On Raising the Gas Tax in Minnesota
Sunday, March 25, 2007 at 9:34 pm
The best solution is to tax gasoline, not ethanol
Saturday’s vote in the Minnesota House to raise the gas tax from 20 cents to 30 cents a gallon has been viewed by supporters of the governor as a meaningless gesture. The reason is quite simple: He says he will veto it.
By all expectations the Senate will vote to go along with the increase as well, although its bill is somewhat different.
I do not understand the governor’s reasoning behind his intention to veto the increase. He claims that Minnesota’s transportation woes can be covered by bonding, but most economists and transportation experts, as well as legislators, find this fiscally troubling. The governor says he’s given up on his “no new taxes” pledge, yet his intent to veto sounds very much like a vestigial appendage from that not-so-long ago era.
more insideOne could make an argument that a jump in Minnesota’s gas taxes might put the state out of alignment with its neighbors. Yet the gas tax in Wisconsin, our economically most powerful neighbor, is 32.9 cents per gallon. (Iowa’s is 22 cents, North Dakota’s is 23 cents and South Dakota’s is 24 cents.)
But let us make a distinction here. Technically, we’re not talking about gas taxes but nondiesel motor vehicle fuel taxes. At 85 percent ethanol, for example, E85 fuel is not technically gasoline but … well … 85 percent ethanol and 15 percent gasoline.
What if Minnesota, instead of raising the nondiesel motor vehicle fuel tax by 10 cents, instituted a true gasoline tax? That is, only the gasoline component in the fuel would be taxed. Thus, if the gasoline tax were 32 cents per gallon, the actual tax on most fuel at the pump, which is 90 percent gasoline and 10 percent ethanol, would be 28.8 cents per gallon. The tax on E85 would be only 48 cents per gallon. And, as we move toward a 20 percent ethanol blend, that fuel tax would be 25.6 cents per gallon.
This seems to be a solution that would satisfy both the governor and the Legislature. First, it raises the fuel tax but places it somewhere between what the governor wants — 22 cents per gallon — and what the Legislature wants — 32 cents per gallon. Second, it encourages E85 use by actually lowering the tax on E85 by over 17cents a gallon. This would promote the sale of cars adapted to run on E85, and give further impetus to the owners of those cars to fill up with E85.
Suddenly, almost every gas station in the state would install E85 pumps, and it all would be done without direct economic incentives.
Now isn’t this what we want to accomplish in Minnesota? Support our home-grown, pollution-minimizing energy resources and discourage the purchase of foreign oil? Talk about a way to keep Minnesota dollars within the Minnesota economy!
Admittedly, this solution may not raise the same amount of dollars to take care of our transportation needs than a straight 10 cents per gallon fuel tax increase would. But then again, it’s better than no increase at all, and much better for Minnesota’s economy and environment than a straight 5-cent per gallon increase.
For the Legislature to buy into this solution would be a no-brainer. But the governor? I don’t know his mind.
Yet for him this would be the perfect policy to advance: promoting Minnesota-based energy production, a clean environment and a compromise solution that would be popular with the vast majority of his constituents. Embracing a gasoline-only tax would turn a negative position — the threat to veto — into a positive one.
Let’s hope that both he and the Legislature view this option as another way to enhance Minnesota’s standing as a leader in energy, environment and economic policy innovations.
18 Comments
Comment posted March 26, 2007 @ 8:31 am
Wow. “Suddenly, nearly every gas station in the state would install E85 pumps, and it all would be done without direct economic incentives.”
The ignorance contained within that statetment is staggering.
So in Pomoroy land, taxes have no direct economic effect? And farmers actually grow enough corn to supply enough ethanol to supply every gas station in Pomoroy land…
And no doubt fine Merlot flows from fountains on every street corner too.
Unfortunately out here in realityville, we used 5% of our corn crop to produce 5 billion gallons of ethanol fuel last year, a set of figures that are inversly proportionate in their effects on our economy.
The 5 billion gallons of alcohol fuel was literally a drop in the bucket compared to the over 150 billion gallons of gasoline consumed, but used enough corn to force a substantial rise in the cost of corn based food stuffs.
And then of course there is the fact that ethanol based fuel has but a fraction of the BTU value of gasoline which means that while the wonderful automobiles in Pomoroy land putter along unaffected (due to the fact that they run on pie-in-the-sky) our here in realityville we’d be visiting gas stations twice as often as we do now.
Which means we’d need more corn than is physically possible to grow.
Have another glass of wine my friend…
Comment posted March 26, 2007 @ 9:14 am
Interesting Idea! But Leigh! If Smilin’ Tim Pawlenty did that, then David Strom (aka Grover “Drown it in the bathtub” Norquist’s Mini-Me) would REALLY be mad at him. You saw how he frowned when Pawlenty tried his “fee” gambit, didn’t you?
