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  1. #1
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    Post Oil man favors gas tax hike to $2/gallon

    This oil man favors a gas-tax hike
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    NEW YORK (Fortune) -- It's not often you hear a corporate executive advocate a tax on the product he sells, particularly not in the oil business, where opposition to gasoline taxes is fervent. But Paul Foster, the chairman and CEO of El Paso-based Western Refining, is a maverick.

    Foster, 51, is a conservative Republican who has spent his entire career in the energy industry. He founded Western Refining (WNR, Fortune 500) in 1997 and in a decade built it into a $7.3 billion giant (No. 342 on the Fortune 500) that refines various fuels and also sells gasoline to consumers, mostly in the Southwest under the Giant and Mustang brand names.

    Foster contends that the country needs to raise the federal gas tax significantly. He points out that, in real terms, we're paying less than we did decades ago. (At 18.4 cents per gallon, the federal tax is currently 16% lower, adjusted for inflation, than it was in 1970.)

    Foster argues that the levy should be increased, in steps, to $2 per gallon or more. He's even willing to credit the Europeans with a good idea or two on this score, as he explains in an interview with Fortune.

    Q: What's your argument in favor of a higher federal gasoline tax?

    A: Well, first of all, I believe that the best remedy for high gasoline prices is high gasoline prices. That's kind of a play on words, but the fact is there's a reason that everybody in Europe drives roller skates and here we drive SUVs. It's because Europe has a huge tax on gasoline. As a result, gasoline at the pump is expensive and people go out of their way to consume less fuel.

    If we had started back in the 1970s, increasing the tax periodically or annually, I believe that we would be consuming far less gasoline than we do today.

    And I think we have our head buried in the sand if we think that keeping our gasoline tax at the same [real level] as in the 1970s is somehow the right energy policy. It's just not.

    The other thing is that all that extra money that we're spending, since we import 65% of our crude oil, goes to foreign nations. Whereas, if it was in the form of a tax at home, a lot of additional money we spend would be used for our own [benefit] - whether it's highway infrastructure, or whatever the use of the funds would be.

    I'm in the refinery business. What I'm suggesting is not necessarily good for our business long term. But it's good for the nation and it's good for the economy and it's what I believe.

    Q: How much should the tax be?

    A: I think that the tax on gasoline needs to be at least $2 a gallon. But I don't think you can go there all at once.

    I think you have to do it gradually. If you add a nickel a gallon now, I honestly don't think anybody feels that. And if you add a nickel a gallon every year, then 30 years from now - I know that's a long time - eventually you get to a point where it starts to make a difference.

    Q: It seems like many thoughtful people - certainly many economists - favor a gasoline tax. And yet, at the same time, they acknowledge that it can never happen politically. President-elect Obama has said he opposes the idea, though his choice for Energy secretary, Steven Chu, has been quoted saying he favors something along the lines of what you describe. How likely is this to happen, even if it's a great idea?

    A: I think it's very likely but I think it's going to be small pieces at a time. I don't think you can come in and slap on a $2 tax on gasoline, especially in this economy. As a politician, you would get shot, or at the very least, not elected, if you proposed something like that.

    But it's not just because it would be politically unpopular - it wouldn't be the right thing to do. This would be the worst time.

    I think it's unfortunate that we haven't had legislators with the fortitude to put it out there over all these years. I mean, we haven't [adjusted the tax to keep pace with] inflation. And I know that every president and every legislator is concerned about the consumer and making sure that people can afford whatever it is they need to afford. But the fact is we consume way too much fuel and there's got to be an incentive not to do it.

    Frankly, I'm a very conservative Republican. I'm not in favor of hardly any taxes. But this is one that has actually been reduced, on an inflation-adjusted basis, over many years. And to me that doesn't make any sense.

    Q: Is this a view you've held for a long time or something you've come to in recent years?

    A: It's a view that I've held for a long, long time. I haven't talked openly about it much because, like I said, it isn't necessarily good for my business. I'm not going to do a Boone Pickens here, either, and go on the road and try to sell it.

    But I think most people probably agree with what I'm saying. You don't have to support something to agree with it.

    Q: Is this the first time you're going to be publicly identified with supporting higher gas taxes?

    A: Yeah, I think so.

