14 August 2008

More Expensive Gas, Please!

He's Got the Whole World
Copenhagen beach with offshore wind turbines in the background.
The Danish Prime Minister said something the other day that you won't hear many other statesmen in OECD countries say:

Namely that petrol prices need to be raised drastically in order to clear the way for environmentally-friendly technology and to free us from our dependence on oil. He was quoted in the New York Times by Thomas L. Friedman who met with the prime minister on a recent visit to Denmark.

"I've observed that people in all other countries, including the USA, are complaining about rising gas prices. The cure isn't lowering prices, but instead we should raise them further in order to break our dependence from oil."

"We will propose a new tax reform with an even higher tax on energy and the money raised from this will be used to lower the income tax - so we will strengthen the incentive to work and the incentive to save energy and develop sustainable energy sources", said Anders Fogh Rasmussen, Danish Prime Minister, to Thomas L. Friedman. Read his opinion piece Flush With Energy here.

It remains to be seen if it will happen. The current government are not environmental angels and the proposal has been met with skepticism from the other parties in the government. But a quote is a good start.

Source [among others]: Politiken & DR


Anonymous said...

Agreed on all counts. I personally find it hilarious for people to be "protesting" high gas prices, as though they were strictly government policies that could be changed at the whim of the regime. Obviously, every government does have influence over the price, but for the true source of the rise, look to the profit margins of the oil companies. A realistic protest would involve sit ins at their corporate offices - which I would love to see, if only for the brutality that would no doubt ensue. Oil executives do not put up with those sort of shenanigans. I think they might take a dim view of breaking our habit of dependence, too, but that's just too bad. Val

Gorka said...
This comment has been removed by the author.
faria said...

Very nice blog i really like it i agreed on all thing i hope that gaz price keep rising that people stop using big cars.
thank you for all those informations

chad from pa said...

Perfect idea. I live in the states and my wife has had to listen to me complaining that gas is still too cheap. About a month ago, gas hit record highs in the US and I actually saw less traffic and more bikes and walkers. That's no small feat for a small town in rural Pennsylvania. It was great. But with the decline in gas prices, people dusted off their SUVs and are driving like crazy again.

I long for the heyday of $4 gas. I wish it would go up to double that because a gas-fueled economy is simply not sustainable.

Kevin Love said...

Very interesting. It raises the question "what petrol price is necessary to break car culture?"

Here in Toronto it is currently about $1.30/litre, having doubled in the last three years. The effect of doubling the price on the amount of car driving done was very little.

I predict that even $2.00 petrol will have some effect, but will not be enough to end car culture.

In my opinion, the tipping point will be at around $4.00 per litre. At that point car culture will be unaffordable to the ordinary person.

So if politicians are asking "how much should the petrol tax be increased?" My opinion is that here in Toronto an additional $3.00 per litre would be the right amount.

Jono Davis said...

Friedman's got his head in the right place, and it's always nice to hear about gov't officials getting on board.

One of my Professors introduced the concept in a lecture in this way:
"If energy is too expensive or is in short supply, as most people seem to think, than how come we waste so much of it and think nothing of it? Using energy as inefficiently and carelessly as we do, it's clear that it is really quite plentiful and quite inexpensive, but for how long?"

Zakkaliciousness said...

great comments everyone. thanks

balexandre said...

All that is good, if there is an alternative!

I live in Strøby and worked in Holbæk, it taked me more than 2 hours and 2 trains to get to work!

Do you know how much difficult is to spend 4 hours a day in traffic when you have an 1 year old daughter?

If they lowered the "green" cars, that would be huge! and I will say: PLEASE have the gas price up up up!

but a Toyota Prius cost here almost 400 000 dkk (53 000 Euros) !!!

it is good when you work and live in the city ... but we can+t have it all.


angus said...

What would help is removing the need to travel longer distances. The ability to work from home, more regional offices and local industries could be a way forward. Having local shops selling local produce. In the UK the superstores rule and it can be difficult to use them without a car. Also our public transport system is a disgrace particularly in the countryside making a car much more necessary. But I agree that higher fuel prices will have a long term positive affect despite the obvious short time financial pain.

Cyclingred said...

I for one find the higher gas prices in the U.S. a good thing. It's about time we woke up.

The increase in prices here have got more people using mass transit and bicycling.

Anonymous said...

The increase of gas prices leads to an increase in inflation, especially in the United States where our entire economy relies on cheap energy and cheap transit. I welcome more bicyclists on the road, but doing it out of necessity by falsely raising prices is nothing more than willingly giving up wealth. This will hurt the poorest people the hardest, and only serve to strengthen socialist polices that wish to redistribute wealth.

Also, the idea that oil companies themselves manipulate prices is completely elementary. The government can regulate the price via taxes and subsidies, but for the most part the price is set on Wall Street, where [perceived] global demand and supply set future prices. If global supply cannot keep up with global demand, prices increase and vice versa. We are currently seeing the demand for fuel in the U.S. decline, therefore prices decrease.

People need to study basic economics before pointing the finger at government or companies that are owned by shareholders (ie: every American with a 401k/IRA/retirement account).

njh said...

Something else basic economics tells us is that one should pay the true cost of things to get true efficiency. This means that the government should tax externalities rather than subsidising them.

The US government is currently subsidising oil usage and in particular private car usage to the tune of at least $100B / year (roads, health, loss of mobility for those who can't drive, congestion, noise, particulates - the list is endless). Clearly this is not going to send the right signals and basic economics would predict a strong move to driver owner, driver only cars.

Anonymous said...

So while I'm totally into alternative transportation, when gas prices go up, it's not just fuel that gets costlier. Food and other necessities do, too-- anything that has to be transported. Even if you buy locally it's affected, and people who used to be able to barely get by now can't at all.

I like having bicycles on the road, and rising gas prices certainly are helping to increase that, but that doesn't mean that the rising prices are a good thing. Other government incentives would work so much better without making life so much harder for people who need to, you know, eat and stuff.

disgruntled said...

There's been a fair bit of reportage here (in the UK) that it's not just a few people taking to their bikes. Ferries and planes are going slower, bus and train drivers are being trained to drive more smoothly, drivers are driving more slowly through cities, people are buying more energy-efficient cars. Some of this will vanish as the price goes down again, but with any luck, some of it will stick to the sides.

uglycoyote said...

They have started trying to put carbon taxes on gas here in Canada, but the politicians willing to stick their neck out for an idea like this are getting slammed and their popularity is taking a beating. How well do things like this go over with the public in Denmark?

Zakkaliciousness said...

there are some grumblers here in Denmark, but we have a tradition for common sense. we also have a history of ditching parties that wish to LOWER taxes, since our taxes, high as they are, make this country work. send kids to school and university, provide free medical care, fix the roads, etc etc etc.

if the PM follows his words up with actions - unlikely - Danes will accept it.