An article which discusses the current gasoline crisis and proposes a solution within the context of what is politically possible in California. Incorporates quotes and statistics provided by the California Energy Commission and the BP Statistical Review of World Energy.
Currently, the federal government taxes gasoline at
18.4 cents per gallon and the state of California at
18 cents per gallon. This is considerably less than
what other industrialized societies tax gasoline. I
propose that increasing the gasoline tax and using the
funds to directly fund mass transit will improve
traffic congestion, reduce pollution, and improve the
economy, while moderating gas prices. This will be a
broad discussion concerning the current status of
these issues in California.
The city of San Francisco provides us with an example
of how such a tax can be beneficial. San Francisco’s
mass transit system is currently experiencing a budget
shortfall and is proposing raising fares to .75.
This in itself is not the problem, although the fare
increase will hurt riders and dissuade the use of mass
transit. The problem is that San Francisco has a
mediocre mass transit system. After fares are raised,
service is cut, parking fines are increased, garage
parking fees are increased, etc. to close the budget
shortfall, San Francisco will still have a mediocre
mass transit system. Traffic congestion is a function
of this. Luckily for San Franciscans, much of the
pollution caused by drivers in the SF Bay Area gets
blown southeast to Modesto.
In discussing the current crisis in the San Francisco
Chronicle recently, Andrew Sullivan, Chairman of
Rescue Muni made comments which appear to suggest that we increase gasoline taxes, without actually making such a suggestion. For example, "However, this rate of increase in fares, fees, and fines is not sustainable over the long haul…There is a real need to find alternative sources of revenue for Muni." Indeed. He also commented, "It is critical that any new source provide incentives for people to use transit instead of driving."
An increase in the gas tax that directly funds mass
transit fits such a definition. This is also why I
favor an increase in the gasoline tax to fund mass
transit over an increase in the sales tax. An increase
in the sales tax does not incentivize the use of mass
transit over driving. If I purchase a pair of shoes
for the purpose of walking, an activity that does not
contribute to either traffic or pollution, how is it
justifiable to tax this item to fund mass transit, and
not tax the consumption of gasoline to fund mass
transit, which does contribute to traffic and
pollution?
A gasoline tax makes far more logical sense as a
source of revenue for mass transit than parking fines,
which is a logically bewildering solution. As a
society we have a need for mass transit. In order to
provide for this need we must depend on people
breaking the law? Curiously, according to its website,
Rescue Muni does not have a position on a local tax
increase of 1 cent per gallon on gasoline, even though
it was part of the MTA’s presentation to the MTA
board.
The city of Los Angeles provides us with another
example of how such a tax can be beneficial. Los
Angeles has the worst traffic congestion in the
country, as well as the worst air quality. These are a
function of a poor mass transit system. Having lived
in both cities, and having had the experience of using
mass transit in cities like Paris and Madrid, I would
have to rate SF mass transit a C and LA mass transit a
D, compared to the A I would assign Paris. These
European cities aren’t even among the cities reputed
to have the best mass transit in the world, such as
Tokyo, Moscow, and Mexico City.
The current mayor of Los Angeles, James Hahn, proposed a plan last year to allow hybrid vehicles to park at the city’s meters for free. He was quoted in the Los Angeles Times as saying, "I think we want to do
whatever we can to improve air quality in Los
Angeles." I was astounded. The utter impotence. The
complete lack of imagination. Instead of proposing a
bold vision that would truly make a significant
improvement in L.A.’s air quality, such as a world
class mass transit system, he proposes a trickle down
solution: When enough rich people buy a hybrid, and
we’ll provide them with financial breaks and
incentives in the meantime, perhaps the air quality in
Los Angeles will slightly improve. "People will
realize they won’t have to fish around for those
quarters." Besides being unaffordable for the majority
of Californians, hybrids do not do anything to relieve
traffic congestion.
During James Hahn’s term, Los Angeles, a city of 3.8
million people went six weeks without mass transit. I
seriously doubt that James Hahn uses mass transit. He commutes from San Pedro in a conventional gasoline powered vehicle, but was considering buying a hybrid, according to the article. How can you have such a lofty goal and come up such inane ideas?
On the other hand, perhaps he is doing more to advance mass transit than the Governor, most state
legislators, and people who work on behalf of the
government. I have heard him proudly proclaim that Los Angeles is starting up two new rapid bus lines per
month. We still have poor mass transit. I know. I use
mass transit.
