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How to Lower NC’s Gas Price

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North Carolina has the highest gas price in the lower 48 states. That’s the latest news on the gas price front. There’s a good reason that this is the case, too. North Carolina’s gas tax now sits at a whopping 27 cents per gallon. Unlike sales taxes, gasoline taxes are paid by the gallon, as opposed to a portion of the price. Well, that’s not entirely true either. The Democrats who control the North Carolina Legislature thought it was a good idea to design the taxes so that they would rise when the gas prices did. In other words, if something happens to drive up the cost of gas to the point that people are having trouble finding the money to buy gas, and SUVs are nearly impossible to sell, the Democrats of North Carolina will make sure that your prices go even HIGHER.
What if North Carolina abolished its gas price altogether? The average gas price in North Carolina would immediately drop from $3.07 to $2.80. Gas stations on the border of Virginia, South Carolina, and Tennessee would start to see a lot more cross-border traffic for gas (right now, that traffic goes into Virginia, not out of it). Along with the gas, customers would spend money on drinks, snacks, and other items. Those items would be taxable through the sales tax. North Carolina would see an immediate economic benefit from lower gas prices, and that would result in an increase in revenues from other taxes. It is not unreasonable to expect that the revenue lost from the abolition of the gas tax would be completely offset by other increases.
Unfortunately, Democrats don’t understand economics enough to do this kind of sensible thing. If they did, they wouldn’t be Democrats.

Oil Company Boycott? Not Workable

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I’ve just gotten another one of those viral emails calling for a day of boycott against the oil companies. These things seem so reasonable, on the surface. Unfortunately, or fortunately (depending on your economic knowledge), the whole concept is unworkable.
The standard line starts out something like this. “If we all used no oil for one day, the oil companies would run out of storage space for their stockpiles.” It would be easy to say that this statement leaves an important detail out. It leaves a LOT of details out. The whole statement is flawed, unworkable, and plainly false.
Oil and gas don’t work the same way other products do. The stockpiles of gasoline from which we purchase are counted in many locations. There are huge storage tanks. There are smaller storage tanks. There are trucks, train cars, ships, and pipelines full. All of this is counted in the stockpile. The gasoline in the storage tanks at your local station are also a part of the stockpile. At many points in the supply chain, slack space is available.
Note that because the local gas station’s tanks are included in the stockpiles, the price you pay at the pump is actually the replacement cost. You’re not paying to buy from the tank. You’re buying from the stockpile. That’s why price increases at the wholesale level almost immediately pass down to the gas pump.
With that said, why couldn’t we simply boycott the oil companies for one day and show them we don’t need them? The answer to this one is even simpler. We DO need them. Far from being the evil corporate greedmongers that some would like you to believe, the oil companies are providing a necessary product on a massive scale at a reasonable price.
We need the oil companies because we need gasoline. We need lubricants. We need plastics, tars, and other petroleum products. To not purchase gasoline for one day would be ineffective, if we still used petroleum products for that day. If we drove to work on that day, we’d just buy the same amount of gasoline the day before, or after, thus negating any effect. We would have to avoid using/purchasing drinks in plastic bottles, Vasoline, WD-40, paint thinners, many paints, shingles, electronics, and electricity. The list goes on, of course, but you get the idea. We also don’t want to use any products or services that require the oil industry to exist, which rules out pretty much everything. Don’t drink water, because the pumps require electricity, which is created by burning oil or another fuel that is transported using an oil-driven machine.
To effectively carry out a boycott on the oil companies, the process would be quite simple. Flip the main breaker on your house to the off position. Seat yourself on the couch and stay still, to reduce food and water needs. Go to the bathroom in a jar, if you can’t hold it in for 24 hours. Eat nothing. Use nothing. Drink nothing. Buy nothing. Produce nothing. Do nothing.
Oil impacts every aspect of our lives in this modern age. Instead of complaining about fluctuations in prices on one product of the industry, try considering how the oil industry has made our lives better in almost every way. Be careful that your immediate dislike of market-driven price increases don’t drive you to be a luddite.

