On Oil and Taxes

[scott]

On Oil and Taxes
A post by Scott

Spurred on by a question posed by clambake in the now classic Why is oil below $50 right now? thread, I've decided to make my best attempt to dispell some common misperceptions about tax breaks, holidays, increases, etc. and their respective effects on oil markets.

The question posed, and one no doubt that goes through the minds of millions of Americans, was "can you tell me why any company that makes billions in record profits deserves tax breaks?"

On the surface it would certainly seem unnecessary (and maybe even sickening) to provide tax relief to companies that, from a pure dollar perspective, have been raking in unprecedented profits.

Now, before I go any further I need to provide some disclaimer information and make one (bound to be ignored) request.

First, for simplicity's sake and due to the existence of more than one outstanding non-disclosure agreement, I won't get into specific details of actual oil industry projects.

The request: while I certainly have no authority to enforce any sort of etiquette in these forms, I politely ask that individuals conduct themselves as adults in my thread. If your clever nicknames or curse words for politicians, political groups or other posters don't add any value to the discussion other than to inflame tensions, then you should probably leave it out.

If you think you've got it all already figured out and nothing I post here could ever possibly change your mind, then you don't need to read any further, nor do you even need to bother responding, unless you feel you are adding value to the discussion ("It's all Clinton/Bush/Satan/Manu Ginobili's fault" does not cons ute adding value).

The Proposals

There are generally speaking three proposals being tossed around the political arena these days, and I'll address the merits and pitfalls of each.

What is important to remember when evaluating any of these proposals is the context of the objective. This seems to be forgotten in any sort of discussion. Most people have one of a few objectives in mind (and sometimes all of them):

• Lower energy prices (specifically gasoline)
• Reduced dependence on foreign commodity supplies (specifically oil)
• Reduce energy demand/usage/emissions

What is most troubling to me when listening to people argue solutions to achieving these objectives, is that most people have both of the first two objectives in mind despite the fact that they are often times in direct conflict with one another.

So, as I go through the pros and cons of proposed solutions, I will be doing so with strict regard to achieving the objective. There WILL be both positive and negative externalities that result while attempting to reach these objectives. The most notable of these externalities is record profits by oil companies. The existence of these record profits are IRRELEVANT TO THE JUDGEMENT OF THE PROPOSED SOLUTION, unless we have previously specified that we want to limit profits (but if everyone else's objectives are met, why would we care about limiting profits?).

You should note, that profits are not related to prices. It is possible for you to pay $4/gal in gasoline while oil companies lose money, and it is possible for you to make $1/gal while they rake in record profits. For the purposes of this thread, we will assume that so long our main objective is achieved, we don't care what kind of profits these private industry companies make.

Again, keep your eye on the objective. We will focus on the three listed above.

Proposal 1: The Gas Tax Holiday

I start with this one, because to the average consumer is may seem like a good idea, but in reality it is the absolute worst in terms of the objectives.

To summarize, John McCain has proposed federal gasoline taxes be suspended temporarily to provide price relief to consumers. Let us evaluate with strict relation to the objectives.

Objective A: Lower gasoline prices. On the surface, it would appear to meet this objective. We subtract off a tax, so the price is lower... right?

Unfortunately, no. The demand for gasoline is based solely on the price at the pump. How that price per gallon gets divided between a station owner, the government, a refinery or an OPEC nation has zero impact on demand. Oil prices, pipelines in Iraq, ethanol tanks in Iowa... none of those have any impact on the demand for gasoline. (They do have an impact on the SUPPLY of gasoline, another issue).

Demand and supply are at their equilibrium (for now we ignore questions of market speculation and how is has impacted oil prices - as it is irrelevant to the evaluation of a tax holiday) at current prices. A tax holiday would have ZERO impact on this equilibrium. Essentially the tax would be removed from the supply side of the equation, and theoretically (after refineries, pipelines, and terminals are allowed to catch up) supply would increase slightly. For a brief moment this could provide some price relief, but would be immediately washed away by a corresponding increase in demand. Supply and demand would eventually recalibrate to the point they are already at. Instead of the intended result, all we've done is shift revenue from the government to profit for some private industry organization (or worse, foreign country).

Objective B: Reduced Dependence on Foreign Sources of Oil. If there were any impact here, it would be in the wrong direction. If demand were to increase as the result of even the slightest price reduction, the supply of oil would need to be filled by a foreign source. Thus we have increased our dependence.

