Obama wants to tax oil companies $10 a barrel to pay for clean transportation | Hacker News Reader

Obama wants to tax oil companies $10 a barrel to pay for clean transportation

qz.com

72 pointsprostoalex146 comments

Oil just dropped in price by more than $70 a barrel, a $10 tax isn't going to cause economic trouble.

It's the perfect time to enact a carbon tax, even if it is limited to oil. This will boost the ROI of new energy technology and open up more private investment dollars.

One way to get bipartisan support may be to put the tax on imported (not domestic) oil.

Isn't the USA basically an net exporter these days?

If congress can't increase the gas tax to support the highways how are they ever going to support something like a tax on oil to support clean transport?

New energy technology will benefit from an increased price of oil. Freeing up private investment dollars is the key. As for the government, considering the deficits I don't imagine such a tax would really free up much budget.

Whether such a law can be passed is an entirely separate question from whether it's a good idea. And it is a good idea.

Yes it is a good idea - a better one would be to stop subsiding fossil fuels. Neither have much chance of getting through congress.

In 2014, the US imported 9 million barrels of petroleum per day, and exported 4 million barrels per day. Net imports accounted for 27% of US petroleum consumption. [1]

While that is from 2014, this table suggests that imports didn't change significantly, up or down, in 2015 through November [2].

[1] http://www.eia.gov/tools/faqs/faq.cfm?id=727&t=6 [2] https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=m...

Probably a net exporter of hydrocarbons only when you include natural gas rather than just petroleum.

http://www.eia.gov/todayinenergy/detail.cfm?id=20692

Here's what we need to do to get support for a carbon tax: don't make it a tax.

Add $x to each unit of carbon and put it in a fund that the federal government has no access to. Then, at the end of each year, empty the fund completely by sending checks to each citizen.

That incentivizes making babies for profit.

Also, that is a tax, as much as Social Security is a tax+redistribution program. It is sort of a reverse paygo, though, committing a spending program for all new tax dollars.

Only if you set it up to do so. Other alternatives are easily conceived.

The previous federal government in Australia introduced something along these lines: a carbon tax designed to be revenue-neutral. Compensation for lower income earners was worked into the income tax system (some also went directly to certain highly-exposed export industries).

Unfortunately thanks to incompetence in how this plan was sold by the previous government and an aggressive campaign against it by the opposition, that government lost the following election and now we have the worst of all worlds: carbon tax repealed (the only country going backwards in this regard AFAIK), compensation retained (the incoming government being too spineless to scrap it, despite themselves declaring a budget emergency) and a new braindead "direct action" policy where we now give tax dollars to polluters to encourage them to tone it down (stupidly inefficient and another hit to the budget).

How much to each citizen?

(1) According to income or need? Then it's just wealth redistribution.

(2) Exactly the same amount for each citizen? The farmer who needs his truck pays a lot, and gets back $x. Stock broker who lives and works in Manhattan and doesn't own a car pays little, but also gets back $x.

(3) Exactly in proportion to how much carbon each person used? This accomplishes nothing except adding a layer of bureaucracy (you pay $n in carbon tax and get back $n-20% after government processing).

1) Same amount to each citizen.

2) The farmer would either pass the cost along to the customer, including the stock broker, or would ideally switch to low carbon alternatives. Over time, lower carbon emitting farmers would be more cost efficient and would gain marketshare.

3) A carbon tax would be largely invisible to most people. It would be collected from oil refineries and power plants, primarily.

For reference the US consumes approximately 7B barrels of oil per year according to https://www.eia.gov/tools/faqs/faq.cfm?id=33&t=6

7B * $10 / 320M population = $218.75 per person.

In case anyone was curious.

Probably we can do something simpler than nostromo's plan. Pair the oil tax with a drop in the bottom tax bracket from 10% to 7%. That's about revenue neutral.

My biggest reservation with oil/gas taxes is that consumption taxes tend to be very regressive. Car ownership is already a tremendous burden for the poor in the US that isn't present in other countries - in all but a handful of US cities a car is pretty much required to hold down a job.

So while I like the idea of raising money for clean energy, I would be more supportive of a policy where the burden isn't disproportionately shouldered by the poor.

When I read about sales taxes and arbitrary taxes on commodities I think just like you have said.

If he wants a tax that doesn't hit consumers he should just raise federal corporate taxes.

In fact, removing subsidies would be a good start.

A tax on consumers is fine if it's used to guide people away from consumption of that product. We do that for Tobacco, for example.

The less oil the world uses, the better.

