When are we going to stop selling our future? I read today how President Bush was in Saudi Arabia seeking higher oil production and I have to think, why? Yeah I hate paying $4/gallon for gasoline as much as the next person, but I also can look beyond today and realize that we're headed for major problems unless we can curb our appetite for oil. The CIA says that according to estimates for 2005, the U.S. consumed 20.8 million bbl/day of oil. More recent estimates from the U.S. Energy Information Administration places oil consumption in 2008 at 20.6 million bbl/day. At the current rate of $127/bbl, that works out to $2.6B/day or just under one trillion dollars/year on crude oil.
The Energy Independence and Security Act of 2007 allocated a whopping $2B for renewable energy research. Doesn't that seem a little ludicrous? Allocating just barely 0.2% of the money spent on oil to research alternatives? It almost sounds like most U.S. citizens plans for saving for the future, far too little far too late. Yes, I'm sure there are other sources of research money for non-petroleum based energy, but is it enough?
I don't believe we'll do anything serious about oil consumption until we hit a crisis. I believe our government and society is caught up in only looking at the short term. Unfortunately we need to make hard decisions and investments now that will hurt in the short term, but will pay off some time in the future. We should be investing at 10 times the current rate in alternative and renewable energy resources. Given the recent past events such as the sub-prime mortgage crisis, are we really able to delay gratification and to the smart thing instead of the expedient thing?
The real question is: Do the Baby Boomers, of which I'm a part, have the guts to do what it takes instead of mortgaging our children's future? For our children and grandchildren's sake, I sure hope so.
Saturday, May 17, 2008
Saturday, May 10, 2008
Gas Tax Holiday?
Do we live in the now or what? In what reality does a Gas Tax Holiday make any sense what-so-ever?? Sure, I'm as unhappy as the next guy when it comes to filling up my car to the tune of $60+, but why should the government give us a tax holiday on gasoline? I thought our goal was to try and reduce our dependence on oil, especially foreign oil, but long term all oil. In case you haven't figured it out, oil takes a very very very long time to create. Since the current consumption rate far exceeds the production rate by many orders of magnitude, and our world wide consumption rate continues to increase, at the current trends we will run out of oil. It's simply a matter of when.
So what is the behavior that a Gas Tax Holiday rewards? Using more gas. Way to presidential hopefuls. This has to rank up there with the most stupid ideas ever. In fact it must be right up there with rewarding people for making really really bad financial decisions and buying a house they had no business buying in the first place, by helping bailing them out of their financial mess. This is truly reverse financial Darwinism at its best!
Forgive me if I write from a reward/consequence model, but that model appears to work in many situations. It has certainly worked with my children, although I'm not necessarily perfect at applying it. It must be pretty clear that if you reward people for making stupid financial decisions, they are simply going to make more of them. Let me count the ways the government encourages stupid financial decisions:
1) The current sub-prime mortgage fiasco where people bought far more home than they could reasonably afford under the false belief that they'd be able to sell their home when needed at a nice fat profit. This is leverage working for you, i.e., you put little real money into the investment and hope that the gains on a much bigger, leveraged, amount will earn you big time money. The problem with leveraged investments is that if they go the other direction, i.e., down in value, your liability is also greatly enhanced. This is the basic problem many sub=prime mortgatge holders are finding themselves in.
2) Penalize people for saving money. This comes in all forms but was most poignantly pointed out to me in applying for financial aid for college. I diligently filled out a FAFSA form, the required Federal form to try and get any form of financial aid, only to find out that I've been too fiscally responsible to get any form of financial aid for the 3 I have in college right now. What I find out is that with my current and past (not even considered I believe) income levels that because I have saved and been prudent with my money, the Federal Government feels no obligation to help me pay for 3 in college. YET had I spent most of my earnings over the last 25-30 years and not saved, the Federal Government would be happy to give me money to pay for my families higher education. I know people that have had two incomes, spent most of it on transient things, and had little saved. The Federal Government rewarded them by offering money to help put their children through college.
3) Aid to dependent children. I don't know that I need to say more.
As long as we continue to reward people for making bad decisions, why should we ever expect them to make good decisions? Increase the gasoline tax, don't decrease it. Encourage people to buy more gas efficient vehicles, encourage them to drive slower to both save gas and lives, encourage them to find ways to eliminate unnecessary trips via car, encourage them to carpool, etc. Yet the morons we are considering electing think we should instead make it cheaper to waste a non-renewable energy source. Whoever it was that said we get the government we deserve was all too correct!
Now, after increasing the gasoline tax, take the additional tax revenue and truly fund significant research to get us off our dependence on oil. Plow that money into solar research, fuel cell research, etc. But please whatever the bloodsuckers do, don't let them do what they did with the lottery. Lotteries were introduced into most states under the premise that the additional revenue to the state would fund education. Well perhaps on paper that's what's happening. But I think peoples reasonable expectation is that education funding would go up by that amount. But that isn't what was promised. So instead the existing funding gets redirected elsewhere and then the liars in office can truthfully say that the lottery money is going to education. Nice slight of hand or trickery of words.
So what is the behavior that a Gas Tax Holiday rewards? Using more gas. Way to presidential hopefuls. This has to rank up there with the most stupid ideas ever. In fact it must be right up there with rewarding people for making really really bad financial decisions and buying a house they had no business buying in the first place, by helping bailing them out of their financial mess. This is truly reverse financial Darwinism at its best!
Forgive me if I write from a reward/consequence model, but that model appears to work in many situations. It has certainly worked with my children, although I'm not necessarily perfect at applying it. It must be pretty clear that if you reward people for making stupid financial decisions, they are simply going to make more of them. Let me count the ways the government encourages stupid financial decisions:
1) The current sub-prime mortgage fiasco where people bought far more home than they could reasonably afford under the false belief that they'd be able to sell their home when needed at a nice fat profit. This is leverage working for you, i.e., you put little real money into the investment and hope that the gains on a much bigger, leveraged, amount will earn you big time money. The problem with leveraged investments is that if they go the other direction, i.e., down in value, your liability is also greatly enhanced. This is the basic problem many sub=prime mortgatge holders are finding themselves in.
2) Penalize people for saving money. This comes in all forms but was most poignantly pointed out to me in applying for financial aid for college. I diligently filled out a FAFSA form, the required Federal form to try and get any form of financial aid, only to find out that I've been too fiscally responsible to get any form of financial aid for the 3 I have in college right now. What I find out is that with my current and past (not even considered I believe) income levels that because I have saved and been prudent with my money, the Federal Government feels no obligation to help me pay for 3 in college. YET had I spent most of my earnings over the last 25-30 years and not saved, the Federal Government would be happy to give me money to pay for my families higher education. I know people that have had two incomes, spent most of it on transient things, and had little saved. The Federal Government rewarded them by offering money to help put their children through college.
3) Aid to dependent children. I don't know that I need to say more.
As long as we continue to reward people for making bad decisions, why should we ever expect them to make good decisions? Increase the gasoline tax, don't decrease it. Encourage people to buy more gas efficient vehicles, encourage them to drive slower to both save gas and lives, encourage them to find ways to eliminate unnecessary trips via car, encourage them to carpool, etc. Yet the morons we are considering electing think we should instead make it cheaper to waste a non-renewable energy source. Whoever it was that said we get the government we deserve was all too correct!
Now, after increasing the gasoline tax, take the additional tax revenue and truly fund significant research to get us off our dependence on oil. Plow that money into solar research, fuel cell research, etc. But please whatever the bloodsuckers do, don't let them do what they did with the lottery. Lotteries were introduced into most states under the premise that the additional revenue to the state would fund education. Well perhaps on paper that's what's happening. But I think peoples reasonable expectation is that education funding would go up by that amount. But that isn't what was promised. So instead the existing funding gets redirected elsewhere and then the liars in office can truthfully say that the lottery money is going to education. Nice slight of hand or trickery of words.
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