Archive for April, 2008

How much will gas cost in 3 months?

This question is actually fairly easy to answer. If we look at wholesale gasoline futures prices, we can see with pretty good accuracy what wholesale gasoline will cost in a month or two. It takes a couple of weeks (or longer) for wholesale gasoline to make it to your local gas station, so that we can look out and see mid summer gasoline prices today.

Take a look at Bloomberg’s Energy Prices page, and you’ll see that NYMEX gasoline futures are trading at just under 3 dollars (297 cents) as of April 18th, 2008.

On average, federal and state governments add another 47 cents in taxes to this figure. The federal government adds 18.4 cents in taxes, and each state’s total gas tax is listed here.

Gasoline storage, distribution, marketing, and retail markup add a bit more than 10%, or 30-35 cents to the final price.

All told, that means that $3.80 regular unleaded is on the way for the summer in low tax states, with gas just over $4 in California, Nevada, and other states with higher gas taxes.

But don’t think I’d have it any other way – just as in the late 70′s, high gas prices will be Americans’ best incentive to ditch their gas guzzlers and start conserving.

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Paper or Plastic? A true cost analysis

Plastic grocery bags have been banned or taxed to discourage their use in other countries, and recently San Francisco approved similar measures. While reusable bags are touted as an obvious alternative to disposable bags, paper bags are also seeing a resurgence, and are the standard bags at upscale grocers like Trader Joe’s. Paper bags are often assumed to be more environmentally friendly, which begs the question: what is the true cost of both bag varieties?

Numerous reports have been published on this topic, with the Washington Post and Environmental Literacy Council providing particularly good comparisons. On most counts, plastic bags come out ahead, even after comparing the true cost of two plastic bags against one paper bag (to make up for differences in bag size). Plastic bags require 50% less energy to produce and cause significantly less pollution during manufacturing. Paper bags are recycled more often, but over 85% of paper and 97% of plastic bags end up in landfills, where neither biodegrades, and where plastic bags take 90% less space. Plastic bags are criticized for endangering certain marine animals, and because they often end up as litter since are easily blown about.

Another good measure of cost is the price of the two items, since neither is heavily subsidized, and since the price that stores pay for bags represents the direct cost involved in production. Plastic bags cost 50% less than paper bags in the US (2 cents for two plastic bags versus 3-4 cents for one paper bag). Advantage plastic.

On most counts plastic is the clear winner for the consumer, the environment, and businesses. In fact, after weighing the costs and benefits, the Natural Resources Defense Council recommends plastic bags to everyone unable to use a reusable bag, and recommends paper bags only for those living on the coasts (to protect marine wildlife). Perhaps, as with ethanol, paper bags have just become another easy way for politicians to score points for being green, rather than taking more beneficial (and difficult) steps to protect the environment.

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