Gas (and possibly other) subsidies and/or local production

[Sibling Zono (anon1mat0)]

Talking to my dad on the phone about gas prices in Colombia and here (about the same) he was suggesting that it wasn't fair that he had to pay as much for gas in the 3rd world as in the 1st, partially because Colombia exports oil. Also, my son was in a conference last week on DC and among the places he visited was the Saudi embassy in which he learned that the gallon of oil there was about US$0.75.

The question: is it fair to subsidize (or not) gas/oil? I suggested to my dad that the markets (which determine the price of oil) aren't about 'fairness', at least not in the social sense.

Does it make sense that if a country produces something it should charge production costs to its people rather than market costs? Obviously by doing so it's loosing money but OTOH it could be seen as a financial stimulus to its economy*.

*This can be applied to any kind of subsidy

[Aggie]

Don't ask me, we pay more for gas in this oilbucket province than you do down south.  It's somewhere over $1.20 a litre right now.  The government gets its fair share of tax off it, but AFAIK it's taxed per litre rather than a %, so it's not a major factor at these prices.

We need refineries here, badly - the government is subsidizing oil sands development through tax breaks but they should be making it attractive to build the capacity to make the bloody stuff useable.

[Sibling Chatty]

For YEARS, Texas has had both the production AND the refineries...

We literally carried this country fuel-wise for decades. Never got us a dang thing except derision from the Damn Yankees that we shoulda let freeze in the dark back in the 70's.

What we NEED is the greedmongers out of the oil bidness, and the US out of other people's oil...

It's NOT the BBL price for crude that's the problem, it's that the US gas and oil industry's getting in their last big grab before the Bushies are out of office. Exxon-Mobil (ummm, monopolies, anyone?) and Shell/Texaco have posted record profits for the last quarters.

[Bob in a quantum-state-of-faith]

For YEARS, Texas has had both the production AND the refineries...

We literally carried this country fuel-wise for decades. Never got us a dang thing except derision from the Damn Yankees that we shoulda let freeze in the dark back in the 70's.

What we NEED is the greedmongers out of the oil bidness, and the US out of other people's oil...

It's NOT the BBL price for crude that's the problem, it's that the US gas and oil industry's getting in their last big grab before the Bushies are out of office. Exxon-Mobil (ummm, monopolies, anyone?) and Shell/Texaco have posted record profits for the last quarters.

Gotta love that-- and they STILL get government bribes tax credits.

[beagle]

Consider yourself lucky you don't live in a socialist Utopia.  Gas/Petrol here is around $9 a U.S. gallon of which about 70% is government tax.  And they've put a heavy carbon tax on normal family sized cars (small  ones by U.S. standards) and are looking longingly at putting congestion charging everywhere. And the refinery union is on strike.

The question: is it fair to subsidize (or not) gas/oil? I suggested to my dad that the markets (which determine the price of oil) aren't about 'fairness', at least not in the social sense.

If left to the markets they'll price it to what the market will bear, as always.

I guess if you believe government direction of the economy is ever warranted, then it's hard not to concede there are circumstances in which it might be appropriate for it to subsidize,  e.g. if you want to encourage industry in depressed regions furthest from the ports.
No danger of ours doing that though, they're always busy devising new ways to extract stealth taxes from drivers.

Does it make sense that if a country produces something it should charge production costs to its people rather than market costs? Obviously by doing so it's loosing money but OTOH it could be seen as a financial stimulus to its economy*.

I guess the problem is that pricing anomalies cause distortions with unforseen side effects.  For example the high gas taxes in Britain mean lorry drivers go to France just to fill up with diesel, and continental truckers have a huge financial advantage.

Perhaps it was intended as an indirect ferry subsidy

[Swatopluk]

There was (or still is) a price gradient in the Norwegian/Swedish border regions. Drivers crossed over to fill their tanks more cheaply. As a result the prices near the border went up. Drivers moved further inland where the prices where still lower, resulting in the prices there to go up too (but not as extreme as in the direct border regions) and so forth. people obviously made calculations how far it would be useful to drive for cheaper gas on the one hand and how far the price could go up while still attracting customers on the other.