In 2000 the State Legislature passed Assembly Bill
2076 which required the California State Energy
Commission and the California Air Resources Board to examine ways that California could reduce its
dependence on petroleum. The joint agency report was finished in 2003 and is viewable on the CEC website. It is titled, "Reducing California’s Petroleum
Dependence." A very broad title. It made such
authoritative statements as, "By 2020, it is possible
that 45.5 million Californians will have 31.5 million
registered vehicles consuming 24.2 billion gasoline
equivalent gallons of gasoline and diesel fuel. If
this consumption occurs, it would require Californians
to accept major expansions in petroleum refinery and
delivery infrastructure, further dependence on foreign
energy supplies, decreased environmental quality, and
reductions in public health."
The 19 page report does not contain the words mass
transit. It is absolutely not discussed as a topic or
strategy, despite not being excluded from discussion
by the bill. I e-mailed the principle authors to ask
them why they gave such a broad title to their report,
why they did not discuss mass transit as a means to
reducing petroleum consumption, and what their view of mass transit is as a means to reducing petroleum
consumption. I received some astounding comments.
Susan Brown wrote back, "Based on available research, and our analysis of the potential for public transit in the technical appendices to the AB 2076 Report, we concluded that even doubling use of public transit in California, would have a minor(as I recall about 2 percent effect) on reducing petroleum demand."
Less astounding, but illustrative of the problem are
Gerry Bemis’ comments. "The Energy Commission sees mass transit as providing only a modest reduction in petroleum demand, maybe 5% or so. Not every city has an efficient transit system…Much of Sacramento is not well served by our transit system due to the length of trips and/or need for multiple transfers."
Would not the logical manner in which to proceed be to
build and develop mass transit that serves all of
Sacramento? How is it that countries such as Spain,
France, Germany, and England that have populations
larger than California consume less oil than
California?
Dan Fong wrote something even more revealing:
"Although we recognize that public transit plays an
important role in providing transportation service to
many Californians, we found that doubling usage rates
would not produce a significant reduction in petroleum
fuel demand. We also did not have a good methodology to determine how increasing usage rates could be achieved and what investment would be needed as a function of increased usage... If our resource levels improve in the future, a more detailed study might be supported and we might then be able to more accurately describe the potential for transit and make recommendations on making future improvements."
Apparently, the state of California is not even
considering the use of mass transit as a means to
reducing gasoline consumption, and subsequently
traffic and pollution. The enlightened Governor
declared at his most recent State of the State
address, "This is a car centered state. We need
roads."
Californians consume 16 billion gallons of gasoline
annually, according to the California State Energy
Commission. This is a tremendous potential source for revenue. The major objection to an increase in
gasoline taxes is that drivers may not want to pay a
few additional cents per gallon of gasoline.
Inevitably, they will end up paying far more than a
few extra cents per gallon. It is an amusing(and
worrisome) exercise to project what the future price
of gasoline will be based on the rate of increase over
the past five years.
For instance, if we take a particular date such as
June 7th, 2004, we can see that the average price of
regular gasoline in California was .316 per gallon,
according to the figures posted on the California
State Energy Commission’s website. This represents a 33.72% increase from the same time of the previous
year. From 1999 to 2004 the average increase from year to year on or near this date was 12.99%. If we project what the price of gasoline will be on or near June 7th, 2005, it will be .617 per gallon if based on
the average yearly increase. If based on the increase
from 2003 to 2004 of 33.72%, it will be .10 per
gallon.
If we pick another date such as October 25th, 2005 and
do similar projections, we obtain a price of .722
per gallon if based on an average yearly increase of
.69% from the same time of the previous five years.
If we base the projection on the increase from 2003 to
2004 of 37.82% for this time of the year, the price
will be .299 per gallon of gasoline.
We can also make predictions based on other factors.
For instance, Goldman Sachs, the largest trader of
energy derivatives in the world, recently predicted
that the price of crude oil will rise above 0 per
barrel. The price of crude is the largest factor in
determining the price of gasoline. If .21 out of a
total price of .38 for a gallon is attributable to
the price of crude as was the case on March 28th, 2005 according to the CEC website, we can logically
conclude that if the price of crude on which this
gallon is based on were to double, the cost of the
gallon attributable to the price of crude would also
double. In this example, the price of a gallon of
gasoline would rise to .59. The CEC also has a
formula for predicting the effect that crude prices
have on gasoline: 25 cents for every . So if the
price of crude were to ascend , the price of a
gallon of gasoline would increase by .25 according
to this formula.
