Australian Politics Forum - The hilarious side of the carbon dioxide tax

rabbitoh07

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Re: The hilarious side of the carbon dioxide tax
Reply #30 - Oct 25^th, 2012 at 10:15pm

Shane B wrote on Oct 25^th, 2012 at 10:08pm:

If the households are compensated enough, this will offset the substituion effect by allowing them to purchase a combination of goods on their original indifference curve. A Hicksian demand curve will show the households new consumption choice after the price change while being compensated enough to allow the household to have the same level of utility as they did previously. Albeit the composition of the consumption bundle might have changed.

As you so helpfully quoted for us earlier:

Carbon pricing reduces emissions from electricity generation by shifting the generation mix towards cleaner technologies and moderating growth in electricity demand.

Moderating growth in electricity demand is only a small part of the equation. The major emissions reductions will come from shifting the generation mix towards cleaner technologies. That is the main point of the carbon price.

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MOTR

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Re: The hilarious side of the carbon dioxide tax
Reply #31 - Oct 25^th, 2012 at 10:19pm

Shane B wrote on Oct 25^th, 2012 at 10:08pm:

If the households are compensated enough, this will offset the substituion effect by allowing them to purchase a combination of goods on their original indifference curve. A Hicksian demand curve will show the households new consumption choice after the price change while being compensated enough to allow the household to have the same level of utility as they did previously. Albeit the composition of the consumption bundle might have changed.

"If the households are compensated enough to consume the same level of electricity," this is economic speak for households being compensated more than the income effect. As if, Shane.

If any of you are contemplating sending your kids to ANU to study economics, pull out their application forms, now.

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« Last Edit: Oct 25^th, 2012 at 10:31pm by MOTR »

Hunt says Coalition accepts IPCC findings

"What does this mean? It means that we need to do practical things that actually reduce emissions."

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Shane B

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Re: The hilarious side of the carbon dioxide tax
Reply #32 - Oct 25^th, 2012 at 10:49pm

MOTR wrote on Oct 25^th, 2012 at 10:19pm:

Shane B wrote on Oct 25^th, 2012 at 10:08pm:

If the households are compensated enough, this will offset the substituion effect by allowing them to purchase a combination of goods on their original indifference curve. A Hicksian demand curve will show the households new consumption choice after the price change while being compensated enough to allow the household to have the same level of utility as they did previously. Albeit the composition of the consumption bundle might have changed.

"If the households are compensated enough to consume the same level of electricity," this is economic speak for households being compensated more than the income effect. As if, Shane.

If any of you are contemplating sending your kids to ANU to study economics, pull out their application forms, now.

Full compensation means that the income effect is not relevant, and some households are being fully or overcompensated by the Government. If households have enough additional money to offset the increase in prices then they can choose to spend this additional income on electricity, for example, and not reduce their carbon consumption. But the substitution effect will still operate. Households will face changes in relative prices, with goods made with fewer emissions becoming relatively cheaper. By choosing less emissions-intensive goods and services, and improvimg energy efficiency households will be able to save money.

Higher-income households who don’t receive compensation will have stronger incentives to economise, as both the income and substitution effects will operate.

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Julia Gillard - twice selected, never elected.

We're still paying for the Whitlam Government.

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MOTR

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Re: The hilarious side of the carbon dioxide tax
Reply #33 - Oct 26^th, 2012 at 4:22am

Shane B wrote on Oct 25^th, 2012 at 10:15pm:

rabbitoh07 wrote on Oct 25^th, 2012 at 9:58pm:

Shane B wrote on Oct 25^th, 2012 at 9:52pm:

I think with the carbon tax the substitution effect will be extremely small due to denand being inelastic and alternatives relatively more expensive.

I think you are displaying you ignorance because the demand is not at all inelastic and alternatives are very much price competitive, even with the massive subsidies given to coal production and coal fired generation.

Um, yes it is inelastic. Here are some estimates reviewed by the Productivity Commission last year:

http://www.pc.gov.au/__data/assets/pdf_file/0003/109929/21-carbon-prices-appendi...

The price elasticity of electricity will certainly be inelastic, however, that just means the contraction in demand will be proportionally less than the increase in price. The figures you have supplied actually contradict your claim that the substitution effect will be extremely small.

It is deceptive to imply that inelastic means virtually unresponsive. Here is the most pertinent bit in the link provided by Shane.

Quote:

The own-price elasticity of electricity demand measures the proportional change in electricity consumption in response to a unit change in the price. It is usually negative, since a price increase will typically reduce consumption. Thus, an elasticity of -0.5 indicates that a 1 per cent rise in the electricity price reduces demand by 0.5 per cent.

The elasticity also tends to be lower in the short term than in the long term, because it takes time for consumers to substitute towards less energy-intensive appliances.

A recent cross-country review of elasticity estimates for electricity demand found that they typically range from -0.2 to -0.4 in the short term, and -0.5 to -0.7 in the long term (Fan and Hyndman 2011).

