Gas taxes were the hot topic at The New York Times last weekend—the editorial board and columnist Tom Friedman both weighed in on their behalf.
I’ve tried before to describe what bothers me about all the attention on gas taxes, only to catch all kinds of hell. Naturally I’m going to try again.
It is said, by various proponents at various times, that a gas tax will raise government revenue, reduce demand for foreign oil, and reduce greenhouse-gas emissions. Friedman calls it a “win win win win win win etc.” A knockout policy blow.
But it’s worth noting that those goals are not, as people often make them sound, of equal significance. Cutting greenhouse-gas emissions is the most urgent goal; it’s a precondition for prosperity, a solution upon which all other solutions depend.
Here’s the thing: Because of the relative inelasticity of transportation fuel demand, cutting greenhouse gases is the goal the gas tax serves least effectively.
So the first question is, why not a broader carbon tax? Matt Yglesias:
... given what we’ve learned about the risks of catastrophic climate change, it also seems like a concept that’s been somewhat overtaken by events. A carbon tax, or a cap on greenhouse gas emissions with auctioned permits, would constitute a tax on gasoline among other things. And there’s no particular reason that burning fuel in a car should be disfavored versus other carbon-intensive activities.
But of course even a very high carbon price would only moderately increase the price of gasoline. Low price hike + low elasticity = low change.
So the second question is, if a carbon tax would affect transportation less than other sectors, why not some kind of additional policy to reduce GHG emissions in the transportation sector?
Kevin Drum grasps this basic problem, but for some reason the separate policy he favors is ... a higher gas tax.
But if a price signal is blunted by low elasticity, is the best solution simply to jack up the price? Remember, this is gasoline; working people pay this tax. To crank it up high you’d have to overcome extraordinary political resistance. Even if the revenue were returned to taxpayers (and thus not used on clean energy) it would be an enormous political battle. All that just to get a little movement on demand.
If we are so hell-bent on getting people out of inefficient vehicles—and we certainly should be—why don’t we take a more direct route? Why don’t we try to directly increase elasticity of demand by creating more low-carbon alternatives? Build the crap out of public transit. Buy gas guzzlers off the road through junker programs. Issue a new ruling that the government will only buy plug-in hybrid or electric vehicles. Raise CAFE standards to 60 mpg and pay the Big Three off with stimulus money (they’re probably going to get it anyway).
In short, focusing so much attention and political firepower on getting a price signal in the area of carbon-intensive energy use where demand is least elastic seems ass-backwards. Get price signals in place where they’ll do the most good! Meanwhile, concentrate on increasing transportation fuel demand elasticity through regulation and public investment. No?
‘Copenhagen Diagnosis’ offers a grim update to the IPCC’s climate science
Comments
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racc Posted 6:43 am
30 Dec 2008
The worst idea would be to return the money raised by the tax to taxpayers. This was tried in BC with the carbon tax and it failed miserably.
Almost as bad would be paying the little three with stimulus money. There is no evidence that they are viable businesses and can produce fuel efficient vehicles at a reasonable price that people will buy.
High gas taxes with alternatives in place is what has worked in Europe.
It is not about us, it is about everyone.
http://www.everyoneforever.org/
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Jon Rynn Posted 7:19 am
30 Dec 2008
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rogerkb Posted 7:51 am
30 Dec 2008
Roger Brown
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JMG Posted 9:38 am
30 Dec 2008
The 5% Project
Let's live on the planet as if we intend to stay.
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GreenMom Posted 11:34 am
30 Dec 2008
That would be disastrous.
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JMG Posted 12:22 pm
30 Dec 2008
We tax working people from the first dollar for social security, and then, to top it off, we CAP the earnings taxed to support the same program, the most important social safety net program we have. When you earn more than about $105k (I forget what it is this year -- it's indexed), you STOP paying social security, so you see a nice little bump in your check, a little reward for doing well.
If you want to help the working people in this country, you are not doing it by maintaining their dependency/enslavement to auto by keeping the price of driving artificially low.
The low-elasticity of gas in large part reflects its tremendously low price; it's not as if elasticity was some universal constant that is independent of the underlying price curve -- it definitely increases as prices do. We started to see a lot more behavior change from $3.75 to $4.00 than we will from $1.75 to $2.00.
It would be pretty easy to jump the gas tax sharply then put a gradually increasing floor under it, and use the money gained to pay for transit alternatives, and rebate the money to the working poor through the Earned Income Tax Credit --- heck, we could even do quarterly e-filing for people who are in line for the EITC, the same way the self-employed folks have to make quarterly tax payments.
Also, if we simply print huge new sums into existence without finding a sensible revenue source to pay it back over time the working poor are going to be hammered worst of all because hyperinflation is going to destroy them.
