So I was thinking as to why the government is not putting more of an emphasis on on energy effeciency and or alternative fuels. Particularly local sources, solar, etc. Then it struck me, as usual follow the money.
So I did a few quick googles, so take the following for what it’s worth.
From what I came up with the following is what is annually paid in SOME energy taxes, I think I got most of the biggies.
58.4 billion in gasoline tax, federal and state
44.3 B Corporate federal taxes
10 B Federal drilling royalties
50 B federal and state taxes paid on electricity.
So around 162.7 Billion on electricity and gasoline alone. I’m guessing the numbers are probably larger as these are 2004 or so numbers and mostly are quick googles covering major companies.
With a total outlay of around 2.2 Trillion in 2004 162 Billion is around 7-8% of the income. I’m guessing it might be closer to 10% when all is said and done. Granted these are really REALLY rough numbers, but still it would surprise me to see the percentage any lower than 5%.
To make things even a tad scarier simply pulling Social Security and medicare out of the mix, ~764Billion, you have a national budget of around 1.529 Trillion making this 162 billion closer to 11% or more. Seems to me the government is more addicted to oil than the general public.
The electricity taxes will still be paid. Just because the source of power is wind or solar (assuming it’s not a solar panel on your roof), won’t mean that the taxes go down. You’re still buying electricity from someone. MidAmerican taxes me whether the power comes from their coal plant or their wind farm. Do you think we’re anywhere close to seeing the day when a substantial percentage of buildings are “off the grid”? I don’t. So the electric taxes probably don’t materially change.
Corporate taxes also are unlikely to change. Somebody is still making money on product. It might not always be BP…it could be the solar panel company or the wind turbine company or the fuel cell company…but somebody’s making money and paying taxes on those profits.
The gas tax is an interesting one. If we all drive electric cars, where does the money come from to build/fix roads? More toll roads? Some type of car tax per mile driven each year or something?
I don’t think you’ll see the total $162.7B go away. Some portion of it? Maybe.
Do you think we’re anywhere close to seeing the day when a substantial percentage of buildings are “off the grid”? I don’t. So the electric taxes probably don’t materially change.
Off grid, maybe not. But replace ones heating and cooling with Geothermal and you knock the crap out of what one is paying in electric bills. Off grid is unlikely in the near future for most, but as new homes are built with more effeciency and more reliance on local sources, some solar, some geo, some wind etc I can see the grid power requirements dropping significantly.
Corporate taxes also are unlikely to change. Somebody is still making money on product.
See above. Let’s say we could drop overall electrical use from grid 30%. That’s a double wammy to the government as they would see an ~30% drop in taxes on the outgoing power and an additional ~30% in corporate profits as well. In short higher effeciency and any “local” production does not bode well for the treasuries.
I don’t think you’ll see the total $162.7B go away. Some portion of it? Maybe.
I don’t think you’ll see it go away either, nor do I necessatily think it’s a good idea. However, the shift from single massive corps to a mixture of higher effeciency, local sources and a bunch of smaller diversified corps will make collecting the taxes much more of a challenge.
I know this is “La-La Land” but let say in the next 25 years cars and solar/wind power are improved to the point that it makes installing a local power source and driving electric a no brainer. You buy a car, throw some “new and improved” solar panels on the roof and everything you need to power your car comes from a few sunny days. At this point the current system of tax collection fails. The tax will then have to be shifted from a very hidden gas and power tax to something much more visible. For a federal level probably an income tax. I really don’t think there’s a politician out there that wants to do that and thus they have no reason to push for such things as effeciency and alternative power.
My first response is to remind you that the government does not act like a business. They may like taxes, but I have doubts that the Congress critters deny support for EE and alt. fuels for that reason. Of course, like many things, I’m probably wrong about that.
In fact, the monsters are already trying to get around the disastrous impacts of fuel efficient vehicles by floating taxes based on miles driven, not fuel bought. The irony here being that a 50 mpg motorcycle would pay the same per mile rate as an 80,000 pound semi even though the semi creates 10,000 times more stress on the road than the motorcycle. Further, roads constructed for large trucks cost about twice as much as if they were made just for cars and trucks.
Of course, I didn’t hear them whining as our fleet fuel economy has gone down due to the rise of the SUV. Not being enough for them, lets increase tax rates on fuel efficient vehicles. Brilliant!
I am amazed by the hate for diesel in southern Ca. , they said emissions were too high before low sulfur fuel . Some VW diesels were not available for sale in Kalifornia ,you could bring them in used from Arizona .
As a kid ( 60s -70s ) I remember diesel being .40-.50 cents cheaper than any other fuel , now its the same as the 92 oct. fuel. Its the easiest fuel to refine at any facility ?
I just got back from Europe where I had a 3700 lb all -wheel drive diesel station wagon rental car , with 4 people and baggage over 1300 miles at 85 to 105 mph most of the time , it got 26.3 mpg . 65% of cars diesel on the highway , the southern part of Germany is all corn fields for bio fuel . Fuel was 6.02 a gallon in US bucks .
