The American Spectator

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(Page 3 of 17)

There is, however, another huge part of the problem that Mr. Peters does not address. Every -- yes, every -- product that we buy has imbedded in its price the cost of transportation to market. Every product that we buy -- yes, every one -- at some point in the chain is transported by a wheeled motor vehicle. So the cost of a gallon of milk is overly inflated by the exorbitant taxes on the diesel fuel for the truck to haul it from farm to bottler, and again from bottler to distributor, and again from distributor to retail store. Now if a gallon of milk costs in excess of $2.00 -- which it does -- how much of that price represents an overcharge because of fuel taxes. Seems to me that milk could be priced at the $1.00 to $1.50 without any loss of profit to anyone -- except for the taxes imposed on the transportation segment of the product cost.

None of this even touches the same exorbitant taxation rates for those who heat their homes and/or cook with oil or gas. None of this touches on the taxation rate on fuel for boats/ships for both pleasure and commerce that do not use the roads, or the airplanes that fill our skies, or the trains that are run with diesel fuel. This also does not address the double taxation cause by the transportation tax costs driving up the retail price of the produce, resulting in higher than otherwise sales tax -- in states that have such.

Then there is the petroleum tax driven cost to produce and market a gallon of ethanol -- the so called petroleum free, renewable resource. I have seen a creditable estimate that it takes over a gallon of petroleum to produce one gallon of corn derived ethanol.

A good case can be made that the taxes imposed by government, at all levels, on petroleum and its products are the most pernicious taxes levied on the American public, albeit in a relatively hidden manner. One might argue that the governmental units look at this tax as a "sin tax." The sin being the usage of petroleum in any of its forms.

p>End of rant. br> -- Ken Shreve /p>

Normally I would emphatically agree with the theme of this essay. However, I believe that the price mechanism should be used to depress vehicular (specifically automotive) fuel demand and force the country to do what CAFE did in the late '70s/early '80s and what the country should do today (if it were not for lobbyists and related special interests).

The expanded revenues either could be a "profit" which, one would hope, would stimulate more exploration and production (E&P) or a tax. However, if one believes even remotely in "peak-oil," then the expanded E&P may not result in significantly expanded production -- at least in areas of the world not generally hostile to the U.S.

Perhaps tax increases is the better way to depress demand with the following caveat -- the increased cash-flow DOES NOT end up in the General Revenues but, rather, is spent on technologies that will quickly generate petroleum substitutes. For example, technologies presently exist to convert coal to vehicular fuels. South Africa has done this for more than half a century and the Germans did it in WWII. NOTE: the U.S. is the "Saudi Arabia" of coal.

Beyond that are the tremendous oil-shale resources that presently are problematic for conversion to vehicular fuels but represent a resource second only to uranium and thorium in terms of US reserves. Profit-driven effort could bring shale "oil" to the market with appropriate attention to environmental concerns.

In recognition that there are those who believe in global climate change, CO2 generation in these conversion processes should be minimized and that which is produced should be sequestered, preferably in connection with EOR.

Who should do the necessary and tertiary development and deployment? The private sector with carefully tailored support from the appropriate Department of Energy National Laboratories (whose particular missions are energy in general and fossil energy specifically).

p>Eventually, maybe, cellulosic alcohol may make a modest contribution, but certainly in my lifetime. Notwithstanding the current planning of the Government which, in all likelihood will emphasize something different in only a few years (there is considerable historical evidence for this pessimistic assertion).

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