Driving slower

"Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?"
            — the late George Carlin

When I drove to Memphis a couple of weeks ago, I did a new thing — I drove under the de jure speed limit. Normally, I do what most people do, stay under the de facto limit — staying carefully under a speed that is 10 mph over the limit.

This change on my part wasn’t due to some newfound respect for the law. We know that here in the United States, no state actually means for us to drive below the stated speed. If they did, the police would stop and ticket us for exceeding it. We all know that a trooper will sit right there and watch you go by if you’re doing 78 in a 70 zone, for instance. But go 85, and he’ll get you. (One exception to this may be the Mississippi patrolmen, who are apparently too busy speeding themselves to notice anyone else doing it.)

Nor was I doing it to help fight the War on Terror. I agree with Samuel Tenenbaum that we should lower the limit to 55 and enforce it, but in the meantime, driving that much slower than the surrounding traffic is not only unsafe, but will not have a sufficiently measurable impact on energy independence to make taking your life in your hands worth it. We’ve all got to do it for it to help.

No, I drove below the limit because my family was packed into three cars, and one of those contained my wife and daughter and the six-month-old twins, and they had to stop frequently. My wife said it made her nervous to try to stay within sight of each other, so I went on ahead, but tried not to get too far ahead.

And you know what? I kind of liked it. It was … more relaxing.

Anyway, when I was getting ready for this trip, I ran into Samuel, and he said "Drive 55!" And I said I didn’t think I could do that, because I had to drive to Pennsylvania, pack my daughter’s belongings into my truck, drive back from Pennsylvania with all the stuff, and unload it at the place where she’s going to be living back in South Carolina, all between Friday morning and Monday afternoon. But I did promise to stay below the posted limits. "But that means you’ll be driving 70!" Actually, no, I assured him — since so much of the trip is in Virginia (limit 65), and the limit in PA is 65 or 55, and the small bit of Maryland is 65 or 60 (around Hagerstown), and the first 50 miles of North Carolina is 60, my average would be far below 70.

So I did it yesterday, and the results were good.

I drive a 2000 Ford Ranger. And for those of you who wonder why the founder of the Energy Party doesn’t drive a Prius, consider three things:

I can’t afford a Prius. I don’t foresee a time anywhere in the near future when I will be able to afford a Prius.

I am the designated truck owner in the family — my large, extended family. No one closely related to me owns a large, truck-type vehicle of any kind — certainly no SUVs, I’m happy to say. Whenever one of my 20-something children has to move from one apartment to another, or building materials are needed, or an attic full of stuff has to be hauled either to Goodwill or the dump or whatever, I’m the guy; I’ve got the truck.

I’ve done everything I can to be responsible about this truck-ownership thing. I went out of my way to find a 4-cylinder, manual transmission. (What this means is that I’m not only the designated truck owner, but the designated truck driver, since no one else has confidence with the manual shift, and I prefer to drive my own truck anyway.)

This brings up an ironic digression. We looked into renting a truck for moving my daughter from PA. It was going to cost more than $700 — we tried several vendors — plus the cost of renting a car to get up there. So we decided to give away a lot of her stuff — my daughter’s fine with that — and haul back only what I could get onto my Ranger. (To get your mind around this, picture the Beverly Hillbillies, only we opted not to take a rocking chair for Granny.) But I needed new tires. So I splurged and bought (via credit card) four new tires. Changing the tires revealed bearings that needed repacking, the need for new tie rod ends, and original shocks that were overdue for replacement at 110,000 miles. Total: $1,450 dollars. Samuel and Jerry Whitley, who is a CPA, told me that at least I was investing it in my truck instead of wasting it on a rental. So I guess that’s something. And it drives really well down, without that shimmy every time I went over the slightest irregularity in the road.

Where was I? Oh, yeah, my point: I drove under the speed limit the whole way. Normally, my truck gets about 22 mpg in town. I had never had it on the highway for an extended period before. Driving below the limit, I got 27 mpg on my first tank of gas. I refilled when we finally rolled into Carlisle, PA, last night, and I had gotten an awesome 28.7 mpg on the second tank. Not as good as the 31 or so we had done in my wife’s car on the Memphis trip, but this is a truck — and as we know, Detroit has put zero effort into making the things efficient, on account of their being exempted from CAFE standards all those years.

So I think it was worth the extra hour and a half or so it took — or whatever. I didn’t want to actually do the math, because that might make me want to hurry on the trip back. It’s like a Zen thing. We left Cola at 10 a.m., stopped several times, and got to Carlisle at about 8:10 p.m.

And it was also a more relaxing drive. Once you drop the usual "Gotta get there! Gotta press the guy in front of me!" mode, your head gets into a better place. I noticed this on the Memphis trip as well.