You rarely see a hybrid car there , I don’t think you can punch one up over 100 mph to pass a line of trucks in the right lane.
They seem to have taken diesel as a here and now solution ,
So - are you assuming that your hydrogen is going to be tax free? Don’t bet on it.
The government will tax any alternative energy source so switching from oil to something else will be tax neutral. Actually, a fairly large portion of the budget is allocated to protecting our interests in the middle east so the government has a vested interest in coming up with an alternative both from a fiscal as well as strategic basis. As soon as someone comes up with something that can compete in the market against oil and/or coal, we’ll switch in a heartbeat. And, the government will quickly figure out how to tax it.
The reason we don’t have an good alternative to petroleum and coal is that those two are both great fuels. They are cheap to produce, easy to transport, they can be stored (literally) forever and, they are actually quite effecient. With modern pollution controls, they are not even all that dirty and, many of the alteratives actually just move the pollution source upstream from the consumer, not eliminate it (eg electric cars or hydrogen production). So far, no alternative has been perfected to the point where it can compete in the market head to head with oil and coal. Where tax policy can play a role is in tipping the playing field a bit. However, the problem with that is once we “pick” an alternative to favor, we’ve effectively shut down any meaningful research into others. There are too many decent roads to go down yet and it is a bit early to pick one alternative. And, whose to say are far sighted elected leaders can actually make the right choice?
Seems to me the government is more addicted to oil than the general public.
Matt,
Agreed. It’s a very, very complicated mess that we have potentially got ourselves into. The entire planet both the consuming public and the governments are additcted to oil and gas.
You mentioned alternatives. I am reading an interesting book right now called “Heat” by George Monbiot. He explodes most of the current thinking on alternative energy sources.
Photo Voltaic cells will “pay” for themselves in terms of money back for the user, in about 6 -7 years. However the full pay-back when you factor in the energy and carbon expended into making those cells, is paid back in 20 years. Guess what the life-span of a photo voltaic array is - about 20 years.
Bio Fuels: Great idea getting a lot of hype and press. Problem is the most likley and cheapest source for bio fuels will most certainly come from palm oil from places like Brazil and Indonesia where they are cutting down and burning massive swaths of rain forest to plant palm oil plantations. The net carbon and energy cost of biofuels procurred in this manner is greater than using existing fossil fuels!
Let’s say we could drop overall electrical use from grid 30%.
Sure, we can say anything we want to. But that’s not realistic at all. Any forecast you look at, no matter how optimistic, shows the future demand for electricity will increase. Even if we drastically increase the efficiency of every new house that’s built, we still have millions of existing homes (not to mention schools, factories, and office buildings) that are still inefficient.
Demand isn’t going down 30% until California falls into the ocean.
In response to another post: There was an article on money.com regarding diesel vehicles in CA within the past week.
…and I will again chime in, at risk of sounding like a broken record-
Until the release of ancient, formerly sequestered carbon is taxed to mitigate the negative effects of said carbon released to the atmosphere, nothing in any of the above posts that reference economics as a factor in the “competitive” selection of fuel sources is valid. It’s a construct under the old “economic model” that assumes no cost to degraded habitat or clean air, or potable water.
To sum up:
Ancient carbon=bad (rapid, massive release by human activity overwhelms an equilibrium arrived at over millions of years; adaptive capacity lags habitat loss)
Renewable carbon=good (maintains equilibrium due to closed carbon cycle at the planet’s surface; business as usual, at least on a geologic scale of time)
Fossil fuels looked good when we were ignorant of it’s cumulative effects both local and now global. We now realize we were mistaken and so, it’s time to change…
NOW
Or, we can just keep paying it forward. What say you, STers under the age of 50?
I’m not entirely sold on any one version of alternate and certainly some of them just aren’t feesible in the current market. However some most certainly are AND take away all taxes from the governement. Take for instance a solar water heat panel and radiant water heating. In one fell swoop you have eliminated two of the largest power consumers of a houshold, hot water and heating. Granted I’m no expert in the field but so I’m not sure exactly how feesible 100% reliance on solar heating is for water and heating though.
So - are you assuming that your hydrogen is going to be tax free? Don’t bet on it.
Not sure I mentioned hydrogen did I? But since you did how do you propose they tax it if I’m producing it in my backyard? Other than to simply make it illegal, like moonshine, I see no way the government can tax “local” power production. A more realistic scenario is one I stated below and that is one already in use which is solar water heating. There’s little doubt that this method is a net gain, local source, and untaxable. Unless they overtax the producers of the panels, which will be very hard to do, they will lose their tax dollar from power sales.
I’m not arguing that we are a long way from a one for one fossil fuel replacement, we most certainly are. However that is FAR from being the only way to lower fossil fuel use. Not only should we be investing in alternative energy sources, but we should be implementing more effeciency in all walks of life from cars to new home builds. Appliances have been doing this for years, not sure why housesd aren’t sold on a similar basis or at least sold with an effeciency rating.