Objective C: Reduced Demand/Usage/Emissions. As we've seen, at best usage remains constant, at worst it increases.

So, none of our objectives are possibly met by this proposal, and it should be immediately discounted. Also, when thinking of the gas tax holiday, I always like to point out that you don't ween someone off crack by providing them with cheaper crack. So even if prices were lower, is that what we want?

Next: Windfall Profit Taxes

[scott]

Proposal 2: The Windfall Profits Tax

The Democrat controlled congress recently failed in there attempt to pass a Windfall Profits Tax on oil companies. Essentially it would tax any profit above what is deemed a "normal" amount. It is important to question what cons utes a normal amount. Typically profits need to be viewed in terms of the revenues required to generate them, and it is worth noting that oil company profit margins remain significantly below other industries. That, on its own, does mean a windfall tax idea is bad or good... but it is important to keep in mind.

Objective A: Lower Gasoline Prices. The way a tax would be ins uted is important in evaluating this objective. If it were based on the dollar amount of profits ("X% tax on all profits over $X billion") then the effects would be strikingly different than if it were based on profit margin ("X% tax on all profit margin over X%").

Because of the level of complexity this adds, I'll skip ahead to the basic result as dictated by fundemental economic theory. A windfall profits tax, when it becomes binding, acts like any tax and results in a decrease in supply (a shift to the left of the supply curve) as a tax adds to supply costs. Less supply means, all else equal, higher prices.

Objective Failed.

Objective B: Reduced Dependence on Foreign Sources of Oil and
Objective C: Reduced demand/usage/emissions.

I am coupling the two together because in this case they are one in the same.

The world's best rationing mechanism is higher prices, and higher prices is what would result. The demand for gasoline (and thereby oil) would be significantly reduced and the high price of these goods would provide incentive for alternative sources of energy.

A downside, of course, is that this would be extremely painful for US consumers. But, pain might be what the doctor ordered. Amongst Monetary Economists, Paul Volker is held in high regard for taming inflation in the early 80s. Of course, his means of doing this was to create a recession. When faced with two options, you have to take the least painful one, even if it is still painful in itself. The windfall profits tax would create real demand destruction, which would reduce our dependence on oil period, both foreign and domestic. It would also cause a global recession.

Another downside is the message it sends to those with capital to invest in assets to produce valuable resources down the road. If we are willing to place a cap on the profits of one thing, will we do the same for something else down the line? That risk my drive people away from investing dollars into new assets.

Objective achieved, with some important caveats.

Next: Tax "Breaks" for Oil Companies

[scott]

Proposal 3: Tax "Breaks" (or their repeal) for Oil Companies.

Here is the question that originally spawned this post.

First, there are a lot of misconceptions about what tax breaks oil companies currently receive. What they do NOT get, is a across the board reduction in their tax rates.

What they DO receive, is tax reductions or abatements on certain projects. Specifically here are items from the energy bill that are lumped into the "tax breaks for oil companies" number that you often hear quoted (usually $14.5 to $17 billion):

• Refinery capacity expansion
• Exploration and production of traditional energy resources (oil, gas, etc.)
• Research, development and implementation of alternative energy sources
• Consumer tax credits for purchase of hybrid vehicles and more energy efficient home appliances

So, let's evaluate against the objectives.

Objective A: Lower Gasoline Prices. The tax breaks are designed to provide incentive to either a) increase supply or, to a much smaller degree b) reduce demand (tax credit for a hybrid reduces demand, as you use less in your hybrid).

Assuming they do so, then the objective is achieved.

It is easy at this point to point out Exxon Mobile made $40 billion of profit last year, and they should need no incentive to make these investments. That would be a fallacy. Like in all industries, investment opportunities are evaluated based on their potential returns. Just because ExxonMobil has a bunch of extra money, doesn't mean they are going to spend it on a project that may not pay out. There would be a shareholder revolt if they started investing in questionable projects simply because they had nothing else to do with their money.

The tax credit on refinery expansion and E&P projects are designed to provide incentive for these companies to go forward with projects that otherwise would not meet return objectives. This is similar to how a company like Toyota decides to build a truck factory on the south side. They received a tax abatement for a certain number of years, because it made the project more economic. Without that tax break, they might not build that plant. The same is true of the oil company. The fact an oil company has a lot of money is irrelevant to whether a tax incentive is required to make a project economic.