The Lorax – An Ecomonic Fable Revisited

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Most anyone under the age of 40 who has read a book has read “The Lorax” by Dr. Seuss. It is widely understood to be a book about how uncontrolled greed can cause environmental and economic ruin. Is that all there is to it? The Commons Blog puts an interesting spin on the story.

“The truffula trees grow in an unowned commons. (The Lorax may speak for the trees, but he does not own them.) The Once-ler has no incentive to conserve the truffula trees for, as he notes to himself, if he doesn’t cut them down someone else will. He’s responding to the incentives created by a lack of property rights in the trees, and the inevitable tragedy results. Had the Once-ler owned the trees, his incentives would have been quite different — and he would likely have acted accordingly — even if he remained dismissive of the Lorax’s environmental concerns.
“The story ends with the Once-ler giving a young boy the last truffula seed. He tells him to plant it and treat it with care, and then maybe the Lorax will come back from there. The traditional interpretation is simply that we must all care more for the environment. If we only control corporate greed we can prevent environmental ruin. But perhaps it means something else. Perhaps the lesson is that this boy should plant his truffula trees, and act as their steward. Perhaps giving the boy the last seed is an act of transferring the truffula from the open-access commons to private stewardship. Indeed, the final image — the ring of stones labeled with the word “unless” — could well suggest that enclosure, and the creation of property rights to protect natural resources, is necessary for the Lorax to ever return.”

How much different could the story have been if the truffula trees had been owned by an individual, or a corporation? Cutting down the trees would still have been allowed, but someone would have been planting new trees. This would not only have prevented the loss of the trees, but also would have protected the industry, and the jobs involved. Only in fiction can such a major operation be a one-man job.
More on trees as a renewable resource here.

More on the EU and the Euro

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I know, I’m a bit of an economics geek. Disinterested Party has some quotes on the problem with the Euro that are quite interesting. There are some notes on the varied economics of the countries within the EU and how this poses problems. Heck, Italy alone has a widely divergent economy depending on where you look at the boot. Trying to work Italy into a monetary policy with Germany and Britan without punishing someone unduly is a rough concept.

Will the Euro End?

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In a previous entry, I speculated on the valuation of the Euro -vs- the Dollar, should a widespread adoption of the European Union Constitution fail. I proposed this as a good question for the folks over at Marginal Revolution. Well, similar questions are popping up over there now, with speculation over whether the actual monetary unit of The Euro” will come to an end altogether.
I’ve always thought that the base reasoning for the adoption of a single currency for Europe was wrong. It wasn’t all about economic health or creating a stable and healthy economic unit. It was about competing with the economic power of America. If it was about the economic health of Europe, and the potential EU states, things would be much different.