55 thoughts on “Driving slower

  1. Norm

    I’ve been doing this (driving just below the posted speed limit) for a couple of years–much to the dismay of my wife and kids. I’d like to say I began driving this way to save energy or some such altruistic reason, but I didn’t. I was driving to Daytona with my family and found myself clenching my teeth everytime I got caught up in a wad of cars. I kept driving faster and faster. My stomach was in knots. Finally I said, “The heck with this,” and I switched on the cruise control at a couple mph below the posted limit just to get a few minutes respite.
    Suddenly, every car on the road was passing me (I stayed in the right lane). I wasn’t getting blocked by a pairs of trucks going up hills. I wasn’t getting hung up in a rolling accident-waiting-to-happen. The tension slowly drained from my jaw and belly, and I was able to enjoy the drive (and my family’s company) so much more. For the 400 mile (more or less) trip from Columbia to Daytona, the difference was perhaps 30 minutes in travel time.
    Since then, I’ve come to appreciate the increased mileage I’m able to get from my precious gasoline. Our ’02 PT Cruiser is rated at 28 mpg highway, but I get about 32 with just this tactic. I’m not a hyper-miler or anything like that.
    My wife made an observation not long ago that I’ve confirmed for myself. Drivers are slowing down on the freeways. Higher gas prices are reminding us of the things we already know, especially in this uncertain economy. Of course, as The State (via AP) reported, there’s been the added benefit of reduced traffic fatalities.
    Good for you, Brad!

  2. Mike Cakora

    Brad – Good anecdote.
    A tad over four months ago I bought a new Ford Fusion and have a tad under 7K miles on it, thanks to several roundtrips to northern Virginia where my mom lives. My overall MPG is 24.56 with a high of 32.4 during a trip at 55 MPH. My low is 19.5 in VA when I drove to and from MD during rush hour over a couple of days. BTW, rush hour up there is 6:30AM – 10:00AM and 3:30PM – 7:00PM.
    Over the 500 miles that my trips last, driving 55 instead of the posted speed limit works out to two hours longer on the road. If one is either with someone or leading a convoy, the difference may be meaningless or not really noticeable. If you want / need to get somewhere, every minute counts.
    The fascism of 55 is typical of the liberal mindset and I’m annoyed but not surprised that you, Samuel Tenenbaum, and other members of the anti-destination league think that you know how folks should sacrifice, failing to understand that each of us may be doing his part in his own way. If progressives really wanted to free us from the whims of imported energy, they’d back nuclear power, boost domestic exploration, and eat caribou twice per week. I’m convinced that the only way that Pelosi and crew will stand for drilling in ANWR is if we sell Alaska back to Russia so they can drill with wild abandon and sell the crude back to us.
    As for personal sacrifice, I wanted a Town Car, would have settled for a Crown Vic, looked closely at the Taurus (nee Five Hundred), but got a great price on the smaller and more efficient Fusion. I need to haul four aging adults often and got the smallest vehicle that could do so in comfort. When I head up to NoVA, I see my mom two hours sooner than I would at 55, ditto for heading home to seem my wife and kids.
    What you folks don’t care about is the thought that went into my purchase. When I got the Fusion, my son bought my 2002 Alero with 160K miles that averaged 25.9 MPG to replace his 1992 4.0L Explorer that got 11 MPG on a good tank. He’ll save 245 gallons per year over the 6K miles he averages even assuming he gets only 20 MPG. And the AC works. I bought the Explorer from him and expect to drive it 300 mile per year for mulch, moving, and whatever. I can afford that but find Samuel’s mandate to drive 55 expensive. Why can’t he understand that I and others are smart enough to figure this stuff out for ourselves? We politely request that he continue with his great thoughts but desist from trying to coerce the rest of us through force of law into doing what he thinks is best.

  3. Gina

    Mike Cakora
    It is all about the juggling act isn’t it (grin) available time vs fuel consumption/cost and your the only one that can determine what means more for you. and yes a prius is not for every one I have one and drive at 55 most of the time and get a consistent 58 MPG and it was to replace a small pickup that had blown the engine after many years averaging 20 mpg driving at the 10 over game i got the prius in 02 thinking fuel was going up did i get surprised i didn’t expect the 4.00+ we have here

  4. Lee Muller

    If you cannot afford to replace a Ford Ranger pickup with a Prius with gasoline costing $3.90 a gallon, that tells you that the Prius is not efficient enough to pay for itself.
    As Mike Cakora said, if his car gets 32 MPG at 60 MPH and 29 MPG at 70 MPH, it is his decision, and his alone, whether to spend a few extra dollars on fuel to shorten his travel time.
    My full-size 2008 Buick gets 32 MPG at 60 MPH, and 30 at 70 MPH. What I drive and how fast I drive, between 45 and 70 MPH, is no one else’s business, especially those people right beside me on the road.

  5. Brad Warthen

    Mike, I’m for increased domestic oil production, nuclear power, AND 55 mph. I’ve never tried caribou (does it taste like venison?), but the rest of it is all part of the Energy Party manifesto.

