and most of the world will run on electricity created by solar, wind, nuclear, coal, etc.
Wednesday, June 4, 2008
I had a great time in Vegas with moms, pops, sis, her bf, and wife. Won some money (and promptly spent it) and generally had random fun. Saw "Ka", and it is pure Manga theatre. Fantastic.
So I'm walking near Bill's casino, and this black guy starts walking next to me and says, "You are elusive". I'm confused, so I look at him. "Are you coming here tonight?" he asks me. (Note: he talks slow and melodical like Jesse Jackson.) "No," I say. He stops and gives me a confused hurt look. "Do ya hate humans?" The wife and I burst out laughing and run away. Ah, Vegas, where weird people go to die.
Posted by Chris at 8:38 AM