adam : It was not without protest. There were riots.

I think it was the right decision, and it did not bring down the government, but Indonesians were never likely to simply take the end of a 30 year tax break on the chin.

cam : Pundits like Zakaria argue that this maybe better done by a strong arm dictator who is enforcing capitalism; ie Pinochet-style, but in this instance the collective recognition of it being the right policy meant that liberal democracy handled it well.

I wonder why many assume that liberal democracy is often best added after capitalism when a strong arm has finished implementing those policies.

There is that individual wealth threshold that Zakaria quoted, IIRC it is about 3K per capita, where liberal democracy becomes more stable after that is reached.

Don't know.

John Barrdear : I agree, but stuff like this gives me hope.

The obvious difficulty for econometricians in the (near) future will be to identify how much of the drop in demand that you quote is due to the high price of oil or and how much because of the recession.

adam : Ukraine vs Indonesia: I wonder how relatively crucial oil is to the average Indonesian vs gas to the average Ukrainian coming into winter.  I\'m thinking \"can\'t afford to ride my scooter to work\" versus \"can\'t afford to stay warm enough to live\".

cam : Indonesia also doesnt have gas pipes: running across its\' territory that supplies western Europe. So you have to wonder if there was any strong arming going on as well from the western European nations.

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ranomatic : So I read the .pdf paper: You\'re right.  Although they propose several ideas for reducing consumption, they only address the short term.  No one has any sort of \"futurist\" view of the post-car culture or how to get there from here.  Lack of action now could result in a global economic collapse.

ranomatic : What does this mean?:

The singularity will be reached at 5 litres to the 100 kms.

Are you saying that\'s the best the auto industry can do?

cam : I was being sarcastic: in my best Alexei Sayle voice. But yeh pretty much. We will hit the point of no return (singularity) one Hummer at a time. We are doing nothing to make us non-oil dependent. We will hit peak oil with the throttle pressed to the floor.

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cam : Also: that is the Australian equivalent of miles to the gallon. Sorry.

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ranomatic : Mutant that I am,: as long as we use metric or US units, my mind freely converts.  All bets are off if you start using Imperial gallons :)

cam : Best comparison: IIRC Pontiac GTO gets about 20 mpg, Holden Monaro gets about 14 litres per 100 km.

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cam : Cross-posted: on Husi as Pay The True Cost Of Gas! .

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ranomatic : Check out this chart: from the Australian Institute of Petroleum .  Worldwide petrol pricing (without the tax) is basically the same.  The difference is tax, going from the USA (with the lowest tax component) to the Netherlands (where 2/3 of the pump price is tax).

To pick a US-only model as an example, how many Nissan Armadas will you see in the Netherlands? With that kind of tax - zero.

cam : But Europe still has a car culture: There is no escaping it. They might have a larger number of small European cars on the roads, but it is still a car culture with people living a car ride away from the shops and work.

When I was over there, there were no SUVs but there were still plenty of BMWs, Audis and Mercedes on the roads. By the same token my \'vette gets 30mpg on the highway. I rented a Chevy Cobalt last week and it got 33 mpg on the highway! The difference is marginal in fuel consumption, and in the US that is only a $9 difference each tank.

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ranomatic : I understand: your thesis. But what will initiate this \"disruptive technology?\" I think the most desirable thing is high enough prices so that there is clear economic pressure away from the car culture. Higher prices do that. And they have the added bonus of decreasing consumption and reducing emissions until the technology is developed.

I drive what is a very typical Euro car - a VW TDI. The worst fuel consumption I have ever seen on it is 45mpg, driving around town with no highway trips. This is a little better that average, but not excessively so. In pure highway driving it gets 55-60mpg. Your \'vette mileage is also better than typical, but again not excessively so. If you drove it hard you might only see 16mpg. I have no idea what was wrong with that Cobalt.

What alternative sources for disruptive pressure are there? The biggest would be a permanent global collapse of the oil supply. It will happen - the only question is when. I would rather see the end of the car culture before that day comes.

cam : Bumping the cost of petrol through taxes: ... only means that marginal technologies, which are uneconomic otherwise, get a look in. People wont buy them unless they are superior and cheaper to existing petrol engined cars.

US military projects helped produce nuclear power. Maybe the US needs to make energy a military issue and use the 500 billion USD military budget to throw consistent funding toward energy research. As georgeha on HuSi pointed out, the cost of petrol includes the cost of the US military being deployed in the Middle East.