    The ideal would be for electric cars to be mass-produced so we could all afford them (instead of boutique-produced the way they were before GM managed to kill the electric car in California), and for the electricity to be produced by nuclear power.

    As I type this, I’m just a few miles from Three Mile Island, and — wait, let me check — I’m not glowing in the dark yet.

  6. Mike Cakora

    Brad –
    Funny you should bring up the canard about killing the electric vehicle. If that were true, if GM had a viable all electric vehicle that had a decent range, reasonable battery-pack life, etc., why is it spending billion$ to develop and deploy the Volt?
    The real story is that GM chairman Roger Smith needed to justify GM’s 1985 acquisition of Hughes Aircraft and announced at the 1990 LA auto show that GM would build an electric car based on the Impact concept car he’d just unveiled.

    Apparently encouraged by Smith’s commitment to the Impact, the California Air Resources Board (CARB) announced in September that year plans to mandate that two percent of all cars sold in the state by 1998 would be zero-emission vehicles (ZEVs) — to all intents and purposes, electric vehicles. Only problem was, electric vehicles were a long, long way from being viable alternatives to conventional gas-powered cars for L.A. commuters. And [Hughes engineer and electric car wizard] Howard Wilson knew it.

    Wilson had worked on the GM Sunraycer, the solar-powered car that drove 1867 miles across Australia on the energy equivalent of five gallons of gas. While he answered Smith’s bidding to expound upon the glories of the battery-powered electric car based on the Impact (that would appear as the EV1), Wilson’s private preference was to “install a small gas turbine engine that could run at a constant speed to provide the electricity for the motors.”
    He was describing what Toyota and Honda introduced as a hybrid over a decade later. Wilson favored a turbine because it could run on anything and its steady speed eliminated the pollution issues associated with starting and stopping. But CARB mandated zero-emissions, eliminating the notion of a supplementary power source. It was only years later, after ZEV proved impossible with current technology, that CARB backed off its two-percent requirement, thereby allowing the introduction of hybrids. The rest is hysteria. But back to electrics.
    GM made the EV1 available only on a lease for several reasons. The car probably cost around $80K per copy in 1995 dollars, net of subsidies, a sum GM did not want to disclose. It did need to get the entire production run into the hands of the public to see what the real-world usage would produce, so it had to come up with a price that pleased.
    The first generation was conventional, using lead-acid batteries. GM’s hope was that the second generation nickel metal hydride battery would lead to breakthroughs, but they did not materialized in time, and still haven’t. What killed the electric car? Reality.

    The end came when GM decided it was cheaper to sue the State of California to roll back clean vehicle regulations than it was to build electric vehicles. GM stated that they spent over US$1 billion developing and marketing the EV1, though a portion of this cost was defrayed by the Clinton Administration’s US$1.25 billion Partnership for a New Generation of Vehicles (PNGV) project. All manufacturers seeking to produce electric cars for market consumption also benefitted from matching government funds committed to the United States Advanced Battery Consortium. The estimated research and development costs for the EV1 program to production (prior to marketing and sale costs) was pegged by General Motors as “slightly less than US$500 million”.

    Batteries remain the challenge, even conventional ones. One reason Toyota sales are suffering is production / QA problems with Prius battery packs. Fortunately that’s manageable and is not an R&D problem.
    While you understand this, others need to push for expanded electricity production so that folks have a enough power at a reasonable price to plug in their electric vehicles. We don’t need California-style brownouts to threaten our mobility.
    Power to the people!

  7. Mark

    Driving slower not only conserves fuel and saves money, but it also saves lives. That is statistically proven despite the cries of the American Lead-footers & Andre Bauer.
    My suggestion for a business idea is to sell magnetic bumper sticker in bright yellow that will attach to the back of your car much like NASCAR flags the rookies on the track. “CONSERVING FUEL”
    This bright Yellow decal will let those people travelling much faster than the speed limit that you are intentionally driving slower allowing them ample warning (we hope) to make adjustments.
    If NASCAR does it for safety reasons, there must be something valid there.

  8. Karen McLeod

    This was my year to buy a new car (I had planned for it, and my 10 yr. old, 200,000+ mi. Rav 4 was doing some irritating, and insoluble things). After comparing prices, and cars and consulting “Consumer Reports” (I bought a car rated ‘much worse rate of repair’ once, and never again) I bought a Prius about 3 months ago. It seats 5 comfortably, has better acceleration than my Rav 4 did, is quiet, and can haul more ‘stuff’. It also cost (new) about $1000 more than my Rav 4 did (new). It also gets 45-52 mpg. depending on where I drive. Since my job keeps me on the road a lot, I figure that the money I save on gas would come close to making a car payment if I had one. I drive under the speed limit when I have the time, and don’t worry about it when I don’t.