    Q: One of the common criticisms is that the gasoline tax is regressive, that people with less money will bear a bigger share of the burden in relative terms.

    A: Well, you can certainly reach that conclusion. But it's also a user tax. It's a tax you have a choice about - just like buying the gasoline to start with. And I think, honestly, the people who are going to use less gasoline are people who are on tighter budgets.

    That doesn't mean that you're targeting them. But the fact is, any time you talk about trying to find a way to curb consumption of something, I don't know any other way to do it other than price.

    Q: What about Americans' deep emotional attachments to their cars? Will people really change their buying patterns in terms of cars and efficiency, or is that something that will come and go with the price?

    A: I think they'll absolutely change, but I think it'll be over a period of time. And again, you just have to look at Europe. A lot of people won't change. Our roads and parking lots and everything else are built to accommodate the bigger vehicles.

    And I think a lot of people will continue to drive those - myself included. But I also think that at some point we have to do something, and I think it's a way to start.

  2. #2
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    Quote Originally Posted by Odd View Post
    I think that the tax on gasoline needs to be at least $2 a gallon.
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    Neo-conservatism is Nancy Pelosi wearing a Reagan mask.

    "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."
    - Alexis de Tocqueville, Democracy in America

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    The opinions expressed by this poster are wholly his own, and should never be construed to even remotely be in representation of his employer, its agencies or assigns. In fact, they probably fail to be in alignment with the opinions of any rational human being.

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    Quote Originally Posted by countybear View Post
    Neo-conservatism is Nancy Pelosi wearing a Reagan mask.

  5. #5
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    Another rat jumping from the perceived sinking ship of capitalism. Or maybe he's just a rectal orifice.
    Detroit Free Press link since his own Autonation site requires payment for registration. What? A choice to pay or shop for a different supplier? How bizarre.


    AutoNation CEO urges higher gas tax to spur sales of efficient cars
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    Reiterating his calls for a tax on gasoline, Mike Jackson, CEO of AutoNation Inc., said Wednesday consumers will not buy fuel-efficient vehicles, such as hybrids and electric cars, while gas is less than $2 a gallon.

    While acknowledging that fixing the economy should take precedence over a gas tax for now, Jackson said he thinks the nation should adopt a gas tax that would increase the price of a gallon of gas 20 cents per year for five years, eventually adding about $1 to the overall price of a gallon.

    The reason: The automotive industry is investing billions to develop technology to reduce the nation's dependence on oil, but cannot recoup those costs unless they charge a premium for the vehicles.

    "Consumers are not going to pay for fuel efficiency if gas is cheap," Jackson said after speaking at the Automotive News World Congress, an industry conference in Detroit.

    Ft. Lauderdale, Fla.-based AutoNation is the nation's largest auto dealership group with 313 new-vehicle franchises in 15 states.

    Jackson also expressed his support for efforts to restructure the automotive industry and the dealership networks as General Motors Corp. and Chrysler try to meet the terms of government loans, which require them to be viable for the long term.

    Domestic dealerships in the United States are struggling to make money because there are too many of them, and the market share of domestic manufacturers has declined. Because of that, many of the most-talented salespeople and managers leave domestic dealerships to work at those that sell foreign cars, Jackson said.

    "You can't attract capital or any talent because you can't make money," Jackson said. "There needs to be a major rationalization."

    However, Jackson said this is not the time to change the state dealership franchise laws that make it difficult for manufacturers to eliminate dealerships.

    "I don't think the franchise laws are the issue. I think the issue is with the manufacturers," Jackson said.

    Jackson said the ideal car dealership would be a 20-acre urban site that sells vehicles made by all manufacturers under one roof. An auto mall like that, Jackson said, would be better for dealers and customers.

    Ok, so consumers pay more at the pump to "help" the domestic auto industry (which helps him) and then the auto industry consolidates into a single dealer-multi brand model (which helps him). Somehow I don't like his ideas.

  6. #6
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    I have mixed feelings on this issue. Although Carter did very little else right, he did push energy conservation through tax credits. I not only got a good tax credit for insulating my 1959 built house, but my heat and A/C bill was cut by about a third. Even at the time, I thought it was a shame that Reagan tossed out all that. I think we'd be better off today if those policies had continued.

    I hate spending money as much as anyone else. My wife drives nearly 30 miles each way to work and even though she carpools with another woman, the nearly 4 bucks a gallon gas hurt considerably. She drives a Toyota Avalon that gets about 24 mph. I have a pickup that gets about 18 mph, but I only put about 6K miles a year on it.

    But I have to admit, it galls me a little when I go to a shopping center near me and see the lot filled with Cadillac Escalades and Lincoln Navigators that are driven my women in high heel shoes. I doubt any of these will have their 4 wheel drives engaged more that 20 minutes in their lives and none will probably ever be off paved roads. The exception the the mileage standards for SUV's was for people who needed them for hunting, work, whatever. Unfortunately, they've become a status symbol and they guzzle gas unnecessarily. People have the right to buy and drive what they want, but as long as it's at all affordable, people like these will continue to waste gas just to look good.

    And as long as gas is cheap, car makers (especially Detroit) will have no incentive whatsoever to build better, fuel efficient vehicles. They briefly considered it during the recent gas hike, but as soon as gas went down, you hear no more of it.

    I don't know the answer and don't pretend to. But if nothing changes, then nothing changes and we are going to continue to be at the mercy of a bunch of wild eyed fanatics in the Mid East.
    When I used to be somebody (I'm center top)

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  7. #7
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    I sure am going to miss the cobra.

  8. #8
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    Quote Originally Posted by Retdetsgt View Post
    The exception the the mileage standards for SUV's was for people who needed them for hunting, work, whatever.
    Did you know the Dodge Magnum is classified as a truck? Looks to me like a Charger station wagon, but it gets counted with Ram pickups in the mileage standards. I believe it was the Forester model that Subaru changed the rear suspension on a few years ago to get it reclassified as a light truck. Suddenly it shifted to a different column on the spreadsheet.

    I don't support the mileage standards in the first place. Now they're having the reverse of the intended effect as cars are upsized to become trucks. Not the point of the exception as you pointed out.

    Quote Originally Posted by Retdetsgt View Post
    And as long as gas is cheap, car makers (especially Detroit) will have no incentive whatsoever to build better, fuel efficient vehicles. They briefly considered it during the recent gas hike, but as soon as gas went down, you hear no more of it.
    That's a real problem which I don't have a solution to either. At $4 gas a lot of things were set in motion. Everything from new engine designs to investment in alternative power sources to dusting off the machinery to get to the shale oil I've been hearing about since I was knee high to a grasshopper. Oil plummets, all that stops and the investors who didn't lose their shirt this time will be even more wary next time.

    I'm not unsympathetic to those looking for a way to stabilize oil prices to keep the wild swings from killing progress in alternatives. Nor would I put it past OPEC to be orchestrating swings for just that purpose, even as oil rich Sheiks in Dubai use their profits to buy Teslas to rent to tourists and make plans to start electric car racing leagues.

    Quote Originally Posted by Retdetsgt View Post
    I don't know the answer and don't pretend to. But if nothing changes, then nothing changes and we are going to continue to be at the mercy of a bunch of wild eyed fanatics in the Mid East.
    That's the pisser. When we're facing that East, Americans of many political views share the same view. As soon as we turn the eyes back upon ourselves to come up with solutions we end up fighting each other instead.

  9. #9
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    The guy's an idiot. Oregon was recently in the news considering a proposal to tax people for the miles they drive rather than the gas they use. Why? Because of the fuel efficient cars and people saving on gas consumption. The government is going to stick it to you any way they can. Today it's a gas tax, tomorrow it's going to be a solar collection tax.

    Raising taxes does nothing to stimulate anything. It's an anchor on businesses and consumers and investors.

    How about huge tax breaks to businesses and consumers of alternative fuels? Why would that work? Because those current methods generally cost higher than gas. So lower their costs on the tax and use end of things to give incentives.

    T. Boone Pickens was recently interviewed and was complaining that since the gas prices plummeted his plan was put on hold because it can't compete financially.

    Taxing gas will increase revenues briefly but when we stop using gas it will stop generating revenue. Let's stimulate businesses not drag them down.
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  10. #10
    Retdetsgt's Avatar
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    Quote Originally Posted by Xiphos View Post
    The guy's an idiot. Oregon was recently in the news considering a proposal to tax people for the miles they drive rather than the gas they use. Why? Because of the fuel efficient cars and people saving on gas consumption. The government is going to stick it to you any way they can. Today it's a gas tax, tomorrow it's going to be a solar collection tax.
    That was my initial thought too. But the gas tax is entirely dedicated to road maintenance. It can't be spent for anything else. And as revenues go down, so does road repair. Even as gas consumption goes down with more fuel effecient cars, there is as much travel and wear on the the roads.

    I'm more open minded about it now, but I still have to see how it's going to be implemented. Some of the proposals, such as tracking cars seems more invasive than I think most people are willing to accept. And we all know how well an "honor system" would work.
    When I used to be somebody (I'm center top)

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    Quote Originally Posted by Odd View Post
    I don't support the mileage standards in the first place. Now they're having the reverse of the intended effect as cars are upsized to become trucks. Not the point of the exception as you pointed out.
    I agree totally. Gas mileage laws are like vice laws. Everyone thinks they're a good idea and want them on the books, but immediately try to work around them so they can still do their "thing".

    The CAFE laws did away with large cars and station wagons, but the demand for them stayed. Hence the SUV's......
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  12. #12
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    Raising taxes always drags the economy. It's never an answer to solving problems. Something like the Fair Tax, even on the state level, would generate far more revenue for the state along with putting money in the hands of the consumer than any scheme being used now or being considered for the future.
    Pleasing nobody, one person at a time.

    That which does not kill me, better start fucking running.

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  13. #13
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    Quote Originally Posted by Xiphos View Post
    Raising taxes always drags the economy. It's never an answer to solving problems.
    That sentence for the win, Alex.
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  14. #14
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    Story's from last month, just now saw it.
    Sure, let's model ourselves on the Chinese Link


    China's latest fuel-tax reform involves a major jump in taxation on fuel. It is intended to help spur demand for more fuel-efficient vehicles. The fuel tax on gasoline will climb from the equivalent of 13 cents a gallon to 64 cents, while the tax on diesel will rise from 6.5 cents a gallon to 51 cents.

    With crude oil prices plunging on international markets, this is considered the best time to unveil the long-awaited pricing reforms in China, first proposed in 1994, in an attempt to offset higher costs.

    "Vehicle sales won't be damaged as the higher fuel tax will fail to lead to higher pump prices immediately," commented Jia Xinguang, former chief analyst with the China Association of Automobile Manufacturers.

    "Consumers tend to buy vehicles that have better fuel economy as future retail prices are widely anticipated to go up with their link to international crude oil prices," Jia added.

    Along with the scrapping of road maintenance fees and five other fixed charges, the fuel tax increase is mainly aimed at encouraging motorists to drive less. It will have the effect of making fuel expenditures a larger percentage of the cost of car ownership. <- Hmm, wonder if we'll get the same pitch. Lower a few fees so graphs showing how this will somehow reduce taxes 70% of consumers can be made. "It's actually a tax cut for you!" Mix in some class warfare rhetoric...hey, have some of this tax go to funding mass transit, yeah, that should sell.

    Market demand for small, fuel-efficient vehicles has grown in China amid rising fuel prices, and analysts are saying the fuel tax will prompt automakers to be even more attentive to eco-friendly and energy-saving technologies.

    "New-energy vehicles, including hybrids and electric cars, will be developed and commercialized much more quickly," said Zhong Shi, an independent vehicle analyst.

    BYD Automobile is one of the Chinese companies due to launch green products soon. BYD's F3 dual-mode hybrid sedan, the company's first, comes out next week, nearly two years ahead of the Chevrolet Volt electric car that is designed to be mass-produced in the United States in late 2010.

    China is well out in front of the United States in terms of government action to encourage consumers to buy smaller cars.

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    Quote Originally Posted by Odd View Post
    China is well out in front of the United States in terms of government action to encourage consumers to buy smaller cars.

    It's absolutely amazing just how much a government can encourage people to behave the way the government wants when the penalty for opposition is a bullet in the head.



    The comparison of behaviors in our free country to behavior controls in a communist oppressed second world country is absurd at best.
    I'm your huckleberry...

    Quemadmoeum gladis nemeinum occidit, occidentus telum est!

    You can be the weapon, and the gun in your hand is a tool - or the gun is a weapon and you are the tool.


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