Rising global demand is the primary reason cited for
rising gas prices. In order to consider the impact
that this rising global demand will have in the near
future, consider the following figures from the BP
Statistical Review of World Energy. In 2003, the U.S.
with roughly 4% of the world’s population, consumed
25.1% of the world’s oil. In contrast, China and
India, each with populations exceeding 1 billion
people, consumed 7.6% and 3.1% of the world’s oil
respectively. These are rapidly industrializing
societies that will continue to compete for the
world’s available supplies. The effect they will have
will be to inevitably push the price up. What theses
figures reveal as well is that the U.S. is the country
that has the greatest impact on the supply and demand relationship that affects the cost of oil.
The chaos in Iraq, home to 10% of the world’s proved
oil reserves, and the threat of terrorism will not
vanish overnight either, and these factors will
continue to push the price upwards as well. Saudi
Arabia, home to 22.9% of the world’s proved oil
reserves, has demonstrated its vulnerability to
terrorism numerous times. The war being fought in
Iraq, purportedly to establish democracies in the
Middle East, but suspected by others, including Chief
U.N. weapons inspector Hans Blix, to secure a low
price of oil for the U.S. economy, should provoke some
questions: If true democracies were established in the
Middle East, would its citizens administer their oil
wealth in a manner that favors the lifestyle and
economy of the citizens of the United States? That is,
would they sell us all the oil we demand for a low
price? I raise this because Americans seem to have a
sense of entitlement over what they pump into their
vehicles.
Ultimately, we must grasp the concept that the world
does not contain an infinite supply of oil. According
to the BP Statistical Review, the world contained 41
years of proved oil reserves at the end of 2003, known
as the reserves-to-production ratio, which is derived
from dividing the total amount of proved oil reserves
by the amount of production for that year. This figure
has only diminished 6% from the peak of 43.7 years in
1989 as probable reserves are converted to proved
reserves. As production of oil increases in order to
satiate worldwide demand, it is inevitable that this
figure will diminish, and the effect it will have on
prices will be to push them upwards. The only logical
response is conservation. An economy based on the
gratuitous consumption of gasoline is not sustainable.
The top recommendation in the aforementioned joint
agency report is that California reduce its petroleum
consumption by 15% below the 2003 level by 2020 and
maintain that reduction for the foreseeable future,
relying primarily on vehicle efficiency improvements
and the introduction of alternatives to petroleum.
Considering the economic impact that .50 and .00
per gallon gasoline will have on our economy, such a
recommendation seems to have little practical
application to reality. It would appear that we need
to conserve much more than this, much sooner, and have viable alternatives to driving. Otherwise, the average Californian will be left severely economically
burdened by the cost of gasoline, and if we don’t have
adequate mass transit, our economy will face severe
challenges. The main problem with the CEC’s approach is that they have made their goal of reducing
petroleum demand subservient to their commitment to
not recommend tax increases. Assuming the rest of the U.S. was to reduce its consumption by a similar amount and world production levels were to remain the same, the U.S. would still consume 21.84% of the world’s oil. Considering the industrialization of the world and the patterns of oil consumption, we must seriously question whether this is sustainable.
If the price of gasoline is constantly fluctuating,
but inevitably increasing, it does not make much sense
to object to an increase of 10, 20 or 30 cents in the
gas tax if such a tax has the potential to moderate
the price of gasoline by providing the population with
alternatives to driving that will reduce demand, as
well as provide other significant benefits. Simply
encouraging Californians to inflate their tires will
guarantee that the price of gasoline will ascend to
.50 and .00. It is ironic that people who may
oppose paying a few extra cents per gallon may end up
wasting comparable or greater amounts idling on our
crowded streets and freeways. A situation which mass
transit can ameliorate.
Demand for gasoline exceeds California’s refining
capacity, but only by a small amount. According to the
CEC, California refines 90% of its gasoline, and it
imports the rest of it, at a higher cost. Based on
this information the Southern California Auto Club was
urging drivers to conserve gasoline a year ago.
According to spokeswoman Carol Thorp, "Demand for
gasoline outstrips supply in California, which helps
push prices upward. Reducing consumption could
eventually result in lower prices." The SCAC’s top
recommendation was to carpool or to use mass transit.
This is a good short term goal for California, to
reduce our demand for gasoline to within our refining
capabilities. Considering the numbers, it is
achievable, and it is the only thing we can do to
moderate the price of gasoline. Beyond this, we should
consider reducing our demand for petroleum within what domestic supplies can provide. According to figures from the CEC, 36% of the oil we consume in California is from foreign sources. Judged strictly on the percentage, it seems achievable. Of course, in the
context of our political, social, and economic
structure it may be considered laughable and
unachievable. We must consider that if our economy
depends on cheap gasoline, and we are no longer able to get cheap gasoline, we must either change or
collapse.
We are underutilizing mass transit in California,
largely because it doesn’t exist. There isn’t a single
city in California that has an efficient transit
system. Those of us who live in urban centers along
transit corridors can debate whether it’s worthwhile
to wait half an hour for a bus to go somewhere.
Perhaps during certain times, bus service is frequent,
but at other times it is dismal and unreliable. For
Californians who live in the majority of cities and
towns, however, this isn’t even an option. For them a
more realistic option is, do I want to take 3 hours to
run an errand?
I e-mailed Carol Thorp of the SCAC twice and discussed the concept of increasing the gas tax to fund mass transit and presented her with the comments made by CEC members regarding the potential effect that mass transit can have on reducing gasoline demand. It would have been odd if a spokesperson from the Southern California Auto Club were to defend mass transit. The SCAC advocates the use of mass transit in order to reduce demand for gasoline and moderate prices, but most Californians have access to either mediocre or poor mass transit. So I asked her, how can enough people be persuaded to use mass transit in order to conserve enough gasoline to make a difference? Would
it not be in the interest of drivers to support a tax
that could provide this alternative to people, in the
name of moderating gas prices, reducing traffic, and
reducing pollution?
She did not respond. She is probably one of those
people that is married to the notion that a tax is
bad. Perhaps she did not want to publicly acknowledge
her untenable position. The SCAC would like to see gas prices moderated, and supports the use of mass transit to do so, but most likely does not support a gas tax to do so, and has no suggestions for how to fund mass transit. The result for the SCAC and people who have similar positions is that there is nothing they can do to achieve their goal of moderating gas prices.
Neglecting investment in mass transit and solely
relying on anticipated or hoped for improvements in
fuel efficiency will keep us locked in to the cycle of
petroleum dependence and spiraling gasoline prices.
And as anyone who lives in Los Angeles knows, relying on the car as the primary mode of transportation will inevitably result in major traffic congestion.
Communities that solely rely on the car as an
efficient means of transportation will inevitably
replicate Los Angeles’ unsustainable model and all of
its problems: traffic congestion, pollution, a
depressed economy.
According to the website of current council member and mayoral candidate Antonio Villaraigosa, traffic
congestion costs the Los Angeles economy billion
dollars per year. I realize that such statistics are
estimates which could either be higher or lower.
Still, such statistics blare a certain logic at one.
If we, Los Angelenos, were to invest an additional
billion dollars per year in a world class mass transit
system in order to relieve traffic, wouldn’t we come
out several billion dollars ahead? At a certain point
we must ask ourselves whether it is viable to continue
to invest in the car as the primary mode of
transportation. We must ask ourselves whether it is
viable to take productive farmland and build Walmarts,
Home Depots, and gasoline stations with huge parking lots, as is done in the Central Valley, in effect
subsidizing these corporations. We have a scarcity of
housing in California, yet we have huge parking lots
everywhere.
The benefits of efficient, fast, reliable mass transit
are potentially enormous. It is the most efficient
manner that we as citizens have to move about in space and time. If I catch the red line at Wilshire and
Vermont in Los Angeles, it only takes 10 minutes to
get to Hollywood and Vine, once I’m on the train.
That’s faster than a car can get there, most of the
time. For people who are driving an average of 20
miles per hour on our freeways, thus taking 2 hours to
drive 40 miles, imagine that a certain percentage of
cars was to be removed from the road, thus allowing
you to complete your commute in a shorter span of
time. The only way those cars will be removed is if
people are given viable alternatives. What percentage
of cars is removed from the road will depend on how we develop and operate mass transit and how much we’re willing to invest.
Mass transit would be a boon to the economy. Money
that would otherwise go to the purchase of gasoline
would have the ability to go to diverse sources and
stay within the local community, thus having a greater
multiplier effect, instead of going directly to the
coffers of the oil companies, perpetuating the cycle
of concentration of wealth in our society.
