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Taxes on fossil fuels just raise the marginal cost of production. They are a totally separate issue from the effect of introducing a new fuel into the market.

Taxes on fossil fuels just raise the marginal cost of production. They are a totally separate issue from the effect of introducing a new fuel into the market. Given the amount of down voting I have received basic economics is not popular on HC. Increasing the supply of gasoline will reduce its price which will cause increased demand greater than the original supply. The original example used by Jevon was coal consumption which rose 10 fold as the price halved. If Promethus succeeds they will cause an increase in consumption of fossil fuels (assuming no other changed) as they will lower the price of gasoline increasing its consumption. The only way that such an approach can work is if they can get the price of gasoline below the cost of production from fossil fuels. While this may be possible, on thermodynamic grounds it is hard to compete with all the stored sunlight in fossil fuels, let alone the sunk costs in the fossil fuel infrastructure. I am very much in favour of doing something about us burning fossil fuel, but I want us to concentrate on those things that make economic sense. In respect to gasoline that would be electrification of the transport system and better electric storage. The one thing that would potentially be worth pursuing is not the production of gasoline, but avgas (diesel) as there really is no viable alternative to these for air and sea transport.

mrob 7y ago
>Increasing the supply of gasoline will reduce its price This is not an inevitability. The state can and does tax things, and I am suggesting that they should tax fossil fuels sufficiently to prevent Jevon's paradox from happening. The correct taxation to prevent the market failure of externalities is not any percentage of the production cost, it's the cost of the harm done. If Jevon's paradox would increase the harm done then tax should increase to prevent this.
- danieltillett 7y ago
  There is no need to have some alternative gasoline in order to implement a tax to decrease consumption of gasoline. Just a straight carbon tax would do this. The problem of course has been getting these implemented. We really should keep the topic of what Prometheus wants to do seperate from other things like carbon taxes. I think the best bang for our buck would be to just buy the oil before it is pumped out of the ground and leave it there. The producers would stop fighting us doing something about climate change and the increase in gasoline prices would drive the adoption of carbon neutral energy sources.

mrob 7y ago

>Increasing the supply of gasoline will reduce its price This is not an inevitability. The state can and does tax things, and I am suggesting that they should tax fossil fuels sufficiently to prevent Jevon's paradox from happening. The correct taxation to prevent the market failure of externalities is not any percentage of the production cost, it's the cost of the harm done. If Jevon's paradox would increase the harm done then tax should increase to prevent this.

danieltillett 7y ago
There is no need to have some alternative gasoline in order to implement a tax to decrease consumption of gasoline. Just a straight carbon tax would do this. The problem of course has been getting these implemented. We really should keep the topic of what Prometheus wants to do seperate from other things like carbon taxes. I think the best bang for our buck would be to just buy the oil before it is pumped out of the ground and leave it there. The producers would stop fighting us doing something about climate change and the increase in gasoline prices would drive the adoption of carbon neutral energy sources.