You don't need cigarettes. You do need energy.

oil !=== energy

Corporate tax is a political sham, a sleight of hand by politicians to make taxes more palatable to voters. There is no such thing as a tax on corporations that's not a tax on people. Corporate income is either paid out as salaries or dividends, or spent on purchasing goods from other firms (so eventually only dividends and salaries). Taxing corporations means reducing salaries and reducing dividends.

The corporate tax also benefits big firms with overseas offices and armies of tax accountants and lawyers, at the expense of small and medium sized businesses that can't afford to play the tax avoidance game.

We should eliminate the corporate tax. Make it revenue neutral with equivalent small bumps in the income tax. But it actually doesn't generate much revenue to begin with, more evidence that it's not worth the trouble.

It's 11% of the federal budget [1]. We'd be talking about a steep rise on payroll and income taxes to replace it.

It would actually be a lot more than 11% if it wasn't for avoidance by multinationals like Apple.

[1] - http://www.cbpp.org/sites/default/files/thumbnails/image/pol...

When you compare it to the income tax, that's not a big percent. The corporate tax is equivalent to an income tax on people, but with the strange property that it distributes the burden between the classes (shareholders vs employees, though there is a lot overlap) through the market instead of by law. Depending on the situation in a particular firm, the burden might be wholly on employees or wholly on shareholders, but probably somewhere in-between. This is all ignoring that some of the burden could be shifted to consumers too, depending on how competitive the market is and what the margins are.

As I said, you would raise the income tax on the middle to high brackets to offset abolishing the corporate tax. You'd be taxing the same people, for the same money, with much less hassle for everyone.

What does the corporate tax accomplish that an equivalently higher income tax does not? It's the same money.

It would of course be far better than that. The low corporate tax rate would attract vast numbers of relocations. Companies like Pfizer would stop fleeing the US; major corporations in other nations would relocate.

It's really sad that our politics is so dysfunctional that we'd rather hold on to this harmful fiction of a tax, just so some politician can play people against each other, than make common sense reforms that wouldn't even change the total tax level.

Cutting the federal budget 11% would throw us all the way back to 2014 levels. I don't know if the system could handle that kind of shock.

Apple is a primary example of his point... If corporate tax isn't eliminated or reduced, will Apple ever put that cash to good use? No! It doesn't want to lose billions, so it'd rather the money sit there then lose it. Removing the tax in that case would stimulate the economy with billions of dollars in new private capital (without devaluing the money already out there [printing money]).

Removing subsidies would be a huge start.

Would that include the subsidies for solar rooftop installations, wind energy projects and electric vehicles?

Problem with that approach is that you quickly get into "subsidies I like" and "subsidies I dislike" territory.

So tax consumption at the pump progressively. Your first 10 galls are taxed normally, then progressively add more tax every whole gallon above that.

Poor people will buy in 10- gallon instances, less poor people won't bother and will just fill it up.

Or tax on displacement at the DMV. Anything from this year on above 1.3 liters gets taxed progressively more so that gas gas-sippers pay relatively little and gas guzzlers pay lots more at the DMV (registration).

[edit] fixed word usage.

Your definition of spendthrift is flipped. spendthrift (n) a person who spends money in an extravagant, irresponsible way.

thanks! fixed.

This is often very had to track. The solution is income tax breaks for the poor. Australia did this with our carbon pricing. The tax free threshold(income below which you're not taxed on) was raised a significantly to compensate the poor without having to track their actual usage.

Displacement taxes are a terrible idea and lead to unintended consequences. Displacement has only a weak correlation with carbon emissions. Which is worse: a 1.3l engine driven 30000km per year or a 5.0l engine driven 3000km per year? And if the manufacturer adds a turbocharger to the 1.3l engine the real-world fuel consumption will rise significantly even though displacement remains unchanged.

But people aren't trading trips. People have to go where they need to go. It's better to have the person travelling 30000 year do it in a less polluting vehicle over the person driving 3000.

-Poor people will buy in 10- gallon instances, less poor people won't bother and will just fill it up.

Wrong. I'd pump 10, shut the pump off, and pump another 10, etc. Why pay the tax if I can break up the full tank into a few transactions.

Most credit cards don't allow consecutive charges at gas stations from the same holder. Not in my experience anyway.

You could pay cash multiple times, but then you'd have to go into the hut a couple of times. Yes you could game it, but people with money won't bother over a couple of bucks.

> Most credit cards don't allow consecutive charges at gas stations from the same holder. Not in my experience anyway.

I have never had this issue. The gas pump stops pumping at $99 and forces a restart. Back when gas was $4/gallon it took 3 restarts to fill up the boat. :/

Interesting, it might have to do with some kind of likelihood of fraud occurring at a particular location score for the service station. So stations in areas where more stolen CC fraud occurs, these stops are in check.

