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Posts Tagged ‘fuel’

A 12-Step Program for Fuel Subsidy-aholics

Back when blog posts were composed with reed styluses on clay tablets, I put up a couple of posts (here and here) on fuel subsidies in the developing world. These are generally 1) fiscally ruinous; 2) terrible for the environment and traffic congestion;  3) highly regressive with regard to wealth distribution; and 4) market-distorting by artificially promoting fuel-guzzling industries. So I made the case that this is a pretty foolish public policy, in fact one of the worst I can think of. It’s up there with tobacco subsidies, the Concorde, pretty much everything the North Korean government has ever done, and our government’s failure in spending a paltry $615,000 taxpayer dollars for UC Santa Cruz students to digitize priceless Grateful Dead photographs, t-shirts and concert tickets.

Given the problems with fuel subsidies, I promised a third post on what to do to eliminate them. But since I have a day job, and being a professor is much more difficult than it looked when I was undergrad, I’ve procrastinated on putting this last post up. However, engineering student Kishore from India wrote asking where part three is, and customer satisfaction is a goal here at Freakonomics. Besides, no doubt governments around the world have been waiting impatiently for my post before they start dismantling their fuel subsidies, so here it is.

Given the damning case against fuel subsidies, and a rising swell of opinion that they are counterproductive on many levels, why don’t these policies go away? The IMF (see this) and I offer several reasons:

Should I Send $550 Back to Ford?

My family liked our new Ford C-Max hybrid so much that we bought a second one just a few months later.  But in between the two purchases, I learned something that made me think that in buying the second car I might also be buying a cause of action. 

Before the second purchase, I learned that Richard Pitkin of Roseville, Calif., had brought suit against Ford for overstating the C-Max’s fuel efficiency.  It apparently is too good to be true that a C-Max can achieve 47 mpg both in the city and on the highway.  

Sure enough, two weeks ago, two $550 checks arrived in the mail because Ford had dropped its official mileage estimate from 47mpg to 43mpg.  Ford calls the money a “goodwill payment.” 

Defending the Indefensible: Your Thoughts on the Benefits of Fuel Subsidies

Last post, I wrote about how many nations in the developing world, such as Egypt, subsidize gasoline and diesel fuel to keep the price at the pump artificially low. There are many ways in which this policy is ineffective, counterproductive, and just plain dumb: it wrecks the public finances of cash-strapped countries in order to create traffic congestion and air pollution, raises the world price of oil, and transfers money from the poor to the wealthy.

In fact, writing about this folly got me pretty irritated, and I’m ashamed to admit I decided to take out my frustration on you readers. So I challenged you to come up with arguments in favor of fuel subsidies, manipulatively using the siren’s song of a prize of Freakonomics swag to get you to twist your brains into pretzels.

Thanks to those of you who gamely tried; many of you confessed it wasn’t easy. For example, poor reader Rob complained that “I’m getting a brain cramp trying to think of a defense for Egypt’s policy.” Rob, I apologize and recommend sitting in a dark room while listening to a CD of soothing ocean sounds for awhile.

Fuel Subsidies: The World's Dumbest Transportation Policy?

There are plenty of transportation policy ideas which get my spider-sense tingling. But in most cases, I think it’s at least possible to form a coherent case in favor which doesn’t strain the basic tenets of logical argumentation. However, I am pretty much at a loss when it comes to government subsidies for transportation fuel, a strong candidate for the title of the world’s dumbest transportation policy.

In the developed world, governments often don’t tax fuel enough to make up for the externalities produced by driving. (Yes, United States, stop shuffling your feet and looking at the ground, I mean you.) But I’ve whined about that enough in the past.

In this post, let’s look at an even more egregious situation that is disturbingly prevalent in the developing world, especially in oil-producing countries (see this). Many governments not only do not tax fuel enough, but actually expend revenue to subsidize fuel and keep gas prices artificially low. In effect, they are paying people to drive.

Why Don’t People Run Out Of Gas Anymore?

Blog reader Becky Roser sent an interesting email recently:

My father pointed out something interesting the other day – almost no one runs out of gas anymore. When gas was $0.60 a gallon, he maintains it happened all the time. Now that it’s $4.00, you almost never see it. I have vague memories of my father running out of gas when I was very young, but I’ve never done it. What changed?

Don't Read This Post

Quick, how many of you can tell me:
1. Your cars’ fuel economy in miles per gallon or, even better, gallons per mile.
2. How much you drove in the last year.
3. The cost to fill your tank.
4. Your monthly and annual fuel expenditures.
5. How your cars’ fuel economy sits in relation to other cars in their classes.
6. What your fuel savings in gallons and dollars would be if you switched to a hybrid or other highly economical vehicle.

Lemons From Lemonade

Although hybrids and electric vehicles can help automakers meet these targets, enough efficiency can be reaped with internal combustion autos. This can come through improvements to things like tires, engines (e.g. smaller ones with turbocharging), air conditioning, transmissions, and vehicle weight. The administration estimates that this will cost $1,100 per vehicle but that the improvements will pay for themselves with $3,000 in fuel savings over the life of the car.