  9. Mark Warner

    The 55 MPH speed limit doesn’t save fuel or lives. Several studies show without a doubt that fatalities decreased in 1995, the year the national limit was repealed, and every year since then. Last year (2007) was the safest year ever in the 30+ years such statistics were kept. The “lives saved” when 55 was implemented in 1974 were likely due to the fact people were driving significantly less.
    People need to get over the fact that gimmick crap like this is just a distraction from really addressing the issue. If the government was SERIOUS about solving the problem, they would implement a 100% tax break on the purchase or lease of a hybrid or high mileage vehicle…just like how you could write off a H2 Hummer as “farm equipment” a few years back. Haha.

  10. Nelson

    Mark, please provide the links to the studies you claim where reduced speed does not reduce fuel consumption & fatalities.
    Brad has given you first hand data to rebuke your claim, how about you do the same?
    By the way, if due to a “rough” economy, people can not afford to buy a new car, hybrid or not, how can they get those wonderful tax credits you say will solve the problem?
    They can’t…and that idea doesn’t work in the real world, only in the la-la land of talk radio.
    Typical Rush-backwards theory and blame the government for your mistakes.

  11. Lee Muller

    So, let me guess: you want Obama to GIVE new economy cars to those who fit the racial and socioeconomic profiles for “needing” one.

  12. Mike Cakora

    Nelson – Data on the effect of raising the speed limit from 55 to whatever states decided was safe and fatalities is widely available: you can start here:

    But almost all measures of highway safety show improvement, not more deaths and injuries since 1995. Despite the fact that 33 states raised their speed limits immediately after the repeal of the mandatory federal speed limit, the National Highway Traffic Safety Administration reported last October that “the traffic death rate dropped to a record low level in 1997.” Moreover, the average fatality rate even fell in the states that raised their speed limits.

    Date on fuel economy and speed is both easy and difficult, depending on what the question is.
    All things being equal, a vehicle gets better fuel economy — can travel more miles per gallon — at 50 MPH than at a higher speed.
    When things are unequal, one vehicle may get more MPG than another at a given speed. That’s a function of aerodynamics, vehicle weight, engine fuel and efficiency, etc. Karen probably gets more MPG in and around town than she does on the highway because a hybrid’s real benefit is in stop-and-go traffic where the regenerative braking recharges the battery pack, limiting by just a bit operation of the gas engine. On the highway, braking is rare and the gas engine runs more often as a function of speed. That’s why hybrids usually have a higher city MPG than highway.
    The policy issue is somewhat more difficult than setting the speed limit that roads can support and the voting public will put up with.
    Mandating and enforcing a 30 MPH speed limit would in theory drive down national consumption of fuel, but would not happen because of the political outrage. Despite what John Warner — he’s a good man who’s served the Commonwealth of Virginia well and I wish him the best in his retirement — might consider as prudent, his view is not widely supported.

  13. Harry Harris

    Despite Mr Muller’s usual over-the-top “ditto head” phrase-laced language, he does highlight a widely-followed point of view. His personal freedom is more important to him than any sense of caring for the impact of his attitudes and actions on others. His views exhibit a profound lack of any sense of community – and he only values citizenship as it serves his own purposes, likes, and dislikes. I wish his views were rare among us, but I believe they are rampant among our parocial “me first” society. He certainly is not required to care how energy prices impact working poor people and is quite welcome to value 30 minutes saved on a four hour trip over any lives endangered by driving 70 instread of 60. His uncaring attitudes sometimes make me chuckle a little until I begin to see the same self-centered and often undisciplined attitudes in myself.

  14. Mike Cakora

    Harry –
    In the grand scheme of things, Lee’s actions have an effect on energy prices that’s so miniscule that they cannot be measured. You and others may wish ever so much to impose your preferences on him and others, but he’ll properly react to market signals as will most other folks.
    I assure you that he and I are concerned about pollution, the balance of payments, domestic security, adequacy of energy supplies, and the like, just as you are. But he and I are puzzled about restrictions on domestic energy exploration and extraction and seek to end them. We wonder why the largest undeveloped uranium deposit in the US is off limits, especially since Jim Clyburn agrees with me, Lee, and Brad that nukes are the way to go.
    On a more general note, liberty was one of our nation’s founding principles, individual freedom was considered sacrosanct at least until Woody Wilson. Call me a romantic, but I think that’s a pretty good principle.
    Do you agree?

  15. Karen McLeod

    Mike, that me-first view of the world would not be a problem were it not so pervasive. Its true, my saving water by cutting off the faucet while I brush my teeth is miniscule; it’s only when a lot of us take such steps that it becomes useful. However, it’s a step I can take, and if enough of us take it, it makes a difference. Likewise driving slower, when feasible, makes little difference when one person does it; when a lot of people do it, it can save a lot of gas. But when a lot of people choose to refuse to do it, even when not pressed for time, we waste a lot. I have never said a word against nuclear power development; I think it’s one route forward. My only problem with developing ANWR is that we’re just going down that same carbon trail that’s already polluting the air we breathe and changing our climate. In addition it will be at least 10-15 years before we can access that. I think the money that we could spend there can be better used–for research, for alternate power, to build a better nuclear plant.

  16. Mike Cakora

    Karen – It’s not an either-or situation. Money spent at ANWR produces energy for mobility with the investment borne by the oil companies, not the taxpayers. While there’s a lot of private investment in alternative energy sources, public funds spent are collected as taxes, and much of the spending is nonproductive and speculative. So we can waste taxpayer dollars on potentially worthless research while Big Oil’s stockholders, Alaskan native Americans, and others bask in the profits ANWR extraction will generate.
    Folks should certainly be persuaded to use water smartly and conserve resources generally, and economic reminders like the water bill help. In fact, the absence of water meters delayed getting clean water in Russian cities after the Soviet Union collapsed. The water authority had no revenue stream to fund expanded treatment and folks had no incentive to use water wisely because it was free.
    It’s just not a good idea to legislate everything. Heck, it’s un-American and we really don’t need more of this.

  17. bud

    Mike, you are simply wrong on the effect of safety from lower speed. Fact is fatality RATES have declined in the U.S. since records have been kept. I’m not sure why you arbitrarily choose 1995 as a starting point. Any 10 year period would show a similar decline. In fact fatality RATES have probably declined more slowly over the last decade than they did in earlier periods. (Not surprisingly the one year in recent history where the mileage death rate increased year-to-year – 2005 – occurred during the Bush, Jr. administration. Like everything else things just keep getting worse during his tenure). Just check out the phenomenal declined during the late 70s/early 80s. This phenomenon has occured regardless of speed limits or other socio-economic factors.
    But the actual number of persons killed tends to increase with speed and declines when speed declines. Of course much of the success of the speed limit is related to how willing drivers are to obey the limits. Today’s high gasoline prices have apparently resulted in some decline in speed and consequently deaths are sharply down even without a change in the legal limit. Speed definitely does kill. The question is how to get people to slow down.

  18. bud

    Mike, I think you completely missed Karen’s point. This is not a discussion on the wonders of free-market economics. What we’re talking about is our energy future. Who actually earns a profit is irrelevant. I could care less if Exxon/Mobile make a profit. Drilling in the ANWR will only continue our addiction to the oil drug. It’s time to move on, keep our environment clean and develop new sources of energy. It’s time to say NO to drilling in the ANWR.

  19. Mike Cakora

    bud – I think I understand quite well the points you and Karen are making: 1) don’t drill and 2) direct taxes to fund R&D of alternative energy sources.
    The primary effect is to put the brakes on economic growth by keeping energy prices higher than what would be the case were ANWR and the continental shelf open to production. And you spend tax receipts on something that has a longer term payoff at best.
    The notion of spending taxpayer dollars on something that’s effective and has a payoff — building nuclear power plants — doesn’t even get a hearing.
    What’s crafty in your approach is that you will eventually end up boosting the costs of conventional energy sources to the point where alternative sources are cost-competitive. I don’t think that the economy can afford that and right now US public sentiment is against it.

  20. Mike Cakora

    Bjorn Lomborg, director of the Copenhagen Consensus, fully accepts the Kyoto / IPCC globo-warmo hypothesis, but not their plans for reducing greenhouse gases, mainly because they will make little difference.
    In today’s Wall Street Journal he examines the best way to spend $10B to help humanity. I recommend the whole thing, but find this pertinent to the discussion at hand:

    If mitigation — economic measures like taxes or trading systems — succeeded in capping industrialized emissions at 2010 levels, then the world would pump out 55 billion tons of carbon emissions in 2100, instead of 67 billion tons.
    This is a difference of 18%; but the benefits would remain smaller than 0.5% of the world’s GDP for more than 200 years. These benefits simply are not large enough to make the investment worthwhile.
    Spending $800 billion (in total present-day terms) over 100 years solely on mitigating emissions would reduce temperature increases by just 0.4 degrees Fahrenheit by the end of this century.
    When you add up the benefits of that spending — from the slightly lower temperatures — the returns are only $685 billion. For each extra dollar spent, we would get 90 cents of benefits — and this is even when things like environmental damage are taken into account.
    A continued narrow focus on mitigation alone will clearly not solve the climate problem. One problem right now: Although politicians base their decisions on the assumption that low-carbon energy technology is being rapidly developed, that is not the case. These technologies just do not exist. Wind and solar power are available — at a high expense — but suffer from intermittency. Researchers need to develop better ways to store electricity when those renewable sources are offline.

    He goes on to write that you can help humanity most effectively through public heath and other measures to fight disease. The point is of course moot if we’re sending our loot overseas for most of our oil.