So long term we are looking at an elasticity of somewhere between -0.5 and -0.7. This is certainly significant.

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« Last Edit: Oct 26^th, 2012 at 4:45am by MOTR »

Hunt says Coalition accepts IPCC findings

"What does this mean? It means that we need to do practical things that actually reduce emissions."

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MOTR Gold Member Offline Australian Politics Posts: 6646	Re: The hilarious side of the carbon dioxide tax Reply #34 - Oct 26^th, 2012 at 4:42am Now, Shane the economist, how about you explain the impact of carbon pricing on supply side abatement.
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BatteriesNotIncluded

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Re: The hilarious side of the carbon dioxide tax
Reply #35 - Oct 26^th, 2012 at 12:18pm

Shane B wrote on Oct 25^th, 2012 at 8:54pm:

MOTR wrote on Oct 25^th, 2012 at 8:19pm:

Armchair_Politician wrote on Oct 25^th, 2012 at 8:00pm:

Prior to actually passing the legislation enabling the carbon dioxide tax to become law, the Greens and ALP went to great lengths to explain that while the cost of electricity would rise and we'd get (some/little) compensation, the whole point of the tax was to make electricity more expensive in the expec tation that we'd use it less in order to save money and the environment all at once.

However, now that electricity prices are rising at nearly double the CPI, the ALP and Greens are going to equally great lengths to say that the tax isn't causing electricity prices to rise (or not by much at the least), in a direct contradiction to their previous position on this issue. I've been waiting and waiting and waiting for someone from the Greens or ALP to stand up and tell us that this is the whole point of the carbon dioxide tax - to make electricity more expensive!

The other hilarious aspect of this tax is the compensation. Why tax us on one hand while giving compensation with the other? Kinda makes the whole deal rather pointless, eh! Also, Gillard's assertion that businesses can simply pass on the extra costs associated with the carbon dioxide tax to customers. That sounds good, but unfortunately our PM and Treasurer live in a world of make-believe because in the real world that we live in, it's not always possible to do so, as is the case with fruit and vegie growers who supply to large supermarkets, as those supermarkets refuse to accept any price rises (but gladly pass on the added cost of electricity to their customers - you and me - in the form of more expensive products).

I tell ya, it's a strange, strange world we live in under Labor and the Greens!!! Grin

Perhaps Shane the economist will come on later to explain the income effect and the price effect.

Don't forget the substitution effect, because the price effect is the sum of the substitution and income effects.

Cheesy

And supposing that Gillard has compensated households adequately then might want to consider the Hicksian demand function.

Jevons Pardox says you can't win the argument on energy not being priced correctly!

Jevons Pardox says you can't win the argument on energy not being priced correctly!

Jevons Pardox says you can't win the argument on energy not being priced correctly!

Jevons Pardox says you can't win the argument on energy not being priced correctly!

Jevons Pardox says you can't win the argument on energy not being priced correctly!

Jevons Pardox says you can't win the argument on energy not being priced correctly!

Jevons Pardox says you can't win the argument on energy not being priced correctly!

Jevons Pardox says you can't win the argument on energy not being priced correctly!

-->> ROSS GITTINS TOLD US THAT ECONOMICS IS BROKEN PRECISELY BECAUSE OF THE REFUSAL TO DEAL WITH THE SUBJECT OF EXTERNALITIES AND YOU CAN'T SPIN THE EARTH IN REVERSE FAST ENOUGH TO TAKE THAT STATEMENT BACK!

SO, .....CUM GET SUM PUNK!! Shocked

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*Sure....they're anti competitive as any subsidised job is. It wouldn't be there without the tax payer. Very damned difficult for a brainwashed collectivist to understand that I know.... (swaggy) *

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cods

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Re: The hilarious side of the carbon dioxide tax
Reply #36 - Oct 26^th, 2012 at 7:20pm

so electricity is the sole cause of GW.. and now we have to find a way to live without it..

can we assume that our green friends have already stopped using anything that remotely needs coal. to power it?..

so thats a step in the right direction..

I and most other sceptics..

those nasty people that believe in GW being a natural phenomenon and not a human caused catastrophy,,

will await the result of this CARBON TAX/PRICE

to really get the true picture..on the one hand we get scientists saying the planet hasnt changed temperature wise in 17years.. on the other we get all sorts of graphs telling us otherwise..its very confusing...

in the mean time of course we have to pay we are not given a voice in that regard...

not only that.. this CARBON TAX isnt reaping in anything..LOL>..they didnt get that right either...

but we are expected to believe them... hilarious.

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adelcrow

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Re: The hilarious side of the carbon dioxide tax
Reply #37 - Oct 26^th, 2012 at 7:32pm

People are cutting their use of electricity so the pricing of carbon is already working.
Extra money in the pocket thanks to the compensation payments and conserving electricity thus saving them money and curbing the amount of CO2 we are sending into the atmosphere.
All round a good thing Im sure you will all agree

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Go the Bunnies

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rabbitoh07

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Re: The hilarious side of the carbon dioxide tax
Reply #38 - Oct 27^th, 2012 at 12:39pm

cods wrote on Oct 26^th, 2012 at 7:20pm:

so electricity is the sole cause of GW.. and now we have to find a way to live without it..