A person would be able to pursue greater sources of
employment because he or she would not be dissuaded from the driving commute or from having to ride 3 different buses and take an hour and a half to get somewhere. Mass transit would free us of the burden of having to invest thousands of dollars in a car that pollutes the air we breathe, just to be able to pursue a living, or just to be able to move around in an
efficient manner.
An additional benefit for all of us would be reduced
pollution, as well as reduced medical costs due to the
respiratory illnesses caused by pollution, which we
all pay for. It is just to increase gasoline taxes
because its consumption uses up a vital resource at
great cost to our society, without reinvesting enough
back into our society.
There are those who will attempt to frame this as an
"us" versus "them" issue. Why should drivers have to
pay higher taxes to subsidize the use of mass transit?
This is a "we" issue. A lot of people in urban centers
both drive and use mass transit, and in the near
future, the only manner in which our society will be
able to sustain itself, is if the vast majority of us
do both, or just use mass transit.
This is one of the greatest opportunities to think
globally and act locally. Our actions can have
tremendous impact. As an example, what other region of the planet consumes more gasoline than Southern
California? What other region of the planet has a
greater impact on global warming? We do not have to
wait until we have a President that understands
science to do something about this problem.
With the passage of Proposition 42 in 2002, the
current state tax on gasoline now goes directly to
fund transportation instead of going into the general
fund. Beginning in 2008, 20% of this tax will go to
fund mass transit. Prior to 2002, the State
Constitution prohibited the use of the gas tax from
being used to fund the operational costs of mass
transit, it could only be used for construction and
maintenance purposes. However, it is unclear whether
Proposition 42, which was an amendment to the State
Constitution, authorizes the use of the gas tax to
cover operational costs because of its ambiguous
language, according to some legal scholars such as
Patrick Bergin, whose analysis is viewable online.
Whatever the legal issues are, the State Constitution
should be constructed to allow for the development and operation of fast, efficient, reliable mass transit in
California. Additionally, it should be constructed to
allow Californians, if they so chose, to impose an
additional 10 cent, 20 cent, or 30 cent tax on
gasoline that in its entirety would be dedicated to
fund mass transit.
Besides just relying on the gas tax, communities
should be allowed to impose local vehicle licensing
fees, which is one of the ideas mentioned by Andrew
Sullivan in his article. Local communities should also
be able to legally impose a gas tax higher than 1 cent
per gallon. If the solution I have described cannot be
implemented on a statewide level, it should be legally
possible for local communities to do this. There is
enough wealth and consumption of gasoline in Los
Angeles county to fund a world class mass transit
system. We can make great strides towards improving
traffic, pollution, and the economy with local
resources.
Apart from this, mileage based car insurance should be made legally possible in California, which it
currently isn’t. People who drive less, instead of
being rewarded, subsidize the rates of people who
drive a lot. A situation which is unjust and
counterproductive to society’s stated goals of
reducing petroleum consumption, traffic, and
pollution.
If we are serious about solving society’s problems we
must be openminded. One should be selective about
which tax increases one supports and for what
purposes, but the position of being against any and
all tax increases is irrational and impractical. It
limits our ability to solve problems. It is a
ludicrous position for any politician to have.
We must make up our minds whether we truly want world class mass transit for our cities. Not having a steady funding stream guarantees that it won’t get built. Having a steady funding stream creates the possibility that it will get built.
A sustainable future is one with fast, efficient,
reliable mass transit and where a car gets 50 miles
per gallon, and its consumption of a vital resource
such as gasoline is taxed at an appropriate level. The
alternative is to make ourselves beholden to the third
tenet of the Republican philosophy: TAXES ARE BAD!
TAXES ARE BAD! TAXES ARE BAD! Dear Father who art in Heaven, please free us of taxation, give us the
patience to be able to tolerate traffic, bless us with
good health so that the polluted air we breath won’t
harm us, stave off the greenhouse effect until we are
old and on our way somewhere else, and let our
children and grandchildren deal with it then(with your
guidance of course). Please sustain the dollar so that
the stock market won’t collapse and our investments
will pay off handsomely. And please provide us with
abundant supplies of gasoline that we can purchase for less than .00 per gallon.
Original: The Solution to the Gasoline Crisis and Other Problems