I saw a post the other day about shale deposits in Montana. This is a great example of where tax breaks are needed if you want to get that supply out of the ground. Otherwise, it just doesn't make economic sense, even with billions in the bank.

At the same time, the tax break does turn buying a hybrid into a good economic choice (especially at $4/gal). I ran my model the other day, and the 5-year return on a hybrid with a $2,000 tax credit (offsetting a $2,000 hybrid premium) at $4/gal, 12k miles a year and 15 mpg increase in efficiency was over 97%. That, my friends, is a good investment.

Objective met.

Objective 2: Reduce dependence on foreign oil. This is a tricky one. Any reduction in the demand for oil would reduce our foreign dependence.

But if we assume demand is not directly affected by the tax credit package, and supply increases and thus drops price, the quan y demanded would be higher as a result of the lower price (remember econ 101... lower price = higher quan y demanded). Because the elasticities (slopes) of the supply and demand curves are not equal, there is no promise that we will have decreased our consumption of foreign oil at all. In fact, it is possible that the increased demand would be greater than the increased domestic supply and we will have actually increased our dependence.

But if the incentives were all geared towards alternative energy sources (and let's not bring up ethanol), then you certainly meet the objective by shifting away from oil all together.

Objective met? Maybe, but depends on a lot of factors and we could actually make things worse.

Objective 3: Reduced Usage/Demand/Emissions. Here is another "depends". If we only focus on increasing the supply of traditional energy sources, then we could very likely result in HIGHER usage.

But if the tax incentives were geared towards alternatives or demand reduction, then yes, we meet the objective.

Objective met? Maybe.

Conclusion: There are good reasons for providing tax breaks to companies raking in record profits, depending on your objective. If your objective is to increase oil supply, then most certainly you would meet that objective by providing tax incentives.

So... the question I have, is what are YOUR objectives for an energy policy? In my opinion that is what is severely lacking by our politicians, so we get a number of disjointed policies that practically contradict another.

Your turn.


Scott is a random guy on the internet (but not THE Random Guy) who knows about economics, oil, beer, and not much else. He'd prefer to talk about beer.

[jochhejaam]

Proposal 1: The Gas Tax Holiday


Demand and supply are at their equilibrium (for now we ignore questions of market speculation and how is has impacted oil prices - as it is irrelevant to the evaluation of a tax holiday) at current prices. A tax holiday would have ZERO impact on this equilibrium. Essentially the tax would be removed from the supply side of the equation, and theoretically (after refineries, pipelines, and terminals are allowed to catch up) supply would increase slightly. For a brief moment this could provide some price relief, but would be immediately washed away by a corresponding increase in demand. Supply and demand would eventually recalibrate to the point they are already at. Instead of the intended result, all we've done is shift revenue from the government to profit for some private industry organization (or worse, foreign country).

Objective C: Reduced Demand/Usage/Emissions. As we've seen, at best usage remains constant, at worst it increases.

The Federal tax is 18.4 cents per gallon of gas. The current price of gas is roughly 4 dollars per gallon, and 4.50 per gallon of diesel, so we're talking less than a 4 to 5 percent discount on a gallon of gas. If you can't afford $4.00 a gallon, you more than likely can't afford $3.82 a gallon. If that's the case then the demand doesn't go up, so the price per gallon, which fluctuates by demand, doesn't go up.

Correct me if I'm wrong here scott.



BTW, I'm not in favor of the Holiday Gas Tax, it's little more than a gimmick, and just doesn't give the type of relief low wage earners are in need of.

[scott]

The Federal tax is 18.4 cents per gallon of gas. The current price of gas is roughly 4 dollars per gallon, and 4.50 per gallon of diesel, so we're talking less than a 4 to 5 percent discount on a gallon of gas. If you can't afford $4.00 a gallon, you more than likely can't afford $3.82 a gallon. If that's the case then the demand doesn't go up, so the price per gallon, which fluctuates by demand, doesn't go up.

Correct me if I'm wrong here scott.



BTW, I'm not in favor of the Holiday Gas Tax, it's little more than a gimmick, and just doesn't give the type of relief low wage earners are in need of.

Well, first I need to get a little technical on the part I put in bold above.

You can interpret the price-quan y relationship in two ways. One, demanded drives price, or two, price drives quan y demanded. In this case, we'd be talking about the second.