No - burning fossil fuels is a significant cause of global warming, and there are many other ways of producing electricity that do not involve burning fossil fuels. Ideally - we should be using more electricity - not less - to replace other fossil fuel use such as space and water heating and transportation.

cods wrote on Oct 26^th, 2012 at 7:20pm:

can we assume that our green friends have already stopped using anything that remotely needs coal. to power it?..

so thats a step in the right direction..

I can't speak for everyone, but I have replaces gas heating with electricity, and by installing more insulation and PV my energy costs and carbon footprint have decrease considerably

cods wrote on Oct 26^th, 2012 at 7:20pm:

I and most other sceptics..

those nasty people that believe in GW being a natural phenomenon and not a human caused catastrophy,,

You are not a "sceptic". Ignorance is not "scepticism".

cods wrote on Oct 26^th, 2012 at 7:20pm:

to really get the true picture..on the one hand we get scientists saying the planet hasnt changed temperature wise in 17years.. on the other we get all sorts of graphs telling us otherwise..its very confusing...

No - no scientists have told you that "the planet hasnt changed temperature wise in 17years..". David Rose of the Daily Mail told you that.

Science tells us that the ongoing warming of the planet is clear and unambiguous

cods wrote on Oct 26^th, 2012 at 7:20pm:

in the mean time of course we have to pay we are not given a voice in that regard...

You had a voice. It was at the last election. Remember? - The majority of Australians voted for parties that had policies to price carbon. Just as happened in the 2007 election.

The ignorant deniers have lost. No one is listening to you anymore. Suck it up Princess.
cods wrote on Oct 26^th, 2012 at 7:20pm:

not only that.. this CARBON TAX isnt reaping in anything..LOL>..they didnt get that right either....

No - that is because it is not a tax.

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bambu

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Re: The hilarious side of the carbon dioxide tax
Reply #39 - Oct 27^th, 2012 at 2:14pm

rabbitoh07 wrote on Oct 25^th, 2012 at 10:15pm:

Shane B wrote on Oct 25^th, 2012 at 10:08pm:

If the households are compensated enough, this will offset the substituion effect by allowing them to purchase a combination of goods on their original indifference curve. A Hicksian demand curve will show the households new consumption choice after the price change while being compensated enough to allow the household to have the same level of utility as they did previously. Albeit the composition of the consumption bundle might have changed.

As you so helpfully quoted for us earlier:

Carbon pricing reduces emissions from electricity generation by shifting the generation mix towards cleaner technologies and moderating growth in electricity demand.

Moderating growth in electricity demand is only a small part of the equation. The major emissions reductions will come from shifting the generation mix towards cleaner technologies. That is the main point of the carbon price.

Well that's good to know, because many people believe the carbon tax is all about 'redistributing the weath'...taxing us to the hilt and sending it off to the UN.

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rabbitoh07

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Re: The hilarious side of the carbon dioxide tax
Reply #40 - Oct 27^th, 2012 at 2:40pm

bambu wrote on Oct 27^th, 2012 at 2:14pm:

rabbitoh07 wrote on Oct 25^th, 2012 at 10:15pm:

Shane B wrote on Oct 25^th, 2012 at 10:08pm:

If the households are compensated enough, this will offset the substituion effect by allowing them to purchase a combination of goods on their original indifference curve. A Hicksian demand curve will show the households new consumption choice after the price change while being compensated enough to allow the household to have the same level of utility as they did previously. Albeit the composition of the consumption bundle might have changed.

As you so helpfully quoted for us earlier:

Carbon pricing reduces emissions from electricity generation by shifting the generation mix towards cleaner technologies and moderating growth in electricity demand.

Moderating growth in electricity demand is only a small part of the equation. The major emissions reductions will come from shifting the generation mix towards cleaner technologies. That is the main point of the carbon price.

Well that's good to know, because many people believe the carbon tax is all about 'redistributing the weath'...taxing us to the hilt and sending it off to the UN.

Yes. Some people are really stupid.

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sir prince duke alevine Gold Member Offline Australian Politics Posts: 23619 Gender:	Re: The hilarious side of the carbon dioxide tax Reply #41 - Oct 27^th, 2012 at 3:03pm bambu wrote on Oct 27^th, 2012 at 2:14pm: Well that's good to know, because many people believe the carbon tax is all about 'redistributing the weath'...taxing us to the hilt and sending it off to the UN. THen you obviously have no idea how the carbon tax works.
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Armchair_Politician

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Re: The hilarious side of the carbon dioxide tax
Reply #42 - Oct 29^th, 2012 at 5:48am

rabbitoh07 wrote on Oct 27^th, 2012 at 12:39pm: