The Oil Drum: Europe

This is a guest post from kiashu

Here in Australia Garnaut, an economist, is undertaking a study on what to do about Australia's greenhouse gas emissions. He has a website about it, and has released a draft report on it. He is in favour of strong action, though what he calls "strong action" and what you and I call "strong action" may be rather different things.

There are two basic ways people think of for dealing with emissions of unpleasant substances, aside from banning them entirely - tax them, and trade them. In taxing them we say, "emit as much as you like, but you have to pay for it." The theory is that people will reduce spending on things with that cost attached to them, thus reducing emissions of it, and that the revenue raised can be spent on dealing with the problems from it. In trading them we say, "you can only emit this much, and you must pay for it." So the government sets a target amount for emissions, creates permits for that much, and lets companies buy and sell these permits as they wish.

The government and Garnaut are in favour of an emissions trading scheme (ETS). I'm not. Remember the point of our schemes is to stop carbon emissions. We did not abolish outright slavery by setting up a slave market. That only encourages it. (Of course it's still not entirely abolished even today, but fewer people as a proportion of the world population are enslaved than ever before, and not because someone established a cap and trade system for slaves.)

I made the following comment recently in a discussion on Global Warming:

If you put it to a popular vote, and people learned that GHG emissions could be arrested (hypothetically) if they were willing to pay $7/gallon of gasoline, what percentage would vote for that? My guess is that it would be well less than 20%, implying that GW concerns will give way to economic concerns.

At one time I was really worried about Global Warming. And at the risk of starting a Global Warming debate here (one that I don't wish to participate in), my position is that the scientific consensus backs the hypothesis that human activity is contributing to Global Warming. I am not an atmospheric scientist, so in this case I rely on the scientific consensus of the experts. This is the same standard I apply to other fields in which I lack expertise.

Apropos of yesterday's gas tax report and discussion, today we bring you Alan Drake's ideas on post-peak mitigation. Alan is an engineer, former accountant, and professional researcher based in New Orleans with best hopes for many. Alan would also like to thank the lovely and talented Wendi Berman for her editing skills and assistance.

Many proponents for public spending on Post-Peak Oil mitigation are attracted to gasoline and diesel taxes or more generic oil and/or carbon taxes. In an era of rapidly increasing oil (and all other energy) prices, passing such taxes will be politically difficult and take precious time.

I would like to propose an alternative tax for Phase I of Peak Oil mitigation that adheres to Sen. Russell Long’s famous dictum “Don’t tax you, don’t tax me, let’s tax that fellow behind the tree!”

World Trade Organization (WTO) rules allow for a specific exemption that will allow the United States of America to impose a non-discriminatory tariff (it applies to all goods and taxable services, with a specific exemption for essential goods) if the funds raised are used to reduce our structural trade deficit, i.e. our oil consumption.

Specifically, the WTO allows nations with a structural balance of trade deficit (which the USA certainly has) to apply a non-discriminatory tariff if the funds from that tariff are used to reduce the structural trade deficit (which reducing oil use certainly would do). A separate section of the WTO treaty allows the importing nation to exempt “essential” goods.

In 2006, the USA imported $1.861 trillion in goods (and exported $1.023 trillion). This allows for significant revenues from a small percent tariff.

Rep. John Dingell has a long history of opposing fuel-economy increases and other "green" initiatives.  His position as defender of Detroit's remaining auto industry more or less forces him to support the production of whatever vehicles are still profitable there, regardless of what they do to US energy security, balance of trade or global climate.  For the last 20 years or more, this has meant large cars and personal trucks:  the "guzzler" segment.  Because of this, I was surprised and pleased to learn of a proposal from him for a carbon tax and a petroleum tax, to help move the US away from both fossil fuels in general and petroleum in particular.

Both emotions lasted about as long as it took to read the summary.  It does not appear to be a serious basis for initiatives to move away from fossil energy.  Instead, it looks like a straw-man proposal designed to fail, while appearing to promote the interests of union labor in the process.  My final appraisal is "disappointingly cynical".

N.S. premier urges revolt against federal budget

The 2005 Atlantic Accord, a deal signed by the then-Liberal government between the governments of Nova Scotia and Newfoundland and Labrador, protects those two provinces from having their offshore oil and gas royalties clawed back under the federal equalization plan.

However, to accept an enriched equalization deal, they have to abandon the accord.

Drilling jobs scene bleak

Thousands of rig hands in Western Canada are waiting for callbacks from their drilling-company employers, but industry observers say the high Canadian dollar and a crash in the royalty trust and junior part of the oilpatch mean they could be idle for a long time.

While the drilling industry, which for years worked to build up its labour pool, is reluctant to talk in terms of outright layoffs because of the seasonal nature of its work, it's expected there will be almost 3,500 fewer roughneck positions this summer relative to last year, as the number of active rigs drops to 376, from 512 in 2006.

[ED by PG:] Engineer-Poet graces us with a new "Short Takes" segment--a few interesting takes all thrown together, whether it's educating us on differential equations, cracking on the MSM for being innumerate or dropping snarky limericks on us--there's nothing quite like the E.P.-ster, and it's under the fold.

Canadian rebirth for wind power

Inside an unremarkable office building on the outskirts of Vancouver, a small team of engineers and marketers is building a technology that will tame the wind.

It is a high-tech battery that looks like a pair of hot-water tanks linked by a twisting network of plastic piping. Each tank is filled with vanadium, an element named after a Norse fertility goddess that could give birth to new possibilities in alternative energy by making wind turbines nearly as reliable as coal-fired electric plants.

First designed by NASA and developed by Vancouver-based VRB Power Systems Inc., the vanadium battery took a major step toward commercial success yesterday after the Irish government released a study showing it could substantially boost profitability at wind farms when the Emerald Isle is looking to inject some of its famous green into its power supply.

Shortage of diesel fuel now 'critical'

Two major fuel suppliers are sounding the alarm for Ontario's trucking industry amid "critical" shortages of diesel fuel in the province.

The fuel shortage, which has seen motorists inconvenienced for more than a week as gas pumps intermittently run dry, has forced Ultramar to suspend diesel deliveries to four Toronto-area service centres and three other Ontario cities - Hamilton, Cambridge and London.

"These sites will remain open only while the product currently in the storage tanks lasts," Ultramar said Thursday in a notice to customers....

...."The last thing you want to have is a situation where your gas stations may be closed but, worse, our truckers cannot get the product from A to B," he said.

McTeague said the Energy Supplies Emergency Act allows the federal government to take action if shortages cause social or economic problems.

When I look to our energy future, and consider all of the possible scenarios and how we can potentially transition to a more sustainable way of life, there is no option that makes as much sense to me as taxing gasoline at a much higher rate. I want to open up a dialogue with TOD readers - especially those who don't think this is a good idea - to see if we can work our way through the obstacles that would prevent a gas tax from being enacted.

First, I would like to poll the readers to get an idea of where people stand on this issue. The current federal gasoline tax is $0.184/gal. How high do you think gasoline taxes should be?