The other alternative is to make the hidden costs of petrol open. Carbon credits, or some other form of market recognition of extra cost. Hummer drivers that go into DC each day should pay more for it. DC is on the verge of losing federal highway funding because the air is so crappy. Carbon credits maybe one way to physically show that cost, and enable those, such as yourself, who have more fuel efficient cars to sell extra credits to hummer drivers.

Taxes dont work. We know they dont go to where they are supposed to. The 40% tax on petrol hasnt gone to energy research in Australia, doubt it has in the US. It just disappears into the warm fuzzy coffers of government.

Petrol is cheap for a reason, it is still plentiful, there is a large logistical infrastructure to support the extraction, refining and transportation of it. Taxing it more isnt going to change that. Maybe we simply need to reflect its true cost.

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Scrymarch : Coming and going: These taxes don\'t go where they\'re supposed to, but raising the prices of products is a very good way to move people off it.  William Pitt taxed windows, and everyone bricked up their windows.  And carbon production is something that needs to be decreased.

Now ideally taxes might be used for something useful, or even related to their imposition, but hey, income tax isn\'t used to create employment.

Disruptive techs are well and good, but evolutionary tech goes a long way too.  You can predict evolutionary tech, all you can do is create an environment for disruption to happen in, and for energy high petrol taxes are part of that.  When disruptive techs come on the scene they need evolution to get a widespread market.  This happened with lightbulbs and microchips.

Petrol tax is almost the only tax I\'d be happy to see doubled rather than halved.  For consistency it should be bundled in as a carbon tax.  I think you\'re flat out wrong when claiming car use is unrelated to petrol prices too, recent research suggests the opposite .

cam : Taxes arent working though: Europe taxes the crap out of petrol. The world has been taxing petrol for fifty years. We have even gone through petrol price shocks - yet even Europe remains a car culture, reliant on petrol, car infrastructure etc etc etc. Upping the price through taxes to retard consumption has not changed the fact that all nations remain wedded to petrol.

The best we can do after 30 years of the government interfering in the market is small cars in Europe, and hybrids in the US. Hybrids carry their only environmental problems when the batteries have to be retired, which isnt reflected in their cost either.

The disruptive technology need not be an engineering break-through, though it would be better if it was. It could be something as simple as carbon trading, or air-pollution trading.

Petrol is cheap to extract, refine, and distribute. That isnt going to change, even after peak oil, it will continue to be relatively cheap for a long time. The problem with petrol consumption is its pollution. High prices at the petrol pump dont make people aware of that cost, which they are not paying, and which taxes on each litre of petrol dont pay.

The only way to give non combustion engine related technologies a chance is through some external currency system which reflects the pollution aspects of the combustion engine.

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Scrymarch : European car culture: The only way to give non combustion engine related technologies a chance is through some external currency system which reflects the pollution aspects of the combustion engine.

This is the reason I support petrol taxes.  I do fear there\'s a perverse incentive at the moment for the government to maximise petrol tax revenue rather than actually move to an alternative fuel source, but ultimately pollution mitigation is a higher priority.

Carbon accumulation in the atmosphere tends to have a lot of inertia, and you get a compound interest like effect on early reduction.  So unless petrol taxes are directly spent on subsidising coal they\'re a better bodge solution than nothing.

I don\'t understand how European car ownership is supposed to translate to price inelasticity.  There are plenty of reasons to own a car, but there\'s also a range of options.  I lived in London and its outskirts for two years without a car; it was largely pointless driving in and around town.  The German (eg) highway system is well engineered, but it\'s not the only option - rail is often cheaper and more convenient.  You don\'t get strip malls and drive throughs to anything like the same degree in Europe as Australia or the US.  I\'d be surprised if population density wasn\'t also a factor.

There are some point to point medium range journeys where cars are superior, and there are some people that just prefer cars, but since the point is not to eliminate cars, but rather petrol, where\'s the problem?

I agree the external costs of petrol should be more closely tied to the costs of the pollution; it\'s a long long way from there to abolishing petrol taxes.  I wonder if consumer carbon credit cards could work.  I suspect the government would still have to underwrite them, but they could issue every citizen with (say) $100 of carbon credits for the year, which you can use to buy carbon with.  Any credit that lasts the whole year you can have for free.  I hate flybuy points though :)  This is why most pollutant trading schemes have focused on the industrial side, where the accountants are comfortable with futures and the rest of it.

Hybrid battery waste can be a problem but it\'s much smaller in scale, already has recycling programs to deal with it, and is most importantly not a carbon problem ... all environmental problems aren\'t equal.

cam : Carbon/Pollution Credits: I think there is some free-market carbon trading system in Chicago already. It is opt-in, and actually has companies doing it. Which is remarkable, though I think they are doing it to impress Europe which has some mandatory form of carbon trading already IIHC (if i heard correctly) on the radio.