  21. bud

    The point is of course moot if we’re sending our loot overseas for most of our oil.
    You are really hung up on this drilling foolishness. You are suggesting that if we drill here we won’t be sending our “loot” overseas. Of course that’s not true. Whatever we do drilling wise (and we’re drilling plenty right now) we’ll still import 70+ percent of our oil. That’s just a fact. The only way out of this is to use less oil. As I’ve demonstrated many times this will require an increase in renewables, especially wind, a proven, cost effective source of energy. With or without subsidies it will be a cost-effective way to go. With subsidies, at a level far lower than our huge oil industry subsidies, wind is likely to take off and provide 20-25% of our electric needs in just a few years. Drilling in the ANWR will only delay the conversion process. I say NO to drilling in the ANWR.

  22. Mike Cakora

    bud – Wind and solar don’t help mobility and don’t displace much petroleum.
    Increased domestic petroleum output will lower worldwide oil prices.
    The 249 million domestic vehicles are being replaced at the rate of maybe 10 million per year, few of those are hybrid or electric, so oil will continue to fuel transportation for decades to come.
    I’m reality-based.

  23. Lee Muller

    What subsidies to oil companies?
    A subsidy is a cash payment or credit to a business in help it invest in production or sell its products for at a reduced price.
    Examples of subsidies would be the payments to ethanol refiners and the tax credits to buyers of hybrid vehicles.

  24. george

    when is big oil going to direct their greatly increased profits to exploration (always deductible, sometimes creditable) rather than increasing the dividend to record levels. they also could uncap the 400 wells sitting on at least a 2 billion barrel field at the north pole. there are some technological issues on mass extraction, but there were for the north sea and prudhoe bay as well. another nice use for record high profits don/t you think.

  25. Mike Cakora

    George – I find it hard to believe that any oil company would sit on reserves at today’s prices. Do you have a link to support that? I can believe that oil companies would buy stock back at the right price, but I think you’ll find that they’re still spending billion$ on exploration. Were I a Big Oil guy, I’d take it slow on exploration to see if the off-shore ban gets extended by 30 September.
    The real success story seems to be the farmers and the processing companies like ADM per this Bloomberg report. Who knew that burning food was so popular and profitable?

  26. Lee Muller

    The oil companies only make 8% profit on each sales dollar, much less than other companies. They are spending hundreds of billions of dollars on exploration and refining, within the constraints of no new refineries in 20 years, no drilling in 546,000,000 acres offshore, and no drilling in ANWR.

  27. Karen McLeod

    Mike, why do you think that the cost of exploration/exploitation of ANWR would be borne by the oil companies, and not us? Most businesses manage to pass the cost on the consumer. That’s how they stay in business (and in some cases squeeze out enormous profits).

  28. Mike Cakora

    Karen – We consumers will pay whatever the market price is for any oil flowing from ANWR; if oil companies are lucky, they will recover their investment and make a profit down the line through crude oil sales. Oil companies will pay the upfront cost — make the investment — to find and extract the oil. Neither the federal nor state will pay upfront costs to entice the oil companies to do that drilling.
    This is in contrast to offering upfront tax credits, R&D grants, and the like for alternative energy. These are taxpayer funded aimed at stimulating demand, manufacturing, and research.

  29. Lee Muller

    Most of the professors, colleges and companies who will take advantage of tax credits for alternative energy are just opportunists, who will milk it dry, then climb on the next government fad train.

  30. Herb Brasher

    Well, Brad, I just got back from a business trip, 3200 miles, and we put it on 62 mph all the way. Easier going? Not really, but then you’re probably right that slightly below the speed limit would be better for that. Better mileage? No, it was lousy, but there could be several factors for that. We’ve gotten 23 mpg in this Windstar before, even with 6 people and a luggage carrier, and we were an even 20 this time. Didn’t save any money, either, but it was a nice experience, nonetheless. Northern Minnesota is nice anyway.

  31. Harry Harris

    One of the biggest “subsidies” to oil companies is probably the “last in first out” rule. For tax accounting purposes, oil companies are allowed to expense a barrel of oil at the last (usually highest)price paid regardless of the actual price paid for the oil. This hides actual profits(significantly), so don’t believe that crap about how low their margins are. In addition, huge bonuses are being paid to executives pretty deep into the company for excess profits that had nothing to do with good management – simply a market out of control. More hidden “margins.” When an administration not so far into their pockets gets in, you will likely see a truer picture of what is going on a la Enron

  32. Lee Muller

    You missed it Harry. That is not a subsidy.
    Every business can elect to use a form of depreciation and inventory valuation particular to that industry. Electing a pricing method affects both buying and selling.
    Keep your eye on the big picture.
    The total oil bought in a year is expensed at the actual amount of money paid. Their 8% profit is the net difference between price paid and sale price.
    8% profit is not “excessive” (a socialist term, not used in business or accounting).

