1. I couldn’t find an exact comparison for Australia, but this page gives us a rough comparison. At some unspecified point “recently”, the refinery price (your bottom two numbers, I guess) was 57% (79.1 cents our of $1.38 per litre), margins + transport was 6% and taxes (federal, mostly) was 37%.

    I’m not sure what that really says, though (I’m personally not against petrol consumers having to contribute a fair bit back in taxes, but I realise there are also flow on effects to other costs in the economy).

  2. Good chart, bookmarked.

    However, all too often, people think of the price-at-the-pump as the main indicator of the effects of speculation (some) and Peak Oil (either in 2006 if you believe T. Boone Pickens, or in next few years, if you believe the bulk of the peak Oil folks) …

    I’ve seen things like: gasoline only costs X% of people’s income, so it’s no big deal if it gets a little more expensive.

    Do you have any mroe good charts on the embedded energy costs, i.e.:

    – food, which at least in North America relies on heavy mechanization, lots of fertilizer(from natural gas), and a lot trailer trucks for distribution.

    – air travel [I think jet fuel is about 25%]

    – transport in general, especially with worldwide supply chains.
    I did find:

    – Energy costs embedded in things like cement, steel, running bulldozers, etc.

    The Ayres+Warr paper, http://www.iea.org/Textbase/work/2004/eewp/Ayres-paper1.pdf ,
    does a nice job of showing how terrifically important exergy (energy x efficiency) is to wealth.

    But, I haven’t yet found a good economics study that integrates:

    – that exergy/welath relationship
    – global warming mitigation costs

    Many people want to say: “No need for large mitigation efforts soon, people will be richer later, and they can do it”, i.e., a positive discount rate. Unfortunately, Ayres and Warr show that exergy is one of the biggest factors in getting richer, and we’ve got many decades of drastic improvements in efficiency and alternate energy sources needed just to keep even with the slow downslope for petroleum (and then natural gas). With world population rise, it’s hard to see how the exergy/person can go up a lot.

    Have you seen anything useful on this?

    Like I said, the pump is just the tip of the iceberg, and like an iceberg, it’s hard to tell how much ice is under water…

  3. John, can economic theory survive a negative discount rate? I suspect there is not much theory to work with after you allow a negative discount rate.

    Perhaps to some extent economists tend to be optimists because pessimism breaks their entire tool chain.

  4. re: negative discount rate

    I don’t know enough to know, but:

    1) We have not had continuous economic growth forever, but ups and downs. I don’t know how well the economists model that; I’m much more used to models of the physical world.

    2) Although it’s not a negative discount rate, the idea of maintenance on an asset is certainly familiar, especially where the asset can suffer badly. As a kid, I learned why we took the short-term hassle to do do contour plowing … i.e., losing all your topsoil is a Bad Thing.

    In the Bell System, we did regular preventative maintenance, because our economists proved that it was cheaper to spend part of the repair budget to send guys out to clean up cable boxes rather than waiting for failures. Of course, that was an organization whose assets were where they were, and also was accustomed to planning across multiple decades, or at least trying to.

  5. If there’s a negative interest rate the present is discounted to the point where it is infinitesimal compared to the far future. I don’t know much about it either, but even the most slightly negative interest rate would probably be mathematically pathological for financial analysis.

    I suspect most economists don’t actually think about such prospects. (Like some AI people don’t think about the probably irreducible mystery of consciousness; it’s too inconvenient for their work.)

    I agree with you, John M, that an analysis such as you suggest is needed. I doubt that it is most likely to come from people trained as economists. I think people will need to think it through from first principles, with engineers like us being among those in a better position than economists to understand and model the whole system.

  6. Average price for a litre of unleaded here is £1.014 (a tad over two dollars). That’s equivalent to over $7.50 per US Gallon.

    About 65% of that is tax, though.

    Incidentally, I don’t think I’d realised just how much the dollar has fallen in value until I started playing with currency converters tonight.

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