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Energy Costs Change Everything



June 27, 2008 – Comments (16)

I suppose I have massive schadenfreude feeling around hardships being felt over higher energy costs.  I have always felt that energy ought to have been taxed to discourage the grossly irresponsible use that has dominated North American culture. 

Well, it appears that low energy costs have had more unrealised costs that most of us would imagine.  Yves has a post about how high energy costs meant that business did not have to concern themselves about transport cost of good and were easily able to go for fewer suppliers offering the best price.  Now it seems more  suppliers located closer to where the good would actually be consumed is the new business plan and companies are restructuring to reduce business transportation costs.

So, over the longer term these kinds of business changes will reduce energy consumption.

Just think, if energy had been taxed to encourage more responsible energy usage not only would the deficit be smaller, but more jobs would have remained at home rather than being exported to China.

And being fiscally responsible in the first place would not have hurt really, people would never have made the grossly irresponsible energy choices in the first place.

16 Comments – Post Your Own

#1) On June 27, 2008 at 3:14 AM, Tastylunch (28.56) wrote:

Yup that's a very good point. That's why I have made sure to maintain relationships with suppliers in my home state. I figure I'll need them down the line for my store.

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#2) On June 27, 2008 at 5:18 AM, rudolphsteiner (< 20) wrote:

I know what you mean. As a long-time environmentalist of the sort who is more interested in sustainability than fuzzy animals (although of course I like fuzzy animals), it's very bittersweet to see many of the things I expected actually coming to pass. Just about everything we are seeing today was predicted in the 1970's, or earlier than that. The sad thing is we started to act on it, but then abandoned the project almost entirely in the new era of cheap oil. Or imagine if we had acted on climate change in the 90's - we'd be in a much better economic position if we had enacted carbon taxes, and encouraged efficiency and renewables starting over a decade ago. But the prevailing logic was always that it would hurt the economy. In hindsight, quite ironic. Somehow the fact that I'm making money now because I was right is small consolation.

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#3) On June 27, 2008 at 6:29 AM, binv271828 (< 20) wrote:

Great post dwot. I agree completely. My thoughts are an echo of rudolph's. Exactly right.

Many smart people here (including you three) have already observed that we cannot get off oil cold-turkey. It is dumb on so many levels to try and is ultimately impossible. Consider GreenMycon's blog (he is a fantastic new blogger and has a very unique perspective). Oil is the most industrially useful substance, and is used in virtually every industry. Yet the biggest use is for transportation. We are burning most of it. We could have been transitioning off oil if we had a suitable replacement. Well we have alternatives coming in a few years to do just that. Plug-In Hybrids are just around the corner. But years ago we could have invested (as a government mandate) in battery technology, transmission efficiency, electric motor efficiency, etc. We could have had a head start on this crisis! And we could have been designing, engineering and manufacturing these vehicles! We are such a brilliant, hardworking and innovative society, we could have pre-empted this whole fiasco and put our economy on more solid footing at the same time!

The above example is only one out of many. We need solutions for clean renewable base-load power and transportation power. And they are coming, and I am excited. But they are coming in the face of a crisis. Not because the government was smart and led us to it. And thus we are in a significantly weaker position (and no, that is not good for exports. Not when you consider we have to import the energy and raw materials with the weaker dollar to begin with). We need an alternative energy mandate, and we need to do it in the form of a smart transition away from oil for transportation to a viable alternative, not some half-baked cold-turkey rhetoric. But the transition needs to start, and I think it finally is.

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#4) On June 27, 2008 at 8:42 AM, dwot (28.99) wrote:

rudolphsteiner I remember going to work in Ontario in the late 80s and I had such a sense of pride in British Columbia because here we drove much smaller vehicles and Ontario was full of 6 and 8 cylinder cars.  Well, BC became an energy pig as well.  I remember some tax policy had helped to encourage the smaller cars.  You had an extra 2% sales tax on 6 cylinders and an extra 4% on 8 cylinders if I remember correctly. 

The other thing is that over the years the gas taxes probably declined relatively speaking.  There was a fixed component that never went up.  The sales tax went up, but I bet that fixed component went from about 25-30% of the cost to about 5-10%.

I remember the energy companies launching a massive successful campaign against it, successful in that it was left alone. 

BC is enacting carbon taxes.

binv, yeah, we need oil for lots of things and to just burn it is extremely wasteful.  We aren't leaving much for the next generations.

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#5) On June 27, 2008 at 10:24 AM, rudolphsteiner (< 20) wrote:

yup, the provinces and states are leading the way on this one so far. There's change in the air, it will be more painful than it needed to be, but finally we're starting to move in the right direction again! I invest more in renewables than oil, or god forbid coal, because I'm still quite hopeful of the future. This is a great quote from Paul Hawken

"It will be the stroke of midnight for the rest of our life. How we respond will depend greatly on what we do now. If you look at the data and are hopeful, then you don't understand the data. If you look at the people [and] are not heartened, you don't have a pulse. Evolution arises from the bottom up-so, too, does hope. What will happen 50 years from now is greatly determined by what we are doing today. The only reason to make predictions is to get a better handle on the present. Crystal balls are bowling balls in drag and tell us very little because all predictions are wrong. What we know about today is that we are collectively compromising our future and civilization. Essentially, you can see almost all economic activity as a means to steal the future and sell it in the present. The question we have to ask, and path we have to take, is where we heal the future and monetize that activity in the present." -- Paul Hawken

Thanks for introducing a new word to my vocabulary.