  33. Herb Brasher

    Oh, and the one thing I would still plead for is a lower truck speed limit. Some are driving slower, but it’s precious few. Illinois is nice–55 mph on trucks, and even though they drive 65, at least they aren’t going 80 like the often do in the South. Tennessee is one of the worst states on that, but South Carolina isn’t much better.

  34. Lee Muller

    Jimmy Carter lowered the speed of trucks, and they were operating in lower gears, getting worse fuel economy than before – another example of bright ideas from government with no analysis, no testing, failing.

  35. Herb Brasher

    Have you ever driven down the interstate with a semi right on your tail, ready to send you to kingdom-come if you just happen to need to put on the brake? Ever had to get around Columbia after a truck dumped its load all over I-20 because it was going too fast and lost control?
    Do you ever consider anybody besides yourself or anything else besides personal freedom? You are incredible.
    Trucking companies will find plenty of ways to conserve fuel if they have to deal with speed limits, and some better weight limits would help our roads as well.

  36. Harry Harris

    Lee missed my quotation marks on “subsidy.” The LIFO rules are not a susidy, but a favorable tax treatment – and legal, but bogus, accounting. It is simply not true that any industry may use favorable valuation rules in accounting. My point is that the profit margin figures cited by oil industry apologists are not straightforward and should and will be subject to scrutiny they now are shielded from. Given a public made powerless in the market by our own lack of self-discipline and oil and gas suppliers well-willing to blame hyper-inflation on increased demand, the public is foolish to accept the arguments of oil-gougers by not calling their hand by cutting demand. That type of action was partly enforced, partly voluntary (but with leadership) during the Carter administration. It worked to crush even an embargo-driven oil shock and gave us the cheap oil of the eighties and nineties -during which we whipped inflation and allowed ourselves to again become addicted to cheap oil.

  37. Norm

    NBC ran a story tonight concerning another impact the higher gas prices are having. Watch the clip and ask yourself if that McCain gas tax holiday still sounds like a good idea.

  38. Mike Cakora

    Harry –
    The oil companies’ profits are their profits however they achieve them, and their 8% (overall) is the result. Had they used another method for inventory accounting, both the amount and the percentage might have been different, but from their SEC filings, annual reports, and auditors’ statements, they appear to be reporting responsibly. All that said, you have to acknowledge that their profit margin is lower than what one finds in other industries and is therefore by no means excessive, whatever “excessive” may mean today. I should add that they themselves own very little oil and act as processors for the owners, most of whom are sovereign states.
    Folks are reducing demand without central government regulations that curtail freedom of movement. You can have the Carter era.
    Folks are reducing demand without central government regulations that curtail freedom of movement.
    Herb –
    I drive the I-77 / I-81 / I-66 corridor twice per month and am familiar with heavy truck traffic. The 219 miles I traverse on I-81 is hilly and especially challenging for the big rigs. Given Virginia’s rather strict enforcement, I normally drive the speed limit plus a tad except for the high enforcement area around Roanoke where I’ve been stopped, searched, doper-dogged, etc. and therefore adhere to the 60-mph limit more religiously than I do anything else in life.
    I find the vast majority of truckers to be reasonable and courteous, much more competent and predictable than the twits in the motor homes and other private vehicles. For example, I realize that truckers pour on a little steam going downhill to make it up the next grade, so I make way on the downhill and pass them on the upgrade. I try to look ahead, as they do, to see any obstacles to maintaining speed and adjust accordingly. A steady speed is the key to reasonable fuel economy: slowing down captures no energy and means that you’ll waste a bit of energy when you have to accelerate back up to cruising speed.
    Think like a trucker and your trips will be less stressful. That’s a 10-4, good buddy!

  39. Lee Muller

    I work a lot in Charlotte, NC, as a consultant in transporation systems. My total driving mileage is 2,000,000.
    Since you cannot dismiss me as ignorant, why don’t you try to make your point, whatever it is, like an informed adult?

  40. Doug Ross

    As publicly traded companies, wouldn’t it be in the best interest of oil companies to attempt to achieve the highest possible profit margin?
    Exxon Mobil’s profit margin last year was 10.85%. The company I work for, Oracle, had a profit margin of 24.61%.
    Guess what? I hope Oracle’s profit margin next year is 50%. Same for the investors in Exxon Mobil.
    If you’re so sure that oil companies are gouging the consumer, buy shares of XOM or put your 401K 100% into energy related mutual funds. It’s guaranteed money, right?
    The market determines price. When the price gets too high, demand will drop. We’re already seeing it.

  41. Lee Muller

    How come these do-gooders don’t mind the gouging and skyrocketing costs of Medicare, Social Insecurity, public schools, college tuition, light rail, public recreation facilities…?