California Gets a "Green" Light

As you may have read, the Obama administration is moving toward giving California approval to cut greenhouse gas emissions by mandating better fuel economy. The California regulations should mean 40 percent more miles per gallon for new cars starting in 2016. The good thing is that the innovations that can make this happen are not in the realm of science . . .

The FREAK-est Links

Prostitution gets a technology upgrade. The new pricing scale for prostitution. (Earlier) Could adding vinegar make biofuels less inefficient? (Earlier) Are self-experimenters good for science? (Earlier)

West Texas Oil Drilling Is Booming — No Surprise

We just returned from four days of hiking in Big Bend National Park, and today we drove 500 miles in Texas along I-10. A number of oil wells were pumping vigorously along the highway. When we took the same road 6 years ago, the wells were there, but they were not pumping. This is no surprise: in 2002 the price . . .

The FREAK-est Links

The baby names debate continues. (Earlier) Head of new NYC Office of Financial Empowerment answers questions. (Earlier) Is public peer review necessary in security? (Earlier) Dirty, dirty biofuel

The Ethanol Mess

One of the perks of being an M.I.T. graduate is that I get an automatic subscription to the magazine Technology Review. I highly recommend it to anyone with a curiosity about science and technology. It is not technical or hard to understand (like, say, Scientific American). Rather, it is loaded with fascinating articles about cutting edge advances in technology, written . . .

The FREAK-est Links

A breakdown of current inflation psychology. VP of biofuels company to chat online about ethanol production. (Earlier) The link between women’s hairstyles and the Japanese economy. Tech pioneer predicts human-robot marriages to happen in the next 50 years.

The FREAK-est Links

N.I.H. and the E.P.A. to collaborate on testing chemicals for toxic effects. (Earlier) The 10 most fuel-efficient luxury cars. (Earlier) A guide to optimizing caffeine consumption. “Plagiarius Award” developed for the best product knockoffs of the year.

Global Warming and the Minefield of Unintended Consequences

Dubner and Levitt recently wrote a column discussing the unintended consequences of legislation intended to help the neediest segments of society. Few movements for change have met with as many unintended consequences as the efforts, both in the public and private sector, to combat global warming. Take biofuels (another topic Dubner has addressed here and here). Hailed as the darling . . .

The FREAK-est Links

Virgin to become the first airline to test biofuels. (Earlier) The “6 degrees of separation” theory fades under pressure. Is obesity really so bad? Sex workers expect business boom from DNC, though less than from GOP. (Earlier)

The FREAK-est Links

How effective are price promotions? (Earlier) Can YouTube help fight crime? (Earlier) MPAA admits statistical error (Earlier) The debate over heart stents continues (Earlier)

The FREAK-est Links

Are stressed out teachers more likely to expel students? Is the mafia involved in tennis match rigging? (Earlier) Is grass the best source of ethanol? (Earlier) Is Rock, Paper, Scissors the best way to pick a president?

The FREAK-est Links

The art and practice of political data mining. (Hat tip: Chris Masse) CalTech scientist works to develop more efficient, less costly fuel cell. (Earlier) Spam made up 90% of e-mails delivered to big companies in November. (Earlier) offers increased options for gift card recipients. (Earlier)

The FREAK-est Links

E.P.A. denies states’ requests to set their own emissions standards. (Earlier) Study indicates that insured cancer patients have better chance of survival. The one place where the Patriots lose: the point spread. Sellers offered extra incentives to buy in stagnating home market.

Is ‘Stop Liking Men Who Drive Hot Cars’ Sound Climate Advice?

Richard Gray at the U.K. Telegraph reports that Sir David King, a University of Cambridge chemist, staunch global warming activist, and one of Britain’s top government scientists, gave the following advice to a woman who asked him what she could do to curb global warming: “[S]top admiring young men in Ferraris.” King’s larger point — that we should act individually . . .

The FREAK-est Links

Why cancer vaccines don’t work. (Earlier) Professor predicts “exodus” to virtual worlds. (Earlier) Electric cars vs. gas-guzzlers: further analysis. (Earlier) Traveler chugs vodka to avoid surrendering bottle to airport security. (Earlier)

The FREAK-est Links

How is baseball signaling like financial markets? Steve Pinker to speak in New Jersey. (Earlier) Airlines offering better meals, albeit for a price. (Earlier) Chinese cremator leaves corpses half burned to save on fuel costs.

The FREAK-est Links

Methane-free kangaroo gas could slow global warming. (Earlier) Weather prediction traditionalists face off against modernists. Honda introduces hydrogen-fueled car. (Earlier) Read newspapers on the Web? That could make you an “influencer”.

Creating the Car of the Future: A Q&A With the Author of Zoom

It’s tough to imagine a world without cars. They serve as a base for our social and economic structure in a way that wasn’t thought possible a century ago. But the rapid growth of an automobile-based culture has produced economic and environmental consequences that, if left unchecked, could cripple society. As such, we’re facing a major dilemma: we can’t tell . . .

A Reason to Not Be Too Competitive

I read a Wall Street Journal article a few weeks ago about how one very promising form of biofuel, palm oil, is in fact having deleterious effects on the environment. In Southeast Asia, farmers cleared huge swaths of rainforest in order to create palm plantations; they also drained and burned off peatland to create arable land, generating massive smoke pollution. . . .