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Pickens Plan; Getting Us Off Foreign Oil

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Re: Pickens Plan; Getting Us Off Foreign Oil

Postby Matthias » Mon Sep 22, 2008 11:47 am

RugbyD wrote:
Matthias wrote:
RugbyD wrote:the free market works best when it is distorted the least. raising taxes is distortive, especially when it is done in punitive, behavior-influencing or social engineering fashion.

If this is a theoretical way of saying that raising taxes on gas is bad, I don't think it could be more incorrect.

Proper economic models take account of externalities so that harmful behavior isn't priced too low. It's indisputable that harvesting and using fossil fuels has a negative effect on the environment and by extension the social good. Not levying a tax, or even levying too low of a tax, on this distorts the free market and results in a level of consumption that is greater than would be socially optimal.

The proper way to price this tax would be precisely by social engineering. How much harm is each unit of this good doing? How much lower than that optimum price is it now? The difference should be a tax.

Econ 101, my man.

The negative externalities are neither measurable nor material (debatable on #2, i know) in a non-traceable aggregate sense, so there is no way to determine proper pricing even if there was one. To the extent that environmental harm is specifically traceable and measurable in a micro sense, like runoff into a water supply, private property litigation can rectify financial comp, which would then be passed on to users via higher prices.

I'm ok with gas taxes as a means of funding roads as a kind of user fee though. Taxes to influence behavior are never justifiable from a (my) philosophical standpoint.

If you don't think that carbon emissions are harmful to the environment, then we can just agree to disagree.

But don't dress your environmental beliefs in incorrect Econ theory. Because taxes to properly price negative externalities, especially in cases where the transaction costs to detect, measure, and prove the harm is very high, is absolutely a societal maximizing action. And taxes to reflect the true cost of a good are behavior influencing, which is the whole point. The models don't work any other way.
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Re: Pickens Plan; Getting Us Off Foreign Oil

Postby RugbyD » Mon Sep 22, 2008 1:48 pm

Matthias wrote:If you don't think that carbon emissions are harmful to the environment, then we can just agree to disagree.

I'm not convinced that they aren't, but if they are, I'm certainly not convinced that the costs are anything beyond negligible.

But don't dress your environmental beliefs in incorrect Econ theory. Because taxes to properly price negative externalities, especially in cases where the transaction costs to detect, measure, and prove the harm is very high, is absolutely a societal maximizing action. And taxes to reflect the true cost of a good are behavior influencing, which is the whole point. The models don't work any other way.

A model without valid inputs is no model at all. Garbage in = garbage out. I understand the theory, but I disagree with the application here. Taxes without basis (invalid model) are at best no less price distortive than imposing no taxes for lack of a valid model. In the case of the best model being an invalid one, the default option should fall on the side of no taxes.
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Re: Pickens Plan; Getting Us Off Foreign Oil

Postby RugbyD » Mon Sep 22, 2008 1:51 pm

LAT editorial from Friday on Prop 10:

http://www.latimes.com/news/opinion/la- ... 9483.story

Reject Proposition 10
Billed as an environmental measure, Prop. 10's real goal is to enrich sponsor T. Boone Pickens.
September 19, 2008

Billionaire Texas oilman T. Boone Pickens, listed by Forbes as the 131st richest American, really, really wants your money. So much so that his natural-gas fueling company has shelled out $3.2 million to further the reprehensible scam known as Proposition 10.

This measure asks taxpayers to fund $5 billion in bonds -- at a time when the state is in desperate financial straits and may be approaching a dangerous level of indebtedness -- for a scheme disguised as an effort to benefit the environment. Yet its true aim is to subsidize vehicles powered by natural gas, which would build a customer base for its sponsor: Clean Energy Fuels Corp., a company Pickens co-founded that operates natural gas filling stations throughout the U.S. and Canada.

The measure generously doles out taxpayer money for a variety of green-sounding initiatives: $200 million for alternative energy demonstration projects at eight California cities, none of which are clamoring to perform them; $1.5 billion in grants and incentives for research and development of clean energy technologies and alternative fuel vehicles, a field that venture capitalists are already shoveling cash into; $250 million for renewable energy generation equipment. But the lion's share of the bond money, $2.875 billion worth, goes for rebates on purchases of alternative fuel vehicles.

The rebates are structured so that only a small amount of money goes to truly environmentally beneficial vehicles, while most would subsidize those that run on natural gas. For example, buyers of hybrid cars like the Toyota Prius that get combined highway-city fuel economy of 45 miles per gallon or better would be eligible for a $2,000 rebate, handed out on a first-come, first-served basis to 55,000 buyers. But if you buy a "clean alternative fuel vehicle," you get a $10,000 rebate. These are defined under Proposition 10 as cars, vans or light trucks powered by natural gas, electricity or hydrogen. Last we checked, there were no hydrogen or electric vehicles on the new-car market.

But wait, it gets worse...
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Re: Pickens Plan; Getting Us Off Foreign Oil

Postby theclefe » Thu Oct 09, 2008 4:59 am

I read an article a few years ago about Tidal and Wave energy, and was very intrigued by the idea. Renewable and abundant. While I don't know how it compares to Nuclear, oil and other current energy options, it seems far more reliable than wind or solar. I've only heard in mentioned a few times since, specifically by Obama when talking about his energy policy, but little elsewhere. According to Wikipedia:

Theoretical potential of renewable ocean energy

The theoretical global ocean energy resource is estimated[2] to be on the order of:
* 2.000 TWh/year for osmotic energy
* 10.000 TWh/year for ocean thermal energy (OTEC)
* 800 TWh/year for tidal current energy
* 8.000 – 80.000 TWh/year for wave energy

This theoretical potential is several times greater than the actual global electricity demand, and equivalent to 4000 – 18000 MToE MToE (million tons of oil equivalent).


Again, I'm not well versed on the subject and I'm sure the investment costs are high, but I thought I'd bring it up for you guys to discuss.
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