  42. Herb Brasher

    I have driven the I-77/I-81 corridor many times myself, and find it much more reasonable than I-40 or I-65 in Tennessee. But my statements were overdone, I realize. In the meantime I’ve done some more research on truck weight limits, and I realize that it is more complicated than I thought.
    I appreciate that most truckers are polite and helpful, but many still drive too fast, as I suppose we probably all do, except that I have to admit a love for the good ol’ German Autobahn with it’s rules of the road, and trucks at 55 mph in the right lane.
    Maybe I am just “spooked,” but there is something about a rig hauling down the interstate at 80 that scares the h out of me.
    Sorry, Lee, I forgot that you are an expert on all subjects. Please pardon my audacity to question your infinite wisdom.

  43. Robert

    Since the law only requires that one maintain a minimum speed of 45 m.p.h., people wishing to drive 55, 62, etc. do not need a change in the law in order to drive as they please. Why is it that so many of you don’t get that? I’ve noticed that the gas milage in my car drops significantly at 75, so I don’t exceed that unless I’m passing. The only thing mandating 55 (which means 62) will do is increase revenue for the Highway Patrol and other police agencies with jurisdictions on interstates.

  44. p.m.

    “…the one year in recent history where the mileage death rate increased year-to-year – 2005 – occurred during the Bush, Jr. administration. Like everything else things just keep getting worse during his tenure…”
    Gosh, bud, are you really are just a Democratic fanatic? Do you understand what’s relevant politically and what isn’t? When you have a flat tire, do you blame it on the White House?

  45. Lee Muller

    You are batting 100% so far in posting nothing but personal attacks.
    Big minds talk about ideas.
    Normal minds talk about things.
    Small minds talk about people.
    Here’s an idea for you: Changing the signs to 55 mph probably won’t slow down someone who is already breaking the current speed limits. Call the highway patrol if you actually see a truck driving 80 mph, since I-77 speed limits vary between 60 and 70 mph.

  46. Herb Brasher

    Uh Lee, what I basically wrote was, and I stick by it, that trucks generally drive faster than is safe. And we all probably drive faster than is safe, especially given the level of driver training that is common in the United States.
    No, changing the speed limit signs won’t help, on that we can agree. The de facto> speed limit is the one that law enforcement chooses to enforce, and we all know what that is: it is at least 80 in SC. I do not see the highway patrol pulling over trucks (or anyone else, for that matter) driving 80. Why should they, if they are driving 80 or more themselves, and freely admit that “the traffic in SC moves at 10 mph over the speed limit.”?
    I know you hate Europe, but I will still use the very nice illustration of the German Autobahn, where trucks stay to the right, and almost always keep to a 80 kph speed limit (add 10% error–most go 90 kph, or between 55 and 60 mph). So even though cars in the left lane may be moving very fast, one is in a much better position to judge situations, and given the same number of vehicles on the road, the traffic will flow better. Add stricter and lower weight limits on commercial vehicles, and I think (though I freely admit that I have not done the research to prove it) that roads last longer and require less maintenance.

  47. Lee Muller

    Actually I like a lot of Europe, and have worked in France and Switzerland, as well as for English and German firms.
    My career involves lots of free trade.
    I doubt the problem drivers in America are of German extraction, from what I see. A lot of them had probably not ridden in a car before sneaking across the border, or learned to drive by watching rapper videos. They pass on the right, on the shoulder, in the median.
    I feel sorry for the ones who know how oppressive Europe is to their ambition and creativity, and I feel even sorrier for the ones who don’t know any better than to be modern serfs, and believe the lie that they have to depend on handouts from their socialist potentates.

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  49. zzazzeefrazzee

    “The fascism of 55 is typical of the liberal mindset ”
    Yeah right. When Nixon signed the Emergency Highway Energy Conservation Act in 1974 establishing that limit, he did so after it had bi-cameral approval.
    Is that a facist process?
    Was Nixon a facist?

  50. Lee Muller

    Dictating slower speeds than safety demands, for the entire country, is central planning, a key feature of all socialist states, not just fascist socialism.
    Likewise, telling manufacturers their products have to get this or that miles per gallon is another example of unAmerica, socialist-style central planning.
    Under Americanism, the states set their own speed limits on state roads, and manufacturers decide what mix of products and features to offer their customers, who are paying for their fuel in their cars, so it is only their business.

  51. Robert

    Of course the idiotic law had bicameral support. Otherwise it never would have reached the President’s desk for signature or veto. Besides, as I pointed out in an earlier post, the current law only requires one maintain a minimum speed of 45 m.p.h., therefore if you want to drive 55 you may do so without passing a law that infringes upon the rest of us. Lowering the speed limit on interstates might reduce fuel consumption; it would definitely make criminals out of thousands of South Carolinians and increase revenue for law enforcement. As for your question about former President Nixon, if you read from the same dictionary I do, you might well conclude that Nixon was quite possibly a fascist.


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