When demand changes for something other than a response in prices, then prices respond. We call this a change in demand, and (graphically) the entire demand curve shifts. When demand responds to a change in prices (which would be the case here) we call it a change in the quan y demanded, and we have a movement along the same demand curve.

Quan y demanded increases with even a 1 penny decline in price, all else equal, so certainly an 18 cent decrease in price would result in higher demand. But, like I said - price wouldn't actually decrease - the money that was previously taxes will just go into the pocket of someone else who is not the government - at least until supply responds, but as I (think I) outlined, we eventually end up in the same place, at best.

The Holiday isn't even a gimmick in my mind, it's just the stupidest idea I've heard yet, given our current set of objectives.

[2centsworth]

Well done Scott. We need to provide tax incentives to automobile manfacturers to increase fuel effeciencies. There's no reason why we can't get the averages to 40-50 mpg. Additionally, we need to drill and build refinaries in the states until we can make acceptable alternative energy sources mainstream.

my 2cents

[jochhejaam]

Well, first I need to get a little technical on the part I put in bold above.

You can interpret the price-quan y relationship in two ways. One, demanded drives price, or two, price drives quan y demanded. In this case, we'd be talking about the second.

When demand changes for something other than a response in prices, then prices respond. We call this a change in demand, and (graphically) the entire demand curve shifts. When demand responds to a change in prices (which would be the case here) we call it a change in the quan y demanded, and we have a movement along the same demand curve.

Quan y demanded increases with even a 1 penny decline in price, all else equal, so certainly an 18 cent decrease in price would result in higher demand. But, like I said - price wouldn't actually decrease - the money that was previously taxes will just go into the pocket of someone else who is not the government - at least until supply responds, but as I (think I) outlined, we eventually end up in the same place, at best.

The Holiday isn't even a gimmick in my mind, it's just the stupidest idea I've heard yet, given our current set of objectives.

Surprised about the info regarding the increase in demand per penny, but I get it scott, thanks.

edit: Surprised = educated

[2centsworth]

demand wouldn't necessarily increase proportionately. A 1 penny decline in price wouldn't necessarily result in a 1 penny increase in demand.

[scott]

Well done Scott. We need to provide tax incentives to automobile manfacturers to increase fuel effeciencies. There's no reason why we can't get the averages to 40-50 mpg. Additionally, we need to drill and build refinaries in the states until we can make acceptable alternative energy sources mainstream.

my 2cents

I agree. Personally I'd also like to see more aggressive incentives on the demand side of the equation, and let that help drive supply.

I think consumer tax incentives for hybrids are a good start, but how about a tax credit for someone who buys a car with 30+ mpg? How about even great incentive over 40 mpg? How about a significant gas guzzler tax for vehicles that only get 10 mpg? It won't take long before you see a 40 mpg Tahoe, IMO, if the incentives are in the right place.

[scott]

Surprised about the info regarding the increase in demand per penny, but I get it scott, thanks.

edit: Surprised = educated

2cents already hit it a bit... a penny decrease in price may only mean a small increase in demand... but it is there.

[2centsworth]

I agree. Personally I'd also like to see more aggressive incentives on the demand side of the equation, and let that help drive supply.

I think consumer tax incentives for hybrids are a good start, but how about a tax credit for someone who buys a car with 30+ mpg? How about even great incentive over 40 mpg? How about a significant gas guzzler tax for vehicles that only get 10 mpg? It won't take long before you see a 40 mpg Tahoe, IMO, if the incentives are in the right place.

I'm with you. I also believe the free market is starting to work, because car dealers are loaded with gas guzzlers and can't keep fuel effecient models in stock. I traded in my Sequoia 2 years ago and now drive a Matrix that gets me 36 mpg hwy and 30 mpg city. We'll start to see more of it, but expiditing the process with agressive tax policies makes sense to me.

[ElNono]

Interesting writeup Scott, thanks for taking the time.
My take on this is that an oil company has little incentive, if any, to invest time and money on alternative energy sources, since there's much more money to be made on a product in limited supply. That's just basic business sense. Now, I wouldn't necessarily add any taxing on them, because of the reasons you explained above.
What I would personally would like to see is a severe shift in the auto market. And I think it's starting to happen. Unfortunately Detroit has spent more money in recent years doing R&D in the perfect cupholder size or the biggest SUV they can build, instead of bringing up the prototype hybrid and hydrogen cars to market.
And I personally think that if we're going to give tax breaks, we should be really be giving them to companies that are making a serious effort to bring products using these alternative energy sources to market.