For a non-fuel item: In Franfurt an der Oder many crossed the border to Poland daily to buy breadrolls. German bakeries in town were not amused and tried to stop it by legal means. (I have forgotten what the final results were)

[Griffin NoName]

Not just oil. Friends in Switzerland travel into France to do their supermarket shop as it is cheaper.

But look at the bigger picture. Animals travel to find sustenance. This is just natural processes at work.

[Sibling Zono (anon1mat0)]

Consider yourself lucky you don't live in a socialist Utopia.  Gas/Petrol here is around $9 a U.S. gallon of which about 70% is government tax.  And they've put a heavy carbon tax on normal family sized cars (small  ones by U.S. standards) and are looking longingly at putting congestion charging everywhere. And the refinery union is on strike.

According to the American Petroleum Institute the average tax on a gallon of gas in the US is 47c or ~15% at current prices. My take on the UK price is a huge incentive to use electric cars (not necessarily a bad idea depending on conditions) unless the price per KW is as expensive .

I guess the problem is that pricing anomalies cause distortions with unforseen side effects.  For example the high gas taxes in Britain mean lorry drivers go to France just to fill up with diesel, and continental truckers have a huge financial advantage.

The economic dogma suggests that any subsidies distort the market which is undesirable (with unforeseen results as you just said). I guess my question is if an economic counterargument exists.

[anthrobabe]

~rattles cage~
mass transit,put it everywhere and even in the 'suburbs',  and make people use it- yes make them use it, yes be semi ugly if necessary to make them use it
~goes back in corner and shuts up!~

[Aggie]

~rattles cage~
mass transit,put it everywhere and even in the 'suburbs',  and make people use it- yes make them use it, yes be semi ugly if necessary to make them use it
~goes back in corner and shuts up!~

Or just pull a Calgary - discourage driving to the downtown core by refusing to improve the road system (into downtown; the main routes for getting from one side of the city to the other are a great compared to most cities), allowing YET ANOTHER office mega-highrise construction project shut down the main east-west avenue (all one-ways downtown), and put a bylaw in place stating that whatever the private parking lots decide to gouge, the city WILL rise to match it in publicly run lots. 

Fair enough.

Then refuse to spend money on transit, so that those attempting to take it have the privilege of waiting for up to an hour watching full buses drive by their stop while they are freezing their butts off at -20 C.  There's a huge demand for transit here, but it's over capacity during rush hour, and underutilized the rest of the time - buses come ever 30 or 45 minutes on most routes outside of rush hour, and I've stood, waited, froze while the scheduled bus drove by with an OUT OF SERVICE sign (yes, I had checked the bus time over the phone repeatedly - they do not notify for out of service buses) - yay, let's freeze for another 45 minutes.

(definitely a suburb problem in this city - we are the area of NYC with 1/10th the population, and most suburbs are a maze of cul-de-sacs and closes and crescents that are NOT bus-friendly.  The anecdote above was on 16th Ave though - it's commercial space along the freakin' TRANS-CANADA HIGHWAY next to a shopping centre, an Institute of Technology and a library.  )

Catch-22 situation - transit generally sucks, so nobody uses transit, so they are not willing to spend money to improve transit generally to the point where people would use it - and because nobody uses it outside of peak hours, they are reluctant to add peak capacity, so transit sucks, so people drive.  And if you can afford to park downtown, then you probably drive a $50,000+ gas-guzzler SUV.

[beagle]

My commute is 40 minutes a day by car, or 3 hours by bus.  Of course transport policy is set by central Londoners...

[Sibling Zono (anon1mat0)]

For what I've heard, the trains in the UK are horribly expensive and not very reliable. 
---
Is this the end of our current civilization? Real state and/or rent are impossible in the cities, public transport from the periphery is substandard or non-existent, and all cities want to avoid people driving in them.

Time to leave the planet?
/

[Aggie]

Time to leave the cities.

Back to subsistence farming - as soon as I have enough money for land.

[beagle]

For what I've heard, the trains in the UK are horribly expensive and not very reliable. 

Haven't been on a train in the last decade. In the Eighties I did three years commuting on British Rail from Leatherhead to London Bridge. Reckon that should earn me a lifetime's exemption.

[Griffin NoName]

My commute is 40 minutes a day by car, or 3 hours by bus.  Of course transport policy is set by central Londoners...

I thought you lived in East Anglia ! 

How much of the 40 mins is spent trying to get off the bypass?