Paper Recycling is Bad for Your Butt AND The World

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So there I was, on the toilet at work. We have a fine restroom, with beautiful stainless steel sinks, track lighting and jazz music piped in from above. It’s really nice. When I reached over for some toilet paper, I found that this company, like so many others, uses that horrible recycled paper that’s less than easy on the buttocks.
This brought to mind something I’ve known for a long time. Paper recycling is bad. It’s not just bad for your butt, when you look at the toilet paper and see bits of cardboard stuck in the white sheets. It’s not all about the substandard paper you’re running through your printer. Paper recycling is bad for the economy, and bad for the environment.
Most people believe what they’ve been told. They believe that recycling paper is a good thing. Stacking up those newspapers and taking them to the recycling center is supposed to help society by reducing waste, saving trees, and making a more economical product in the end. The problem is, it really does none of that.
Paper comes from trees. Trees are good. That’s hard to dispute. I like trees. Most paper, though, doesn’t come from the majestic oaks and redwoods. You won’t see clearcutting of virgin timber to make greeting cards. Paper is generally made from pulpwood. Pulp comes from softer wood trees like the pine. These trees grow relatively quickly. Longleaf pines grow quickly and easily enough that they are actually farmed. Land is set aside for the growing of pine trees. These trees grow, are cut down for goods, and then more are grown in their place. Trees, like so many of our resources, are renewable.
So, if recycling paper doesn’t actually save the mighty oaks, or the old-grown forests, it must at least be more economical, right? Unfortunately, that’s not so. Paper from trees is a relatively simple process. Recycling adds more steps. Paper must be collected, cleaned, shredded and treated chemically before it can then be turned into a paper that is generally of lesser quality than the original whence it came. The treatment of paper to be turned into more paper uses more chemical processing than the original paper did, and you KNOW that can’t be good for the environment. In the end, the recycled paper simply costs more than paper directly from wood pulp. The only reason the end cost is lower to the consumer is because the government subsidizes its production, passing the additional costs on to the taxpayer
So, recycled paper costs more to produce, causes higher tax rates, increases chemical pollution, and doesn’t save old growth forests. Does it at least help in controlling so-called “greenhouse gasses” to leave trees standing instead of chopping them down? No, it doesn’t.
You see, trees grow and they die. When a tree grows, it turns a load of carbon dioxide into oxygen. Trees aren’t the best at this job, but they aren’t slouches when it comes to oxygen production. After a while, though, the tree reaches a point where it reaches a balance. The cast off leaves or needles fall and begin to decay. This decay process produces carbon dioxide. The amount of carbon dioxide used up by the tree eventually reaches parity with that being thrown off by decaying matter. When the tree dies, the balance shifts completely toward carbon dioxide production. If, however, the tree is turned into other products, the cycle changes.
One of the major complaints about landfills is that the bio-matter in them doesn’t have the chance to break down and decay. If we simply buried the old paper in landfills, then it wouldn’t decay either. This would result in less carbon dioxide being produced. I argue that the BEST place for old paper is at the bottom of a landfill.
Next time you buy a pack of recycled printer paper or toilet paper, think about the damage you’re doing to the environment and the economy. When I’m in that beautiful bathroom at work, I’m just thinking about the damage that recycled paper is doing to my butt.

France’s EU Vote and Monetary Valuation

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In recent weeks/months, the US Dollar has been losing value against other currencies, including the Euro. This brings a couple questions to mind. One, what happens to the Euro if widespread adoption of the EU constitution fails? Two, what happens to the value of the Euro, and the dollar -vs- the Euro, if widespread adoption of the constitution fails? This is a good question for the folks over at Marginal Revolution.

Henry Ford -vs- The Selden Auto Patent

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While reading a post on the pharmaceuticals market over at Marginal Revolution, I noted a link to the story of Henry Ford’s fight against the Selden Auto Patent. In a nutshell, George Selden conceptualized a poorly designed vehicle that ran on a gasoline engine. No part of it was terribly feasible, and no automobile was ever built to its specifications. Early auto manufacturers, however, banded together to form an industry association and control the patent. Automakers that they liked would be charged royalties, and everybody else would be kept out of the market.

Henry Ford didn’t see it that way. He designed a car that was in no way related to or derived from the Selden Patent. When the controllers of the patent came after him, he fought back. The story is a good read, and is a nice lesson in patent law and economics. It also gives a new take on the Henry Ford story that I had been unaware of.

Black Market Candy – The Underground Economy

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I was reading Bruce Bartlett’s article on underground economies, and it got me thinking. What is an underground economy, and how can we learn from them? This led to my own thoughts about what underground economies I had witnessed, and before long I was ready to spew forth with an anti-public-education screed when my browser crashed. Here’s take two.

More: Read the rest of this entry…

Oil 101

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A classic post from Lockjaw’s Xanga Page

One respondent to yesterday’s blog pointed out that some have tried to tie the higher gas prices to President Bush, VP Dick Cheney and Haliburton. One of my favorite arguments is that Bush is pushing gas prices up so Haliburton can make more money. This concept is laughable. Anybody who comes up with that kind of idea is so devoid of logic and knowledge that they shouldn’t even be taken seriously. Why? I thought you’d never ask.

More: Read the rest of this entry…

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