[Nbadan]

Wanted

Nice thread Scott, thanks for taking some valuable time...even I don't think messing with windfall taxes or a tax holiday will result in significantly lower gas prices for consumers, but there is something legislators can do to put a dead stop and even reverse oil future speculation sneaked into legislation by Phil Gramm...and lower oil prices by as much as 25% overnight....

Michael Greenberger, the former head of the CFTC's Division of Trading and Markets, testified yesterday before the Senate Commerce Committee on the topic of Energy Market Manipulation.

He stated that former Senator Phil Gramm of Texas sneaked the Enron loophole through a large piece of insignificant legislation years ago: the result was that regulations upon the futures industry were abandoned.

Greenberger said that legislation immediately closing the Enron Loophole with a broader, international scope would stop market manipultion and would cause oil prices to plunge over 25% overnight.

As early as the winter of 2002, it was widely known that the 2000 Commodities Futures Modernization Act had created a monster, capable of running up energy prices outside of the normal law of supply and demand.

Worse, our government had been warned this was going to happen. Representatives of the Federal Reserve, the Securities and Exchange Commission and the CFTC had already told Congress not to deregulate energy because "the market was ripe for manipulation."

Professor Greenberger warned about our "New American Economy" far better than I could:

"Should we have an economy that’s based on whether people make good or bad bets? Or should we have an economy where people build companies, create manufacturing, do inventions, advance the American society and make it more productive? We are rewarding people for sitting at their computers and punching in bets. That’s not the way our economy is going to be built, and India and China, with their focus on science and industry and building real businesses, are going to eat our lunch, unless the American public wakes up and puts an end to an economy that praises and makes heroes out of speculators."

Greenberger’s statement explains why Detroit and other American manufacturers suffer while Wall Street speculators make a fortune — and your rapidly shrinking checkbook pays for it, every time you buy food, fuel or feed.

All because there is no shortage of these goods, you’re just being told there is because it’s more profitable – for a few – that way.

Link

The Enron Loophole is about to be shut down if Bush does NOT veto this legislation:

[scott]

I think it is really the topic for another thread, but there is definite market manipulation going on with regards to the prompt oil price. On any given day, 400 million barrels of crude oil is exchanged on the open market, excluding any direct contracts between refiners and oil producers. Oil demand is only 87 million barrels a day.

The other day, over 1 billion barrels of oil changed hands.

This isn't because liquidity is making oil an efficient market, it is because people who have no business owning oil (speculators) have jumped into the market.

An interesting statistic. It is estimated that the increased demand for oil by OIL SPECULATORS since 2002 is as big as the increased demand for oil by the Country of China in the same period.

And now we have all of these long-only commodity funds, which have monetized these commodities, and thus we no longer have a commodity value based solely on the intrinsic properties of the material. Instead oil is being used as a store of value, driving up costs significantly.

[MannyIsGod]

I think it is really the topic for another thread, but there is definite market manipulation going on with regards to the prompt oil price. On any given day, 400 million barrels of crude oil is exchanged on the open market, excluding any direct contracts between refiners and oil producers. Oil demand is only 87 million barrels a day.

The other day, over 1 billion barrels of oil changed hands.

This isn't because liquidity is making oil an efficient market, it is because people who have no business owning oil (speculators) have jumped into the market.

An interesting statistic. It is estimated that the increased demand for oil by OIL SPECULATORS since 2002 is as big as the increased demand for oil by the Country of China in the same period.

And now we have all of these long-only commodity funds, which have monetized these commodities, and thus we no longer have a commodity value based solely on the intrinsic properties of the material. Instead oil is being used as a store of value, driving up costs significantly.

Thats actually fairly amazing and I'd never thought of it in that manner.

[Homeland Security]

I think it is really the topic for another thread, but there is definite market manipulation going on with regards to the prompt oil price. On any given day, 400 million barrels of crude oil is exchanged on the open market, excluding any direct contracts between refiners and oil producers. Oil demand is only 87 million barrels a day.

The other day, over 1 billion barrels of oil changed hands.

This isn't because liquidity is making oil an efficient market, it is because people who have no business owning oil (speculators) have jumped into the market.