What would be interesting is if people dont sell their carbon credits. Because of complexity, ideology, or just not caring. That would shrink the available pollution pool, and would be an instance of the crowd being wiser than government ever could through tax manipulation.

The problem with petrol isnt so much its consumption, but its pollution. I think we should remove taxes off petrol, and not tax consumption. but instead make pollution expensive, so the real cost of the combustion engine is obvious.

Increasing taxes on petrol also hits the non-wealthy hard. I am established enough that I could barter with any prospective employer to have my salary increased to cover my travelling. Someone going for a job at Walmart would get laughed out of the room if they tried it.

If petrol prices increase, those that have enough power in the labor market will just up their salaries to cover their petrol consumption during their commute. Those that dont have that power, will just see their take home pay dwindle even more. As Millman said, it becomes a fine on people for the failure of the market and government to build an economicly alternative infrastructure and transportation method.

The other issue is, right now, I dont pay for most of my petrol consumption. When I go to New Jersey, or Pittsburgh, or Baltimore, Philly etc, I get a rental car. I expense the car, tolls and fuel to the company.

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ranomatic : Carbon Credits:

The other alternative is to make the hidden costs of petrol open. Carbon credits, or some other form of market recognition of extra cost. Hummer drivers that go into DC each day should pay more for it. DC is on the verge of losing federal highway funding because the air is so crappy. Carbon credits maybe one way to physically show that cost, and enable those, such as yourself, who have more fuel efficient cars to sell extra credits to hummer drivers.

Carbon is emitted in proportion to fuel burned.  Any system that charges for carbon is, in effect, taxing petrol use.  Even though I use less fuel than that Hummer (what an understatement!), I still emit the same amount of carbon per liter burned. I just burn less of them, so I would need to buy fewer carbon credits.

cam : What about if instead of buying carbon credits: or pollution credits, everyone was issued a fixed amount. Say when you get your tax check back, you also get a check for 1000 carbon/pollution credits. Say some place like DC which has real bad pollution problems charges 10 carbon credits a day for cars to enter. Yet some place that has no pollution problem like ...... umm ...... Finley, NSW .... doesnt charge anything. So a Hummer driving into DC each day would deplete their credits quickly. You could also be precious about yours and not sell them too, or you could flog them off to the highest hummer bidder.

The problem with that scenario is that governments will allow Dell and Walmart to be exempt from it, in order to get them in their county. Which doesnt help the problem, and just offloads the cost of pollution to the average person again.

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cam : jtl found an interesting statistic: Some European countries have higher car ownership per capita than the US ;

1. Italy 539 per 1000 people
2. Germany 508 per 1000 people
3. Austria 495 per 1000 people
4. Switzerland 486 per 1000 people
5. Australia 485 per 1000 people
6. New Zealand 481 per 1000 people
7. United States 478 per 1000 people
8. France 469 per 1000 people
9. Canada 459 per 1000 people
10. Belgium 448 per 1000 people

The Netherlands is 15 in the cars per capita list. The Netherlands which has the highest gas taxes in the graph that ranomatic found, is also a bigger user of oil (per barrel) per capita than the US. Which surprised me. I think there are a lot of myths around these issues.

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ranomatic : Yet more statistics: From World Resources Institute (using Y2K data), Australia used 940 , the USA used 1679 and the Netherlands used 339 liters of gasoline per capita.

From that same site, the Netherlands (at 4,748.1 kgoe) doesn\'t use anywhere close to the total energy per capita that the USA (at 8,083.5 kgoe)uses. It does use more total energy than several countries with lower taxes.

cam : Some more: from this site ;

Netherlands 54.56 barrels per day per 1000 people
Canada 51.91 barrels per day per 1000 people
Japan 41.51 barrels per day per 1000 people
Australia 39.64 barrels per day per 1000 people
Germany 34.12 barrels per day per 1000 people

The US isnt on that list, but about 300 million people, and 18 billion barrels of oil a day brings it to about 64 barrels per day per 1000 for the US. I got the 18 billion of another site.

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ranomatic : That site: uses data from the CIA factbook .  Your 64 barrels per day per 1000 for the US agrees with the numbers there.  I have no idea where that oil is going in the Netherlands, but it isn\'t being used in cars.  I suspect that it is being refined and exported.  Isn\'t Shell Oil\'s HQ in the Netherlands?