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#6) On June 27, 2008 at 12:03 PM, joeykid13 wrote:

I love that word...but I don't believe for a second, that you mean it.  You are way too good for that.  We have become energy doubt about that.  I live in a state (Florida) that has no public transportation infrastructure, so the folks here don't have too many choices.  One of the saddest things about the Sunshine State, is that there are hardly any sidewalks...I mean even if you wanted to take the SLE (shoe leather express), you would risk getting run over.  Anyway, great post, and now I have to find out who this person called Paul Hawken is...LOL

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#7) On June 27, 2008 at 12:04 PM, ahabswife (62.16) wrote:

Nice post Dwot, just what I was thinking!

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#8) On June 27, 2008 at 12:10 PM, ahabswife (62.16) wrote:

including the happiness in others misfortunes, but not because I delight in suffering, but because maybe we can see ourselves for what we are

(in reference to my agreeing with you post)

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#9) On June 27, 2008 at 6:53 PM, abitare (29.98) wrote:


Ken Fisher:  

"Data-mine all you want. You're not going to find a credible cause-and-effect relationship between oil and stocks.

Have you allowed yourself to be scared out of the stock market by high oil prices? If you have, you're making a big mistake. You are falling prey to a media myth. It's fascinating how often the media get away with a story claiming X causes Y when an abundance of statistical evidence exists to disprove the connection. It is routine now to see stories blaming a drop in stock prices on a rise in oil prices. Don't believe these stories. There's no connection between the two."

Stop Fretting About Oil
Kenneth L. Fisher, Portfolio Strategy
Forbes, 08.15.05, 12:00 AM ET

Stop Blaming Oil!
Barry L. Ritholtz
Monday, June 27, 2005


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#10) On June 28, 2008 at 1:00 AM, sid187 wrote:

DWOT You cannot tax your way onto prosperity or responsibilty

its sort of like standing in a bucket and trying to lift yourself up while your standing inside the bucket...

Bateman - Did you know that Whitney Houston's debut LP called simply Whitney Houston, had four number one singles on it? Did you know that Christi?

Christi - You actually listen to Whitney Houston? You own a Whitney Houston cd?

More than one?

Bateman - It's hard to choose a favorite among so many great tracks. But The Greatest Love of All is one of the best and most powerful songs ever written about self preservation and dignitiy. Its universal message crosses all boundaries and instills one with the hope that it's not too late to better ourselves since it's impossible in this world we live in to empathize with others, we can always empathize with ourselves. It's an important message, crucial really, and it's beautifully stated on the album.

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#11) On June 28, 2008 at 1:12 AM, sid187 wrote:

Just think if energy had been more taxed ???


energy consumption is being presented like its a bad thing

Consuming energy is not bad...

but hey why don't we just cut off everyones electricity...

why dont we stop refining oil

we can go back to lighting candles and maintaining beasts of burden to ride on.

Imagine if everyone had to go back to raising horses to use as transportation.

Imagine my sarcasm


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#12) On June 28, 2008 at 4:42 AM, dwot (28.99) wrote:

Here's an interesting one, CR has a piece on what the cost of shipping would be equivalent to in a tarriff, 9% at today's prices.

That just so fits in with my post today, how keeping energy prices responsible would have kept jobs at home.


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#13) On June 28, 2008 at 1:03 PM, sid187 wrote:

WHat is a responsible rate ?

from my understanding, taxes usually cost cosumers more money than they save, so we are suppose to save us from ourselves with a responsibilty tax ?


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#14) On July 01, 2008 at 4:19 PM, FarelessWorrier (< 20) wrote:


Keeping jobs at home is a rather provincial priority. I think worldwide economic growth is much more important. Not many Americans or Canadians are likely to starve due to off-shoring and importing. However, economic growth in emerging economies lifts millions out of abject poverty.

Even here in the developed word, energy taxes are among the most regressive.

Artificially inflating the cost of energy causes more problems that it solves.

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#15) On July 01, 2008 at 4:22 PM, GreenMycon (< 20) wrote:

Sid: Taxes can be used to promote or hinder growth in specific areas.  If you tax energy usage, it promotes not being as wasteful.  There is the notion that the tax will be passed on to the consumer, but overall that will affect the demand for a product if it is.  Basically, taxing energy would promote a more sustainable, less wasteful society.

 Great post and discussion!

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#16) On July 25, 2008 at 3:11 PM, LordZ wrote:

Taxes ultimately are always absorbed by the consumer.

and yeah the more expensive you make something the less people are able to spend as most have limited funds.

If the gov could i'm sure they would tax the very air we breathe.

Ever watch idiots at the gym simply waste water by leaving the sink running while they shave thinking that hey i'm not paying for it, when in fact they are but dont even realize it...

realize DWOT is spelled with a Z in America... lol


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