Fortunately, any kind of displacement-based tax on vehicles would have to be a state-run affair (A Federal Department of Motor Vehicles would be far, far too Kafkaesque or perhaps even Lovecraftian). So good luck, California, you seem to like trying out this kind of stuff :-)

Although excise taxes that you already pay at the DMV are probably a decent proxy for engine displacement already. 5.4L V8 pickup truck = $45k sticker price, vs $15k 1.3L shitbox subcompact.

That's a good reason to subsidize public transport and a poor reason to subsidize driving.

It could be that carbon consumption is fairly widespread between rich and poor: in other words, Bill Gates does not consume 100000 times the carbon that Joe Schmoe does, but maybe only 10 times as much, or perhaps even less. This means that to actually make a dent in usage, you have to make the tax hit everyone.

Of course, you could also try and compensate by lowering income taxes, or increasing the EITC or something, so that the tax is offset for the poorest, but still give them an incentive to use less carbon.

That's what this conservative commentator suggests: http://www.nytimes.com/2015/09/06/upshot/the-key-role-of-con...

But... politics. Flagged.

> Bill Gates does not consume 100000 times the carbon that Joe Schmoe does

People lile Gates and Buffett travel in their private plane, they do consume more carbon compared to the average joe.

It's likely, but do you see the point? They earn orders of magnitude more and have a zillion times more in the bank. But in terms of carbon - or food, to pick something else - they may not consume that much more than the average person. Put another way, 10000 Joe Schmoes are going to consume way more carbon or food than 1 Bill Gates. So to actually curb carbon usage, you're going to have to take that into account. One way to make it 'fair' would be to offset those costs in other ways: if you continue to drive as before, it'll be neutral, but if you curb your driving, you'll actually come out ahead financially. That's the theory, at least.

what about carbon foot print of Gates' businesses -building and running costs

There are many ways to set up a revenue neutral carbon tax, but if all the revenue is distributed back to citizens equally, Microsoft pays the tax, but does not get a refund.

Businesses that are large carbon emitters have to raise their prices, and the market cares about CO2 a little bit more.

> It could be that carbon consumption is fairly widespread between rich and poor

It's less clear that oil consumption is equal for the rich and the poor. The rich person can afford a Tesla and have zero gas usage. The poor person is driving a '93 Ford Taurus that barely passes environmental air quality standards, let alone having any sort of fuel economy.

Maybe progressively tax car ownership based on car's age/price?

This is already done through property taxes in many states. Unfortunately much of this money is used for things other than improving transportation.

Weren't people paying the equivalent of $10/barrel more just a few months ago? It seems unlikely that a new crop of people could suddenly afford the multi-thousand dollar, ongoing investment in a vehicle because they'd pay $0.25/gallon less for gas.

Besides, we've hidden the 'true cost' of driving from consumers by refusing the raise the current fuel tax. It doesn't even come close to paying for the roads. We should raise the tax on it for that alone.

Lack of oil/gas taxes encourages wasteful spending elsewhere. When gas is cheap why not buy a house in the suburbs that's a 90-minute commute to work and a gas guzzler vehicle?

http://www.theamericanconservative.com/urbs/the-conservative...

What is point of Obama at this point proposing anything unless it can be implement by executive order. Congress won't pass anything he suggests.

I would guess that Biden wrote this bill and wanted to propose it one last time.

This isn't a tax on oil companies it is a tax on everyone.

Exactly. The oil companies will just pass that tax right along.

For the sake of comparison, do you feel that oil companies pass along the current tax breaks they get?

Oil companies pay extremely high tax rates compared to the small tax breaks they get. And in fact, most of the tax breaks they get are made up of routine corporate deductions that all corporations qualify for and aren't special to the industry:

https://www.aei.org/publication/the-truth-about-all-those-su...

Exxon and Chevron, as two examples, have been paying essentially the highest corporate tax rates on earth for a long time.

Good. As they are supposed to. How do you imagine this is supposed to work, if not making gas more expensive?

The price of the oil drums costs more than the price of oil per drum, although they are reused. A tax on oil will certainly be passed on to the consumer. If the end game is to discourage oil use, not to keep the planet clean, it still will not work. Look at the high price of tobacco even in the face of the risk to health issues. People will continue to use oil in the same quantities unless the price goes up by an order of magnitude. The government wins both ways: higher tax revenue, or they can claim they saved the planet.

You do realize that wholesale oil is not literally packaged in individual drums? "Barrel" is a unit of measure.

