Common Sense & Scorching Temps on September 13, 2018

September 13, 2019, by John Norris

It has been blisteringly hot here in central Alabama, seemingly forever. You expect hot weather when you live here; however, recent high temperatures have been unusual even for those of us accustomed to them. So much so, climate change was a popular topic of discussion at a cocktail party I attended in Montgomery, Alabama, this past Thursday night.

You read that right: climate change was a topic of discussion at a recent cocktail party in Montgomery, Alabama. The prevailing opinion was there IS something strange about recent weather patterns. Further, no one disagreed some 7.7 billion people requiring food to eat, water to drink, clothes and shoes to wear, and a dry place to put their head a night will consume a lot of natural resources around the global, putting some level of stress on the environment in the process. However, folks differed on the absolute impact mankind is having on the climate and what we, as Americans, can really do about climate change.

As someone there said, and I paraphrase: “we (meaning Americans) can all go live in caves and eat grass, and it wouldn’t make a [darn] bit of difference is no one else changed their ways. Shoot, there a lot of folks that want the American lifestyle, and now we are telling them they can’t have it because of the weather? How does that sell in places like India and China? You think they’ll buy that? I sure as [heck] wouldn’t.” Not surprisingly, heads nodded in agreement.

I have long maintained people will do what they are incentivized or disincentivized to do. If you don’t want someone to buy something, you make it exorbitantly expensive. Conversely, the quickest way to empty the shelves is to slash prices. That sort of thing.

With this in mind, what would you say the biggest obstacle facing grand, sweeping, government programs to combat climate change? Practicality? Perhaps. Actual effectiveness? To be sure, that is in the mix. Economic considerations? I would say so. However, when push comes to shove, I imagine a lot has to do with what is mine, what is yours, and what is ours?

After all, ‘we’ can all agree the climate has changed in some form or fashion until we are blue in face. Rising ocean temperatures? Plastic bottles in the Pacific? Something HAS to be done. WE have to keep THEM from doing that! What? Why are you looking at me? Brother, I am 4-5 hours inland from the Gulf of Mexico, and nowhere close to Sri Lanka or wherever!

That gets at the heart of it: what is my actual slice of the problem? How do we quantify that? Why should I have to change MY behavior when MY contribution to climate change is but a drop in the proverbial bucket? What is ‘all of this’ going to cost ME?

Indeed.

According to taxfoundation.org, California has the highest taxes on gasoline of any state in the country, at 61.20¢ per gallon. If your tank takes 15 gallons, Sacramento will take $9.18, thank you very much. On the flipside of the coin, Alaska’s tax $14.66 per gallon. 15 gallons there will result in $2.20 for Juneau. If you fill your tank up once a week, living in California will cost you $477.36 in state gasoline taxes. Comparatively, an Alaskan would fork over ‘only’ $114.35 in this form of tax.

With this information at your disposal, imagine I play a little game with you. I will ask you one question: on average, do Alaskans drive bigger cars or do Californians, again, on average? If you get the answer right, I will pay you $100. If you get it wrong, you pay me $100. Again, this is just for fun…no money will exchange funds, and all that good stuff. So, what is your answer? Who drives the bigger cars? Alaskans or Californians?

According to an article originally posted on usatoday.com on August 29, 2017, written by an Ashley May using Kelley Blue Book data, the most popular car in California in 2016 (and presumably still) was the Honda Accord. We all know the Accord, the reliable sedan with the good gas mileage. You put oil in it every so often, and off you go. By comparison, the Ford F-150 was the most popular vehicle up North. Hmm. Coincidence?

Pennsylvania had the second highest state gasoline sales tax at 57.70¢ per gallon, and the Honda CR-V, a small SUV, was the mode vehicle in that state. It was also the most popular in Illinois, which had the 3rd highest state tax on gasoline. On the opposite end of the spectrum, the Ford F-150 was also vehicle of choice in the 2nd and 3rd cheapest states, Missouri and Mississippi. Interesting. Here are the URLs.

https://www.usatoday.com/story/news/nation-now/2017/08/30/these-most-popular-cars-and-trucks-every-state/478537001/

https://taxfoundation.org/state-gas-tax-rates-2019/

 

With a couple of exceptions (like Indiana and Hawaii), the general characteristic, if you want to call it that, was/is: the higher the gasoline tax, the smaller and more efficient the vehicle of choice. The inverse was also true. This makes complete sense: the higher tax makes gasoline more expensive for consumers, so they buy cars which use less of the stuff. As such, I would be willing to bet $5 of your money sedans are a higher percent of dealer inventories in California than they are in, say, Missouri.

Now, what makes more sense? Washington mandating auto manufacturers get to some predetermined emissions level by a certain date or face penalties? Or raising the tax on gasoline which would increase consumer demand for more fuel-efficient vehicles. Intuitively, this would cut down on emissions. Hmm. In the latter instance, the companies are simply responding to the markets, which would result in a more efficient, more rapid change in their business models than the former.

But isn’t it the same? I suppose it is, in the sense the government had a goal of X by time period Y. However, what gets it there faster? The negative incentive of a punishment? Or the positive incentive of an increase in demand for a certain type of product?

If this to hard to grasp, let me use another analogy: you are standing there minding your own business. man approaches you with a bucket of ice water and a bad attitude. He informs you he will punch you in the face if you don’t pour the bucket over your head within 60 minutes. What do you do? Assuming he is bigger than you are, you would wait 59 minutes before doing as he asked, which would give the ice some time to melt. If he is smaller, you would tell him to take a hike.

Now, imagine the same man with the same bucket approaches you with a smile and a fistful of dollars. He says he will pay you $100 if you do as he asks immediately. He will give you $20 if you do it within 15 minutes, $10 within 30, and $0 if you take a full hour to do so. What do you do? I imagine the majority of folks would opt for the $100.

Don’t get me wrong. I am not clamoring for higher taxes on gasoline. However, IF the goal is to reduce the consumption of things which are assumed to be bad for the environment and/or are contributing to climate change, why not let the consumer decide how much such things are worth to them? As opposed to mandating this, that, or what have you? The latter approach will take longer and ultimately be more expensive for everyone.

Clearly, the kneejerk reaction would be this would hurt the least fortunate among us and be an overstep of governmental authority. Fair enough, as I can’t really argue with the logic other than to say we already do this type of thing on plenty of other items, booze and tobacco being first to mind. Secondly, whew, I would much rather the government adopt this type of approach, higher taxes on consumption, instead of adopting economically dubious schemes like the Green New Deal in order to effect climate change. That is, if those are my options.

Of course, maybe everyone is just overthinking everything, the economy and climate both. However, I will promise you this: climate change is going to be a more important issue in next year’s political campaigns than you might imagine at this time.

 

 

 

Have a great weekend.

 

John Norris