But seriously: Yes, if we’re going to be promoting ethanol, the simplest and easiest thing to do would be to make it exempt from a gas tax. It would probably be just the ticket to encourage building of switchgrass-based ethanol plants, as corn-based ethanol can’t go as far in taking care of our energy needs: http://www.public.iastate.edu/~brummer/ag/biomass2.htm
As for a certain commenter: Nice to see that you’re continuing your tradition of showcasing the finest in conservative rhetoric, Swiftee. Keep it up — you’re the best thing to happen to the Minnesota GOP since Jon Grunseth.
Comment posted March 26, 2007 @ 9:31 am
Calling it a “nondiesel motor vehicle fuel fee
Comment posted March 26, 2007 @ 4:05 pm
Tee hee Sphincter Woman made bubbles in her Kool-Aid!
Comment posted March 27, 2007 @ 7:29 am
E85 – a clean air choice for many Minnesota drivers No one is mandating E85 for your motorcycle, Swiftee, so why are you yapping? Speaking of your bike, do you burn diesel in it? Diesel has more BTUs than that wastefull, government-subsidized boondoogle fuel we call gasoline.
For more info on E85 and biodiesel in Minnesota, see our website: http://www.CleanAirChoice.org
Bob Moffitt
Communications Director
American Lung Association of Minnesota
Comment posted March 27, 2007 @ 11:16 am
Heh Bob the Lung…living proof that “there is no spoon” in the fever swamp.
Comment posted March 28, 2007 @ 11:43 am
E85 fuel economy I recently purchased a vehicle that is capable of e-85. After about a 5,000 mile break in period I have been alternating two tanks gas with two tanks e-85 to compare the results between the two fuels (note: I generally do not refill until near empty). With e-85 I get 11 mpg, with gas I get 15 mpg.
Cost wise e-85 tends to follow the price of gasoline. When gas jumps 20 cents so does e-85, I track both prices when possible at the time of purchase. From my limited data set e-85 is ~20% cheaper than gas, but only delivers 73% of the mpg. So it cost me more to run e-85. I still need to take an extended trip on e-85 to compare pure highway vs. the mostly city/short trip milage I normally drive.
As for the posters comments about switch grass ethynol, a little research will show that the reason it is not currently being used is the process is not currently cost effective. Translation, it cost a bunch more money per gallon to produce than corn/sugar based ethynol. Also switch grass or other cellilose (wood, corn stalks, etc..) still needs a whole bunch of research to develop a viable and commercially feasable process. Most estimates are 10-15 years before it will be commercially viable, with 5 years being the lower end estimate.
Dave
Comment posted March 29, 2007 @ 11:40 am
Cellulosic Ethanol Dave has been doing his homework.
Much of the talk about “cellulosic biomass” is largely coming from the U of M PR machine — and I must admit they are doing a good job. I hope they get their grant so they can tone it down a bit. Don Shelby is ready to pass out Noble Prizes to a bunch of guys who have yet to prove they have anything that will work in the fuel marketplace, not just in the lab.
If you look closer at cellulosic ethanol, it’s a lot like that “Far Side” cartoon where two scientists are looking at to complicated equations on a blackboard, joined by the phrase “And then a miracle happens…” The caption was something like “We need to work on that part in the middle.”
I hope the experts are wrong, and an effiecent, effective way to make ethanol from corn stalks, grass, etc. is found soon.
In any case, we should continue using E85 and biodiesel when and where we can.
Comment posted March 29, 2007 @ 12:35 pm
And do not forget that to make a thorough comparison of petroleum vs. alcohol based fuels you must include the energy that goes into producing it and any other ancillary problems that occur.
Ethanol shares the same inefficiencies as coherent light (laser) ie: it takes more energy to produce than it returns.
Ethanol is also corrosive. Engines that use it for fuel cannot use aluminum for any component that comes into contact with either the fuel or the byproducts of combustion which means that you must use steel with high chromium content which is not only more expensive but is also much heavier…which will further reduce the mileage.
Ethanol is out there to give agribusiness a nice income and make the tinfoil hat crowd feel good. As a viable fuel alternative it is a scam.
Which explains why it is so attractive to Bob the Lung and his ilk.
Comment posted March 26, 2007 @ 3:31 am
Wow. “Suddenly, nearly every gas station in the state would install E85 pumps, and it all would be done without direct economic incentives.”
The ignorance contained within that statetment is staggering.
So in Pomoroy land, taxes have no direct economic effect? And farmers actually grow enough corn to supply enough ethanol to supply every gas station in Pomoroy land…
And no doubt fine Merlot flows from fountains on every street corner too.
Unfortunately out here in realityville, we used 5% of our corn crop to produce 5 billion gallons of ethanol fuel last year, a set of figures that are inversly proportionate in their effects on our economy.
The 5 billion gallons of alcohol fuel was literally a drop in the bucket compared to the over 150 billion gallons of gasoline consumed, but used enough corn to force a substantial rise in the cost of corn based food stuffs.
