Energy Density, Innovation, Gas Tax, Supply Chains And Economic Shifts

A comment I posted to "Innovation, and the Gas Tax" on The Bellows by Ryan Avent:

In response to high gasoline prices in Europe, Europe did not innovate. Europeans reduced their miles driven (actually the number of hours gasoline engines run) and reduced the weight and size of their vehicles, including the number and weight of passengers and cargo the vehicles can carry, which then require less fuel.

If they had been able to innovate, such as to produce a much more fuel efficient gasoline engine, they would own larger cars and drive greater distances. Most mileage improvements have come from changes to the vehicle body and not the engine, such as air drag reduction and lighter materials

There is a fundamental natural problem. For practical energy sources, gasoline has the second highest energy density only surpassed by nuclear power.

Alternatives to gasoline as an energy source have not materialized because other energy sources are like the energy differences between fire and sunlight.

Innovators have not been able to find a practical alternative dense energy source. Many of the popular media alternatives, such as hydrogen, pose great dangers. Hydrogen interacts with its container, weakens it, and is highly explosive. Batteries contain and are manufactured with highly toxic heavy metal and rare materials, many of which are in short and limited supply. Batteries move more serious and harmful environmental issues from the car to the manufacturing and disposal facilities. Large batteries can also be explosive.

It is not clear that reducing passenger miles will help reduce carbon. If I will not drive to the Home Depot 10 miles away, hardware stores will have to move closer to where I live and within my acceptable driving distance. Supply trucks will drive the additional distance that I forego to bring the goods to the stores and more often because there will be more, smaller stores, with less inventory storage space, closer to more people. There maybe total carbon savings depending on relative fuel efficiencies or there may not be.

Additionally, 45 percent of a barrel of oil becomes gasoline. If gasoline use declines, the question is how much can oil barrel production switch to non-gasoline products. About 25 percent of a barrel of oil is use to make plastics and other products. One has to look at the price change that will occur in the other products. The price may go up or down. My guess is the prices will go up, because if they were currently more profitable than gasoline, production would have shifted to produce more of the other products than gasoline to maximize earnings. That means with less gasoline usage, the price of the other products from oil will rise to recover costs formerly recovered by gasoline's higher profitability.

Changing byproduct costs, such as plastics, lubricants, etc. that are widely used in the US economy will cause dramatic production and price shifts. These economy wide production shifts may or may not increase carbon production.

Most analysis about price changes (taxes) to gasoline look at the carbon reduction from the reduction to total miles driven. Driving shorter distances and using less gasoline will cause economic shifts to oil barrel production and the retail product supply chain in the US. The economy wide effects to the supply chain of reducing passenger miles will offset in part or in total the benefits of reduced passenger miles. Most European countries that place taxes on gasoline for cars recognize the need for increased trucking and do not place the same burden of taxation on trucks and other delivery vehicles.