Except that smoking rates have dropped to one third of their 1965 levels. If this tax gets those kinds of results, I think the pro alternative energy community would be ecstatic

1) That's half-true. Or 60% or 40% true. Econ 101 says some % comes out of profits, some % comes out as higher prices.

2) Externalities. Also Econ 101. We've got a basket of reasons, from environmentalism to national security, to limit our dependence on oil. Kicking in taxes while the prices are low can prevent markets from forgetting all the things they started to build in during $120/barrel oil, continuing to limit our future dependence, with the bonus that we now have a relief valve we can ease up on if things get really tough with oil prices.

It's actually the most market-based way to attack the myriad problems the oil economy creates for us.

In a perfectly competitive market corporate profits are zero and it all comes out of the consumer.

Now oil is not perfectly competitive and you are right. But it is rather close. So you can still expect the majority to come from the consumer.

If oil is close to perfectly competitive, how does OPEC control prices by adjusting supply?

> In a perfectly competitive market corporate profits are zero and it all comes out of the consumer.

No, the determinant of tax incidence is price elasticity, which is orthogonal to competitiveness of a market. [1]

Oil is interesting because it is somewhat price inelastic both for demand and supply. People's ability to stop driving is limited in the medium term, but also many suppliers of oil aren't capable of completely exiting the oil business.

In practice, I suspect the incidence is in fact roughly 50/50 if applied in a huge country like the United States (the incidence would be much on consumers in smaller markets).

[1] https://en.wikipedia.org/wiki/Tax_incidence

No, you're missing the part where corporate profits are zero in a perfectly competitive market.

https://en.wikipedia.org/wiki/Perfect_competition#Profit

If corporations always operate at revenues=expenditures, then the entire tax must fall on the buyer in the long run. The price inelasticities you're talking about are only in the short run.

> you're missing the part where corporate profits are zero in a perfectly competitive market.

I'm well aware of what defines a perfectly competitive market.

> If corporations always operate at revenues=expenditure

That's not what zero economic profit means. Taxes can also come out of the owner's opportunity costs if the have low elasticity of supply.

> I'm well aware of what defines a perfectly competitive market.

Then you should have addressed that point in your first reply to randyrand. It was the entire point of his comment.

> That's not what zero economic profit means.

If you're just talking about the difference between economic profit and accounting profit, I'm well aware of the difference. My point stands.

> Taxes can also come out of the owner's opportunity costs if the have low elasticity of supply.

Not in the long, as I qualified. In the long run, the only thing owners of capital bring to the table is pure capital itself, and they will simply redistribute capital to the next most profitable venture, which in a large economy is essentially identical.

Of course, the whole reason for our dependence on oil is that there's a much larger basket of externalities that count as benefits. Those are harmed by higher oil prices.

But it sounds better as a tax on those evil corporations.

Yep, economy is finally getting back on track because the gas price is becoming reasonable again, and now they want to do this. The price of gas affects everything. The more expensive it is to ship things, the more expensive everything is. Simple economics.

It's a tax based on the elasticity of the demand and supply. The demand for oil is hardly inelastic (people definitely buy less gas if it's more expensive).

https://en.wikipedia.org/wiki/Tax_incidence

In the economics world, tax incidence is a matter of serious study. There has been a decent amount of work on who actually pays oil taxes.

Hal Varian (who later became Chief Economist at Google) wrote a good piece[1] summarizing the basics in 2000 for the New York Times.

The summary: "A gasoline tax in a small country falls mostly on the residents of that country. The world price of oil is essentially independent of the taxing policies of most countries, since most countries consume only a small fraction of the amount of oil sold.

"But the United States consumes a lot of oil -- almost a quarter of the world's production. That means it has considerable market power: its tax policies have a major impact on the world price of oil, and economic analysis suggests that in the long run, a significant part of a gasoline tax increase would end up being paid by the producers of oil, not the consumers."

[1] http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2...

Every single tax is ultimately a tax on workers and consumers.

This'll go over like a lead ballon - now oil companies are not only feeling pressure from clean energy; they're being asked to actually pay for it?

Are you decrying a lack of sympathy for oil companies in a measure that has the ultimate goal of killing them? Or just pointing out that oil companies will be opposed to anything that threatens them, be it natural market pressure or regulators?

It's a "fuck you" to the oil industry, but the oil industry isn't exactly filled with Obama supporters anyway, and besides, he's never seeking election again.

It'd be pretty hard to get it through Congress, but it could potentially work, given that both the tech & financial industries have made some pretty big investments in renewable energy and their power is rising while the oil industry's power is declining.

It would in fact be impossible to get through the Republican Congress presently. Not an exaggeration, it will not happen under any scenario so long as the Senate and House are both Republican held. This is nothing but a political stunt on the part of Obama, he gets to say that the effort was made and it appeals to the base.

Gas should be more expensive in the USA. Sounds like a good idea.

The price of gas is linked to the price of everything through shipping and transport. The lower the price of gas, the stronger your buying power. There's no upside to a high price of gasoline.

Except for decreased usage of gasoline and thus a decrease in the externalities of using gasoline.

A decrease in gasoline usage is by definition a recession. It is people being unable to be productive.

No one stopped buying gas at $4 a gallon but they did stop spending money elsewhere to make up for it.

That's not true! I specifically remember reading, back when gas broke $4 a gallon, that we had finally discovered the price at which drivers change their habits. Below $4, rising prices just made them complain. But above that price, we started seeing statistically-significant changes in demand.

I think you're right there is a tipping point. I do feel that there is a flex point where drivers change recreational driving but they will still need to get to work and the grocery store. They won't go on fun trips though.

Vehicle miles driven went down during that time period. Additionally, there was an increase in the sale of more efficient vehicles, so people indeed did buy less gas.

You know what was awesome about $4 gasoline? $3.75 heating oil.

It will definitely strongly affect the type of car I buy next when I'm done running the current one into the ground.

To clarify or perhaps nitpick, if the price of gas included the cost of its damage to the environment (and all other current externalities), then there would be no externalities, and decreasing the usage of gasoline wouldn't be a desirable economic goal.

Right, but then, that's exactly the point of taxing it, which the parent commenter was recoiling from, because it raised prices. :)

There's some interesting evidence of gasoline being a giffen good for some segments of the market: budget constrained will spend less on vehicle maintenance when the price of gas goes up, thus lowering their vehicle's efficiency, and buying more gasoline.

You're mixing up price and value to an extent. The money's not being set on fire, it's going to other useful things. The question is whether those things are worth more or less than discount gasoline.

It's largely being set on fire through bureaucracy in practice. I would get much much more out of the money myself than I do from the government.

Let's say this costs me a thousand dollars a year out of pocket. I could get a new computer and add a lot of value to the economy. Or the government could buy a square foot of pavement.

it's your taxes that build the systems that allow you to buy that laptop

It's also affordable energy building and sustaining those systems.

That's why it should be revenue-neutral. Every dollar the government brings in via higher fuel taxes, it should offset by reducing taxes somewhere else.

The average fuel consumer breaks even. People with low carbon footprints come out ahead. People with abnormally high carbon footprints lose. Seems perfect to me.

Of course there is: the more people can't afford to meet their own needs, the more people will be dependent on government programs.

Oh, wait, you said "upside"...

"No upside to a high price of gasoline." This is not true.

In no particular order, and off the top of my head, the rapid disinflation in the price of oil is currently:

1. Wreaking havoc on the budgets of most oil exporting nations. 2. Destroying purchasing power through currency devaluation in Russia, Nigeria, across the Middle East and Latin America. 3. Crushing the economies of parts of Canada, Alaska, and the Dakotas. 4. Directly causing job losses in Texas. 5. Negatively impacting the Houston office markets. 6. Destroying earnings of publicly traded oil companies. 7. Reducing stock market valuations of said companies. 8. Reducing portfolio values. 9. Impacting earnings of banks that have extended credit to oil firms.

Yeah, but my portable building factory is shipping more often. People have less of a delivery fee to pay and it makes them more likely to purchase.

Additionally, my materials costs have been slowly dropping as their shipping costs are dropping.

Win - win!

No it shouldn't. For the same reason you gave.

"Hey, Mom, are we going to visit grandma and grandpa for Christmas this year?" "Sorry, sweetie, gas is too expensive. We can't go this year."

"Honey, are we going to finally take a vacation this year?" "Sorry, sweetheart, I just don't think we can afford it. It would cost too much to make the trip."

"Hey, Mom, can I sign up for the traveling baseball team this summer?" "I'm sorry, dear, we can't afford all that extra driving every week."

"Dad, can I apply for that job on the other side of town?" "Sorry, son, I can't afford to drive you back and forth to work every day on top of all the other driving I have to do."

"Son, can you drive me to my chemo treatments in Big City this month?" "I'm sorry, Dad, but I can't afford to drive that extra 500 miles a week."

Those are just the kinds of issues that come up as a direct result. The increased cost of everything in the economy means that everything from eating out, to going to the movies, to getting the braces that your 14-year-old needs becomes more difficult for the average American.