And then of course there is the fact that ethanol based fuel has but a fraction of the BTU value of gasoline which means that while the wonderful automobiles in Pomoroy land putter along unaffected (due to the fact that they run on pie-in-the-sky) our here in realityville we'd be visiting gas stations twice as often as we do now.
Which means we'd need more corn than is physically possible to grow.
Have another glass of wine my friend…
Comment posted March 26, 2007 @ 4:14 am
Interesting Idea! But Leigh! If Smilin' Tim Pawlenty did that, then David Strom (aka Grover “Drown it in the bathtub” Norquist's Mini-Me) would REALLY be mad at him. You saw how he frowned when Pawlenty tried his “fee” gambit, didn't you?
But seriously: Yes, if we're going to be promoting ethanol, the simplest and easiest thing to do would be to make it exempt from a gas tax. It would probably be just the ticket to encourage building of switchgrass-based ethanol plants, as corn-based ethanol can't go as far in taking care of our energy needs: http://www.public.iastate.edu/~brummer/ag/biomass2.htm
As for a certain commenter: Nice to see that you're continuing your tradition of showcasing the finest in conservative rhetoric, Swiftee. Keep it up — you're the best thing to happen to the Minnesota GOP since Jon Grunseth.
Comment posted March 26, 2007 @ 4:31 am
Calling it a “nondiesel motor vehicle fuel fee
Comment posted March 26, 2007 @ 11:05 am
Tee hee Sphincter Woman made bubbles in her Kool-Aid!
Comment posted March 27, 2007 @ 2:29 am
E85 – a clean air choice for many Minnesota drivers No one is mandating E85 for your motorcycle, Swiftee, so why are you yapping? Speaking of your bike, do you burn diesel in it? Diesel has more BTUs than that wastefull, government-subsidized boondoogle fuel we call gasoline.
For more info on E85 and biodiesel in Minnesota, see our website: http://www.CleanAirChoice.org
<p>
Bob Moffitt
Communications Director
American Lung Association of Minnesota
Comment posted March 27, 2007 @ 6:16 am
Heh Bob the Lung…living proof that “there is no spoon” in the fever swamp.
Comment posted March 28, 2007 @ 6:43 am
E85 fuel economy I recently purchased a vehicle that is capable of e-85. After about a 5,000 mile break in period I have been alternating two tanks gas with two tanks e-85 to compare the results between the two fuels (note: I generally do not refill until near empty). With e-85 I get 11 mpg, with gas I get 15 mpg.
Cost wise e-85 tends to follow the price of gasoline. When gas jumps 20 cents so does e-85, I track both prices when possible at the time of purchase. From my limited data set e-85 is ~20% cheaper than gas, but only delivers 73% of the mpg. So it cost me more to run e-85. I still need to take an extended trip on e-85 to compare pure highway vs. the mostly city/short trip milage I normally drive.
As for the posters comments about switch grass ethynol, a little research will show that the reason it is not currently being used is the process is not currently cost effective. Translation, it cost a bunch more money per gallon to produce than corn/sugar based ethynol. Also switch grass or other cellilose (wood, corn stalks, etc..) still needs a whole bunch of research to develop a viable and commercially feasable process. Most estimates are 10-15 years before it will be commercially viable, with 5 years being the lower end estimate.
Dave
Comment posted March 29, 2007 @ 6:40 am
Cellulosic Ethanol Dave has been doing his homework.
Much of the talk about “cellulosic biomass” is largely coming from the U of M PR machine — and I must admit they are doing a good job. I hope they get their grant so they can tone it down a bit. Don Shelby is ready to pass out Noble Prizes to a bunch of guys who have yet to prove they have anything that will work in the fuel marketplace, not just in the lab.
If you look closer at cellulosic ethanol, it's a lot like that “Far Side” cartoon where two scientists are looking at to complicated equations on a blackboard, joined by the phrase “And then a miracle happens…” The caption was something like “We need to work on that part in the middle.”
I hope the experts are wrong, and an effiecent, effective way to make ethanol from corn stalks, grass, etc. is found soon.
In any case, we should continue using E85 and biodiesel when and where we can.
Comment posted March 29, 2007 @ 7:35 am
And do not forget that to make a thorough comparison of petroleum vs. alcohol based fuels you must include the energy that goes into producing it and any other ancillary problems that occur.
Ethanol shares the same inefficiencies as coherent light (laser) ie: it takes more energy to produce than it returns.
Ethanol is also corrosive. Engines that use it for fuel cannot use aluminum for any component that comes into contact with either the fuel or the byproducts of combustion which means that you must use steel with high chromium content which is not only more expensive but is also much heavier…which will further reduce the mileage.
Ethanol is out there to give agribusiness a nice income and make the tinfoil hat crowd feel good. As a viable fuel alternative it is a scam.
Which explains why it is so attractive to Bob the Lung and his ilk.
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