Two words - Gas Tax - are probably the worst words that a politician could ever utter, especially now. It would probably mark the beginning of the end for Barack Obama, Hillary Clinton, or John McCain. But why are we so averse to a Gas Tax?
A recent proposal in Virginia was just defeated. It "would have raised the state's gas tax of 17.5 cents a gallon, last raised in 1986, by a penny a year for the next five years. The Senate approved the plan, which would have raised $260 million annually when fully phased in."
Another reason that the gas tax was voted against was because the "federal government could be getting ready to raise the federal gas tax". I highly doubt that the feds are going to raise the gas tax as most Americans don't like the idea of paying even more for gas (however, considering that Congress' approval ratings are at 22%, they might as well take a shot - it can't get too much lower than that). Plus, the gov't massively subsidizes oil and that isn't going to stop until we actually run out of oil.
I like to look across the ocean at England, actually all of Europe for example. They have tiny cars, in large part because gas is so expensive there. It really is impossible to drive an SUV unless you have lots of money. I for one think a higher gas tax would be great. Granted, I don't have a lot of money, but this proposal would've raised gas by a penny per year. I can afford that. Plus, maybe it'll push more people to walk to work, or bike, or take mass transit.
When is America going to realize that we need to curb our dependence on oil? Or, do we already know it and just not realize the sacrifices we need to make? Do we have to make gas so expensive that we're forced to curb the dependence?
Monday, February 25, 2008
Why we need an increase in the Gas Tax
Labels:
energy; fossil fuels,
environment,
oil,
policy
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5 comments:
I would recommend a federal carbon tax instead because then all the burden doesn't have to fall on the consumer. Instead, the problem of climate change can be handled by somewhat by the market. The costs could be distributed throughout the market so that both producers and consumers have incentives to invest in clean technology.
There is still debate on how to divide the carbon tax (what portion falls on coal mining companies vs. what portion falls on power companies that burn the coal). But I can't find a flaw in the idea of a carbon tax. Any ideas?
I recommend reading this article from Gristmill that advocates for a cap-and-rebate system instead. http://tiny.cc/oJ8va
The flaw with the carbon tax has to do with political feasibility (though it's more feasible than a gas tax). I think this is demonstrated by the fact that the democratic presidential candidates oppose the carbon tax in favor of cap-and-trade and the democratic Congress hasn't even passed a moderate cap-and-trade system- the Warner-Lieberman bill. (Throwing virtual tomatoes...) Then there will be huge issues with implementation, loopholes, corruption etc. etc. But for goodness sakes let's do something. John Holdren emphasizes that taking that first step- even if it's not the best system- is the most important.
Hi all,
I just looked at the blog for the first time in ages and I am really impressed! Good postings, and getting comments, fantastic.
The gas tax debate is really interesting to me because gas has tripled during the Bush administration. In the 1990s discussion of gas taxes was met with horror that the economy would be destroyed by a 50-cent gas tax, raising the price to $1.75 or so. The economy was not destroyed when we passed that level in 2004. It's certainly suffering now, but part of that problem is that the additional cost of gas is not leading to revenue for the government, but to oil company profits. According to trickle-down theory, those profits could stimulate the economy if they were invested, say, in building new refineries and modernizing old ones. But this would increase supply and would lead to lower prices. Since oil companies have tested the $3/gallon prices and found that people will pay them, there's no incentive to build more capacity. What's the windfall being spent on then? Probably donations to politicians so that hugely profitable oil industry can keep its subsidies.
Another theory is that in the free market, there will be competition and prices will be driven down. That does not seem to be happening here either.
A penny-a-gallon gas tax may not seem like much, but for some it is. It would cost me about 40 cents a month to support my 20 minute commute. But if I were poor--if I had an older and less efficient car, or if I had to drive farther, or if I were in a service job where I had to drive from place to place to place--it could add up to a few dollars a month. And if I were already spending as much or more than I made each month, that few dollars has to come from somewhere, or else I can't work. If I put it on my credit card, I'm then paying 20-30% interest on it. $25 a year extra in gas becomes $200 a year in credit charges.
So I'm in favor of gas taxes, but there has to be a tweak such that they are not regressive. And I would really like to take a hard look at petroleum industry subsidies.
Bill,
Thanks for pointing out the issues with the gas tax proposal in the '90s. Your point seems to confirm Sharlissa's statement that a gas tax is politically unfeasible.
It is interesting that people are more willing to pay higher prices if they come "naturally" from the petroleum companies, rather than "artificially" from the government. (When did we start trusting petroleum companies more than the government?)
As you said, petroleum companies ideally would use their increased profits to invest in infrastructure that would ultimately lower prices again. But because of today's climate, peak oil, and energy security issues, I'd like to see the petroleum companies identifying themselves as "energy companies" and investing that money in new forms of energy - no-carbon energies that will improve society and make the companies competitive in a world that is crying for clean energy.
But my hopes are also probably "unfeasible", since petroleum companies are definitely set on being "petroleum companies" first, and maybe dabbling in clean energy on the side. So we certainly need our government to give companies more incentive to work for the common good of investing in clean energy. I think a carbon tax or cap and trade system is absolutely essential.
The Clean Air Act of 1990 instituted a highly successful cap and trade on sulfur emissions in power plants. So I think Sharlissa may be right about starting with a cap and trade system.
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