The question is, what kind of person wants other people to remain in poverty, and why?

"Hey, Mom, are we going to visit grandma and grandpa for Christmas this year?" "Oh honey don't you remember? They passed away last year. Lung cancer."

According to a study, automobile emission causes 53,000 premature deaths every year in the US.

The question is, what kind of person wants other people to die early, and why?

Source: http://news.mit.edu/2013/study-air-pollution-causes-200000-e...

> Emissions from road transportation are the most significant contributor, causing 53,000 premature deaths, followed closely by power generation, with 52,000.

I'm sorry, but it's not possible to know how many fewer people would die each year in the entire country if we did not drive gas-powered cars. It's not possible to tie a case of lung cancer to the fact that cars exist. "If only we drove electric cars charged by solar plants, grandpa would have lived 7 more years!" No, it doesn't work that way. Even if you strapped masks to everyone's face that measured the fumes they breathed from birth to death, you couldn't make a statement like, "If we didn't use fossil fuels, Bob Smith would have lived 5 years longer."

By the way, how about the greatly increased life expectancy brought on by the amenities of modern life made possible by the use of fossil fuels? You know, abundant varieties of food in-and-out-of season, medicines, transportation, HVAC, communciations... the list goes on and on.

If you want to go back to the frontier lifestyle, be my guest. People didn't live very long back then, and life was very hard.

Can we just institute a revenue-neutral carbon tax ($15-35/ton) and let the market figure out the solutions?

Try running for office on that platform.

holy shit. that's a 30% tax at current prices.

We have recently seen 110/barrel so consumers could easily deal with it. But given the elasticity of demand for something like oil, this will negatively affect the oil glut recovery by slowing demand.

Speaking as an Alaskan where our entire economy is driven by oil, our government is running a HUGE multi billion dollar defecit due to revenue shortfalls stemming from oil prices. We would like to see increased demand for oil to burn through the supply glut quickly to get prices back to at least $70 per barrel. Regardless of Obama's plan it's going to take years and years to get back there if ever.

The real issue is our state government can't afford to operate without levying any new taxes on the general population. The cost of living here is already astronomically high, plus we've been in a recession since 2012, and a tax like this is not going to help our situation at all.

give it a few years and alaska may look like a ghost town. The fact that I am a programmer who works on federal stuff, my position is not really in jeopardy but the majority of my friends are engineers who depend on oil and gas. Worst case scenario I can take a remote job and probably get a raise for doing so. Maybe then I'll be able to afford a house up here haha.

Bottom line is the USA now produces as much oil as Saudi Arabia (albeit with more than double the operating costs). We are much larger than they are and far more diversified, so as a nation we are able to withstand this sort of thing but if you examine places like Texas, Alaska, North Dakota, Oklahoma etc this oil price situation is going to financially destroy hundreds of thousands of people and dramatically affect millions of us. Gas prices also are somewhat less elastic when sliding left on the supply demand graph. so even though prices are 1/4 what they were, we're only seeing gas prices at 1/2 the rate they were. This means there is not as much of a benefit to consumers as you would think from these prices.

Worth it? who knows. No matter what alaska is in a world of shit.

Yah Alaska really needs to figure out an economy that's not based on selling things they find in the ground.

They need to learn from California and New York and other places where people have figures out how to make money off of ideas.

You need smart people for that, though.

Eh, you kill the resource extraction industries, and all you're going to have left will be the homesteaders and some tourist trade. It'll look like the coast of Maine, at best.

People aren't going to freeze to death up there if there isn't free land or easy money.

It'll be like Maine except we will have triple the cost of living. Anchorage will look like Detroit and the bush will look like rural mongolia 100 years ago.

Maybe we'll even have to run the iditarod for real again to try and get vaccines/food/supplies to nome.

I grew up in the bush. Without support from the government, it would be amazing if they did that well. They don't have the culture and population to live off the land completely again. It would be the apocalypse out there.

Funny you should say that. I agree with some aspects of your complaint. But I place the blame on trendy tech companies and wonder why we don't see more investment/activity from tech firms here. Oil has been what makes money in AK for the last 35 years, We're not going to change overnight. There are attractive things for tech startups here. In Anchorage I have a gigabit home internet connection. I'm Sr. Programmer, I've been in the industry for 10 years, have a CS degree and I only make $70k per year. In other words we have a supply glut for programmers in Anchorage. I could make more in Cali, I'd have to leave my california illegal guns with my family first. I could also forget about hunting and fishing with my dad every weekend. I bet the the best backcountry snowboarding in california is a far cry from what I have an hour from my house. The real issue is I derive value from what I can do in my time off here that I can't do anywhere else in the world. There is talent up here that can be tapped for pennies on the dollar when compared to NY or SF. I'm sure there is even more talent who would like to move here because it's friggen awesome[1].

I wonder why we don't see more startup activity here, where you can actually operate a business and hire good people for less than six figures. Meanwhile the employees can rent apartments or even buy houses and have a mortgate with a 10 min bike commute to the office for around 1k per month.

Sure seems silly seeing all those people pay out the ass for an apartment to commute two hours to an office the startup can barely afford with no parking. You would think a bunch of software engineers would be able to solve a simple network optimization problem by pushing resources to the edge of the graph but it seems like an office in a trendy location and insane taxes and rent is more important than a sustainable operating budget with work life balance. But of course us Alaskan's are the dumb ones.

[1] http://imgur.com/a/llGid

Guns, hunting, fishing, offroad. Yep, you fulfill my stereotype of Alaska ;) Nice photos, they remind me northern Sweden.

Nothing wrong with those stereotypes :D I have a feeling i'd be right at home in the wilderness of Scandinavia.

"You need smart people for that, though."

Why do you think an entire state lacks intelligent people?

Mozumder must get his info from reality TV shows. Pity there aren't any featuring petroleum engineers. I guess smart people doing technical work without causing problems isn't good TV.

His attitude is a pretty typical thing that comes from coastal urbanites who think they know what's best for rural America without ever setting foot here.

30% is not a "holy shit" level of fuel tax. The federal fuel tax in 1993 was 18.4c per gallon (and remains at that level), while crude oil that year cost as little as $13/barrel. That's a 57% tax. Of course the real value of the federal fuel tax has monotonically declined through inflation, since it remains at a nominal 18.4c/gallon.

In civilized countries the fuel tax is generally well over 100%. In Switzerland for example the tax is .75/liter, or about 120CHF (~$120) per barrel.

Your math eludes me. National average gasoline price for 1993 was $1.10, yielding less than 17% tax.

This article is using the price of crude oil as the denominator. In 1993 Brent Crude Oil varied between $13 and $20 per barrel.

But the fuel tax figure you quoted was for gasoline, not crude. You were comparing apples to Orangesicles.

All except one of those "civilized" countries don't produce oil. They also all have much higher population densities where public transit makes sense and most people can't even afford to buy a car. That is not analogous to the situation here. There isn't a single European country with a population density so low it is close to Alaska [1]. Even Norway who is most similar to AK and is an oil producer has much smaller towns that individually are less spread out and are more easily served by public transit as a whole, norway has 30x the population density of AK[1]. In these civilized utopias most people can't even consider buying a car there due to artificially inflated costs from over regulation and taxes. I like a 4x4 truck that can get me to work in shitty weather. I like being able to afford to drive a boat around the ocean on the weekends and catch halibut. None of this pertains to my argument though and only serves to offer a bit of perspective.

Regardless of consumer costs ($10 more is still a far cry from $110) What really matters here is the supply glut which causes a shortage of demand per unit of oil. This kills margins and rules out any new investment and developments in Alaska. These are the things that drive jobs. High margins fund the state government and new development. Low prices mean layoffs across the board before we even think about a huge tax stabbing into demand. In other words, that tax will retard oil's recovery by artificially suppressing national demand for oil. US consumers can withstand it no problem. But at the moment that tax is equivalent to kicking Alaska's economy in the gut when we're already on the ground trying to tap out.

I love Alaska and I don't want to have to move. If you can't empathize with that I understand. Who cares about 700,000 rednecks and eskimos up north who like to fish and hunt. They're probably all like sarah palin anyway haha. (she screwed our oil industry with crazy taxes and pretty much single handedly ensured AK industry didn't take part in or benefit from the US oil boom and is not a popular person around here)

Like it or not. The US is a major oil producer now thanks to shale oil and technological improvements. High oil prices enabled us to go for harder to reach fields and the low price eliminates their feasibility. Like I said before, We produce as much oil as saudi arabia. Low prices will have a dramatic negative effect in many localized places like alaska. I understand if you don't empathize with us or care what happens to our economy but this kind of tax is not going to do alaska texas oklahoma idaho or north dakota any favors.

[1] norway has 14 people per sq/km versus 0.46 people per sq/km in alaska. Even Mongolia has 4x AK's population density! Russia is 19x our density.

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&e...

http://data.worldbank.org/indicator/EN.POP.DNST?order=wbapi_...

> Even Norway who is most similar to AK and is an oil producer has much smaller towns that individually are less spread out and are more easily served by public transit as a whole,

Wouldn't having lower number of larger towns be easier to service with mass transit (trains, planes) than larger number of smaller towns?

