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$4.00 Gas plus a $4.00 Gas Tax

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April 04, 2012 – Comments (5)

Or, as it could be called, Europe.

Recently Morgan Housel asked the question "Can We Handle $4.00 Gas?" 

 http://www.fool.com/investing/general/2012/03/07/can-we-handle-4-gas.aspx?source=ihpsitcag0000002&lidx=7#724535 

After I read the discussion that followed I was interested to find out how Europeans handle their much higher pump prices for gasoline.

In the United States average /capita gasoline consumption is 430 gallons/year ranging from a high of 688 gallons/year in Wyoming to a low of 296 gallons/year in NY. I just cannot believe the California numbers posted here so I am throwing them out along with Vermont, Georgia, Missouri and Ohio.

 http://www.statemaster.com/graph/ene_gas_con_percap-energy-gasoline-consumption-per-capita 

Europeans average 253 gallons/year in gasoline consumption.

http://earthtrends.wri.org/text/energy-resources/variable-292.html 

Europeans spend 253 x $8.00 = $2,024 dollars/ year on gasoline.

Americans spend 430 x $4.00 = $1,720 dollars/ year on gasoline.

New York spends 296 x $4.00 = $1,184 dollars/ year on gasoline.

Wyoming spends 688 x $4.00 = $2,752 dollars/ year on gasoline.

In 2009 the average fuel economy of an automobile was 43mpg in Europe, 42 in Japan, 35 in China and 25 in the United States.

So yes, I believe we could handle it. And obviously this disregards the wealth redistribution of using our atmosphere and water as a dumping ground for spills and exhaust.

Best wishes,

Steven 

5 Comments – Post Your Own

#1) On April 04, 2012 at 9:10 AM, Melaschasm (53.74) wrote:

I agree that we could handle $8 gas.  However, it would have a huge impact on the lower middle class.  

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#2) On April 04, 2012 at 9:49 AM, lemoneater (71.35) wrote:

We have less cheap public transportation available to us than Europe. Our jobs are 20 minutes away. At least my husband and work at the same place and we already share transportation. I wish more companies embraced telecommuting for at least part of the work week. Some of what I do, I could do at home, but my company is not that flexible yet.

$8 gas would mean that we would save a lot less than we currently do.

We have so much domestic natural gas it seems a shame to not tap into it for transportation needs.

 

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#3) On April 04, 2012 at 10:10 AM, TDRH (99.49) wrote:

I believe per capita consumption is a little misleading.   I believe a more accurate analysis would be per household, and the impact on consumer discretionary income.

Median household income for the US is $49,445.00 before taxes  Census Bureau.   Searching the web I found this article that broke down the spending for this group based on a little higher number, but you can see the ball park breakdown of their spending.   article.   Not sure that I 100% agree with some of the breakdown.   The $175 fuel costs may have been calculated at a lower price per gallon.    Taking 15,000 miles per year/ 12 Months/20 Miles to the gallon = 62.5 x 4 = $250.00 per month.  Rising gasoline and food prices combine with stagnant real growth in income results in net real reduction in the standard of living and consumer discretionary income for 1/2 the population of the United States.     Can we stand it, yes, but not without some net adjustments that could undermine a relatively weak economy. 

 Breakdown from Article.

Net Income after Taxes$3,174.00Housing Payment:$1,235.00 Car Payment $300.00 Fuel Costs$175.00  Food $550.00 Cell Phone: $50.00 Electric Bill$70.00 Healthcare$200.00 Gas Bill$50.00Emergency fund$200.00 Retirement$200.00 Miscellaneous$100.00 $3,130.00    

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#4) On April 04, 2012 at 10:31 AM, whereaminow (< 20) wrote:

For someone who claims to care about the working class, I find it (not at all) surprising that you would promote price increases that would hurt the working class the most.

And what would your benelovent government do with that money? Kill some more brown people overseas?

This post qualifies for Great Call of the Week!

David in Liberty

 

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#5) On April 04, 2012 at 6:00 PM, devoish (96.28) wrote:

First the easy/nasty one.

David,

Thank you for the award. 

Nowhere in this post did I call for a tax on gasoline. I posted data and if you feel that data presents a case in support of a gasoline tax, that is your analysis of the data, not mine.

I suggested we could handle higher gasoline prices. I thought the example of doing what Europeans do, which is buy higher mpg cars and use less gasoline made that case whether hihger gasoline prices supported a tax or XOM exucitive pay.

And yes, if there is a tax , it does matter what the "benevolent government" does with the money, just as it matters what the "boss" does with a profit, whetehr he pays himself, his employees or his investors.

You'll get it eventually.

lemoneater,

The cheap natural gas seems to come at the price of clean water and air pollution. It is not a solution to impose those costs onto other people. Lets not continue to interchange/confuse "cheap" with "best".

Melaschasm,

Yes it would impact the lower middle class and the upper middle class and the poor and the middle middle class. In Europe the impact was smaller, high gas mileage cars and lower gasoline consumption and less air pollution. If Europeans want  a gas guzzler they are free to work harder to pay for it. 

 TDRH,

I think "My Budget 360" does a great job pointing out the financial problems faced by most Americans.

If you look at his sample budget, there is an emergency fund and a retirement fund that are available to pay higher gas prices, credit card charges, or 401k fees, in addition to the European strategy of using less gasoline. In the median household budget, the money is there to pay the higher gas bill whether the money from higher gasoline prices goes to taxes or XOM dividends.

Best wishes,

Steven 

 

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