An interesting statistic. It is estimated that the increased demand for oil by OIL SPECULATORS since 2002 is as big as the increased demand for oil by the Country of China in the same period.

And now we have all of these long-only commodity funds, which have monetized these commodities, and thus we no longer have a commodity value based solely on the intrinsic properties of the material. Instead oil is being used as a store of value, driving up costs significantly.

You better shut up right now or plan on a slow, painful death at Gitmo.

[1369]

Scott, one of the things I hear is that the oil companies do not have to pay certain royalities to the gov't on some of the lease blocks in the Gulf. Any truth to this, and if so, would that fall into the "tax break" column?

Also, what's your take on Real Ale's "Firemans #4 Blonde Ale "?

[RandomGuy]

I ran my model the other day, and the 5-year return on a hybrid with a $2,000 tax credit (offsetting a $2,000 hybrid premium) at $4/gal, 12k miles a year and 15 mpg increase in efficiency was over 97%. That, my friends, is a good investment.

Parameters?

Don't be afraid to be very specific/technical here.

I am looking into to whether or not to keep my old, paid-for jalopy, and I would find any economic analysis of various vehicle solutions helpful.

I will take some time on my coffee break later to work up my own analysis.

[RandomGuy]

Scott, one of the things I hear is that the oil companies do not have to pay certain royalities to the gov't on some of the lease blocks in the Gulf. Any truth to this, and if so, would that fall into the "tax break" column?

Also, what's your take on Real Ale's "Firemans #4 Blonde Ale "?

If I may:
Not paying normal royalties are indeed counted as a tax break. Royalties are simply a fancy word for what is, in effect, a tax. A rose by any other name...

The RealAle brewing company puts out my absolute favorite beer, the Brewhouse Brown Ale.

If it is fresh and kept cool, I have never tasted a better brown ale. Perfect blend of hops, sweetness, and malt roasting. My opinion of course.
My problem with my favorite beer is in distribution. If the batch sits around too long unrefridgerated, it gets funky. This makes it a real crapshoot at the store.

On to the Fireman's #4 blonde ale, I tried it once out of respect for the brand and was pleased with the results. Heh, I may have to "refresh" my memory this weekend though.

[RandomGuy]

It won't take long before you see a 40 mpg Tahoe, IMO, if the incentives are in the right place.

My understanding:

A 40 mpg Tahoe would be a physical impossibility, unless driven under VERY specific conditions. (no stops at all, and always driven at about 48 miles per hour with a significant weight reduction) It is simply just too big and heavy to get even close to that range.

Possible? Yes, but it would be so redesigned and reduced in size that we wouldn't really consider it in the same class.

[xrayzebra]

Scott, very good read and educational. One thing I think
you left out was not all OILCO's are striking it rich in these
times. Valero is hurting, because they are in the refining
business and have to buy oil just like everyone else. I
believe their profits are way down. I am providing a link
to the story I am referring to.

http://online.barrons.com/article/SB...lenews_barrons

[2centsworth]

My understanding:

A 40 mpg Tahoe would be a physical impossibility, unless driven under VERY specific conditions. (no stops at all, and always driven at about 48 miles per hour with a significant weight reduction) It is simply just too big and heavy to get even close to that range.

Possible? Yes, but it would be so redesigned and reduced in size that we wouldn't really consider it in the same class.

it's called advances in technology. Considering all the technological accomplishments of this country a 40 mpg Tahoe should be a piece of cake.

[Extra Stout]

It won't take long before you see a 40 mpg Tahoe, IMO, if the incentives are in the right place.

If Chevrolet stuck a Tahoe badge on a 2500-lb hatchback, maybe.

[Extra Stout]

it's called advances in technology. Considering all the technological accomplishments of this country a 40 mpg Tahoe should be a piece of cake.

Absolute piece of cake.

Your 2012 Chevy Tahoe:

[101A]

It won't take long before you see a 40 mpg Tahoe, IMO, if the incentives are in the right place.

The laws of physics, ultimately must be obeyed.

40mpg 2.5 to 3 ton vehicle is not at all feasible in the near future.

However, if the govt. would ease up on some of the safety restrictions on cars, VERY light vehicles, with minimum power requirements would result. It ridiculous that I can go buy a motorcycle, which obviously haw NO seatbelt, bumpers, etc...but if someone puts a third and fourth wheel on that ride, I need not only belts, but side impact protection (big heavy steel bars), and a bank of airbags to boot!