I don't think distances make public transport vs cars hard. It's non-clustering as in US suburbs opposed to European cities and towns.

> I understand if you don't empathize with us or care what happens to our economy but this kind of tax is not going to do alaska texas oklahoma idaho or north dakota any favors.

Does it get windy in Alaska? How about seeding wind power industry there with the money taken from people that make holes in your ground and suck the oil? Or do you want it to remain your top industry forever? Norway doesn't want that for itself.

Alaska was built in the 70s so our towns and cities have very low density "non clustered" making public transit difficult. Consider your example contrasting suburban US and Europe. Alaska is to lower 48 burbs what US burbs are to Europe. We have big lots and we have spread out. So public transit is expensive and it poorly serves us. To compound this difficulty, the majority of villages aren't even connected to the road system. The locals get around with snowmobiles and 4wheelers. Those tend to be more clustered but public transit in a town that has no jobs and 100 people living in 2 sq miles is pointless. I lived in the 4th biggest city in Alaska and it was 8 miles to the nearest gas station and 20 miles to my highschool.

You can't export wind power. The current hope is to build a liquid natural gas line and export that. Unfortunately Gas prices trend with oil prices so getting that built in this market is going to be difficult and potentially unprofitable in the long run.

Figuring out how to have an self contained perpetually sustainable economy is an interesting problem I don't think any nation has figured out. If you have a trade deficit your country/state will become poorer over time a surplus will enrich it. So it's best to try and export and stay ahead of the game or you will bleed out. Alaska needs to export goods because we import most of our food and necessities. Not everyone is willing to live on moose and salmon. (although I sure could)

Thank you for this explanation. I didn't know it was that bad. Why people chose to build this sparse in such a cold climate? I'd imagine in harsh environments you'd give anything to keep close to other people and to infrastructure and supply lines.

I think people who come to Alaska tend to be the type who prefer the quiet serenity and privacy that comes with a house in the middle of a large lot in the woods. It offers a level of autonomy you would be hard pressed to find elsewhere in the world.

Thanks for hearing me out. Ultimately Alaska will have to change and move off of oil exports. I hope it is done gradually. The consequence of this will likely be a smaller population. We can export fish, natural gas etc and grow more things locally to improve our trade deficit.

I wonder what would have happened to SV if the Federal government put a 30% tax on every dollar earned by tech companies a week after .com bubble burst.

It would have been perfectly fine solutions if they wanted to phase out internet use.

Well the rent would certainly be cheaper.

At what point is our ROI on clean energy negative?

I wonder if you could just place a tax on premium gas, the type that fancy cars take - so that it minimises any potential affect on low-income households.

That would be counterproductive. A lot of the more efficient engines require premium too because they use the higher compression to get decent performance out of a smaller package. So it would end up discouraging people to get more environmentally friendly engines.

Yep. Let's implement possibly the most regressive tax possible on working-class people. Because every penny of that tax is going to come out of our pockets at the pump or at the grocery store.

Isn't that a flat tax? And definitely not regressive if you assume rich people buy more gas.

Rich people may buy more gas, but gas eats up a considerably larger portion of the poor's wallets.

I think it's regressive because people with less income spend a larger proportion of their income on gas.

I disagree with him; for the record. Just trying to see his viewpoint. Personally—I think this tax is a great idea. I think the government has two jobs: (1) to build and maintain effective infrastructure for the common good (roads, firefighters, etc.), and (2) to apply pressure to rectify forces where the tragedy of the commons would otherwise apply (global warming, etc.). This is an example of the latter.

Oil is 31 USD/bbl now. It was 41 USD/bbl in Jan 2015. Would you notice the difference?

For somebody who is closer to the edge, that bump in fuel prices is going to trickle into everything they consume, and when the transit costs of the product are a bigger proportion of the total cost of the item, that's got real impact on their buying power.

Plus, it's never just gasoline that goes up. Gasoline, you could just cut back on non-essential miles. But gas goes up, and heating oil follows - and you can't stop paying the oil bill when it's 0 F outside, unless you want to freeze yourself, and your plumbing. Then your electricity rates go up because the fuel oil for the oil-burning plants that backstop your eco-friendly, weather-dependent renewable electric energy when the sun isn't shining and the wind's not blowing, goes up.

And you can bet your bippy that once they jack the tax up, it won't come back down easily.

Seems like a stupid move when the Saudis are trying to hurt our domestic oil production in a price war.

Exactly why they want to do this. Tax the difference and keep the price constant because they know a raped consumer will keep paying it.

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