Curbing our need for oil

Go to Original
By David Lazarus

With oil prices at record highs and gas heading to the $4-a-gallon level, I was set to come roaring out of the gate today with a proposal that all vehicles be slapped with a conservation-promoting surcharge based on mileage, with proceeds going to public-transit projects.

As I visited several Westside gas stations this week, I felt confident this idea would help drivers eat their petro peas and carrots. Some are already doing it.

L.A. resident Morton Miller, 81, recently traded in a gas-slurping Jaguar convertible for a 2008 Toyota Prius that gets an estimated 48 miles per gallon in the city. "I want to be a green person," he told me as he filled his tank. "I saw the handwriting on the wall with gas prices."

But then I met Ontario resident Ignacio Villegas, 47, a construction worker who spends about $90 every time he fills up his 2005 Chevy Avalanche, a heavy-duty truck that gets about 14 mpg in city driving. Villegas showed me all the tools in his truck’s bed.

"What can I do?" he asked. "I can’t drive a little Toyota. I need this for work. It’s not a luxury. This is the only way."

Thud. So much for my surcharge scheme. Until I could address the legitimate needs of all the Ignacio Villegases out there, I had no business punishing them for simply trying to earn a living.

But clearly we need to do something. Oil was trading Tuesday above $108 a barrel after earlier topping $109.

At the pump, the national average for a gallon of regular gas hit a record $3.227. The average in California was $3.581 a gallon.

The United States imports about two-thirds of its oil, so we can’t do much about the supply side of the equation. What we can control is demand, and we can do that via greater fuel efficiency, conservation and increased transit alternatives.

Here are a few suggestions, first at the national level and then for beleaguered Southern California, where decades of failure on the part of elected officials in giving people alternatives to their cars have left consumers especially vulnerable to soaring gas prices.

Mileage standards: The most effective thing we can do as a nation to wean ourselves from our oil jones would be to significantly boost the minimum required mileage for new vehicles. As of 2004, new cars were required to get an average of 27.5 mpg and light trucks such as sport utility vehicles 20.7 mpg.

Late last year, Congress enacted the first major overhaul of so-called corporate average fuel economy, or

CAFE, standards in more than 30 years. Automakers will now be required to raise average mileage for both cars and light trucks to 35 mpg by 2020.

That’s good, but not nearly good enough. I say the nation’s minimum mileage average should be no less than 50 mpg by 2020.

Sure, automakers will whine that this is an unreasonable goal or that it would make their products too expensive for most consumers, but that’s bull. The Union of Concerned Scientists says existing technology, such as advanced metals and transmissions, could raise vehicle mileage to an average of 40 mpg without significantly affecting prices.

More important, why are we undervaluing good old-fashioned American ingenuity? If an ambitious CAFE standard of 50 mpg was our mandated goal, why would it be unreasonable to expect some of our most resourceful companies to meet it?

If American automakers can’t do it, they have no business in this business.

I have no doubt the Japanese and South Koreans are ready and able to meet this challenge.

Congestion tax: Drivers obviously face different conditions on L.A. freeways from, say, conditions in rural Montana. So a nationwide increase in gas taxes would be unfair.

I propose an urban congestion tax of at least $1.50 a gallon for all major metropolitan areas. This would make gas more expensive and thus compel more people to seek alternative ways of getting around.

It would also raise much-needed revenue for public transportation. Most proceeds from the congestion tax would be applied to local transit projects, such as L.A.’s long-long-awaited Subway to the Sea.

Because any such tax would be regressive in nature, hitting lower-income people disproportionately harder, a portion of the revenue should be applied to providing tax credits to people who fall below a certain income threshold -- say, $50,000 a year.

Lower speed limits: Fifty-five saves fuel and lives. It was true then and it’s true now. Don’t like it? Tough.

Oil subsidies: Nobody knows exactly how much the oil industry receives in government-funded tax breaks and other handouts. Greenpeace estimates the total at $15 billion to $35 billion a year. Whatever the amount, the companies don’t need it.

Last year, Exxon Mobil pocketed $40.6 billion in profit, the most by any company ever. Put another way, the oil giant earned nearly $1,300 every second throughout 2007.

For its part, No. 2 Chevron’s profit last year hit $18.7 billion. Factor in results from Shell and ConocoPhillips, and the industry’s four leading players collectively took in more than $100 billion.

Yes, yes, the industry will complain that oil is harder and more expensive to find nowadays, and that’s true. And it will point to its relatively modest profit margin of about 7.6% of revenue, although that’s a red herring; the real number is the oil industry’s very impressive 27% return on equity, a more reliable measure of a capital-intensive company’s performance.

Bottom line: They can afford an end to government gimmes. And isn’t that better than a windfall-profit tax?

Telecommuting: To get people off the roads in L.A. and elsewhere and thus ease the pain of runaway gas prices, businesses should be given tax breaks for encouraging and enabling employees to work from home.

In L.A. specifically, tax breaks also should be offered to businesses that create branch offices closer to workers’ homes, thus easing commutes and gas costs.

A downtown company (like, for instance, this newspaper) doesn’t need everyone under one roof. People who live on the Westside should work, at least part of the time, out of a Westside office. People in the Valley should work out of the Valley. People in Orange County . . . you get the idea.

The technology’s already in place. It’s crazy not to use it.

Public transportation: L.A. is choking to death in cars and our political leaders seem incapable of doing anything about it. The city’s limited metro system is slow and inconvenient, and the best we’re otherwise offered are half-baked ideas like making Pico and Olympic boulevards one-way thoroughfares.

How’s this: Close Olympic to all traffic weekdays from 7 a.m. to 10 a.m. and 4 p.m. to 7 p.m. The road would be exclusively dedicated during these hours to express, rapid and local bus lines.

If a Subway to the Sea can’t get built, we can at least have a Busway to the Beach.

Windfall-profit tax: What the hell, why not? A measly 1% levy would have produced an extra $1 billion last year for public transportation and research into alternative fuel sources. The oil majors can just figure out a way to scrape by on $99 billion in annual profit.