It's time to get off the pot and start listening to the "navel starers" who have been trying to talk about green tax shifts for several decades at least -- even when that means that people without much money have to pay more to act in ways that hurt the environment.
Our system is to tax (discourage) precisely those things we claim to want (income, earnings, labor, investment, savings) while letting liberals do the heavy lifting in fighting off consumption taxes because "they will hurt the poor." Meanwhile, corporations and rich people laugh at the stupid liberals and call them useful idiots because they fail to notice that the industrialized democracies whose policies are best for the poor and the environment ALL tax the hell out of consumption with VAT and similar taxes. Meanwhile, we screw the poor relentlessly by slashing funding for essential services, in the name of helping them by keeping taxes low.
Great work.
The 5% Project
Let's live on the planet as if we intend to stay.
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Jon Rynn Posted 1:13 pm
30 Dec 2008
Now we turn to the US. McCain and Hillary jump on the ridiculous idea of pulling a tiny gas tax that would probably just be replaced by a price rise anyway. McCain, in the general election, almost has a game-changing slogan with "drill now"etc, for which the Democrats had no good answer.
Now consider that Californians just approved a high-speed rail, and that everyone's talking about infrastructure. This indicates to me that pushing public investment is a bigger political winner than a gas tax, and it would attack the problem directly.
As for inflation, oil price rises will ripple through to make a horrible inflation. And, I think it can be argued that if the government builds something useful, like rail systems or wind systems, you can simply print the money -- because you have increased goods and services. Since money reflects -- should reflect -- the underlying goods and services of an economy (pace Adam Smith), when productive goods are produced, it's OK to increase money accordingly. The big problem comes when, in a banking system that is fractional (that is, the banks create money), they lend for speculative reasons. Then you have inflation. Greenbacks, that is, money that government makes, not banks, are something to consider -- in effect, money printed for infrastructure investment are like greenbacks -- at least, that makes sense to me, maybe I'm wrong.
As for soaking up money for revenues, as opposed to printing money, the richest percentage or two or three, the big corporations, have plenty that they would have been paying had this been the 1950s -- and then there's the defense department (plus subsidies, plus prisons,etc). So there is no need, as far as I can tell, for the middle and lower classes to finance a green transformation.
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Pangolin Posted 4:06 pm
30 Dec 2008
On the top end of the auto market new vehicle buyers are continuing to purchase size, speed and style and largely ignoring the undersubscribed, over-hyped hybrid offerings. (Prius excluded) If you have the income and credit to buy a new car or truck $4 gas isn't quite the hit that it is for the used car buyer. Chances are you are able to afford horsepower over hybrid.
The solution is to add a whopping surcharge to all new vehicles without a 20 mile, low speed electric range. Bump that up by ten miles every five years until it gets to 50 miles or so. Then add that surcharge directly back as a credit to buyers of said hybrids. This will stabilize gas prices for the poor by reducing demand while slowly turning over the vehicle fleet. The people who will pay this surcharge will also benefit from lowered fuel prices; win-win. The auto industry can just eat it as it's on the dole anyway; make the changes or die.
Public transit expansion will have to be entirely separate as much of the money is spent before anybody benefits and the majority of the benefit of rail lags installation by several years as development and commerce adjust to service the rail line's population flows. Trying to tie this all into one package and please everybody isn't going to work. Somebody is going to lose if we do something or nothing. We might as well do something right.
Put the Carbon Back
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geewizdaddy Posted 11:53 pm
30 Dec 2008
Living in central Pa most of my life we simply have not put the same level of attention to the right kind of infrastructure like say Portland or Seattle. We have great hiking trails, oodles of wild areas and state game lands, and an ever expanding network of recreational rail to trail facilities, just no easy way to walk or pedal to the grocery store.
Streets and highways are designed for cars, trucks, and buses and a portion of their development and maintenance is paid for through gasoline taxes so I feel no special entitlement to use them for my human powered vehicle. If we are to get serious about slowing and even reversing the effect human activity has on the environment it is time to build a national network of specialty use roadways for pedestrians, HPV's and low-speed electric neighborhood vehicles.
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Ken Johnson Posted 10:11 am
31 Dec 2008
$167/ton is probably far higher than any kind of carbon tax or trading incentive that anyone is contemplating. It's also much higher than regulatory incentives, e.g., California's vehicle emission standards have projected compliance costs of only about half that level (and the projections are probably over-inflated). But a $167/ton technology investment could be sufficient to incentivize the most advanced fuel-economy technologies at zero net cost.
So why aren't we all driving hybrids already? We probably would if we had to pay lifecycle fuel costs up-front with our vehicle purchase. Actually, there is no need to make all vehicles more expensive to motivate technology adoption; the same effect can be achieved by making fuel-efficient vehicles relatively less expensive.
Tax-type pricing instruments like Friedman's gas tax are politically unviable because they basically take money out of someone's pocket and put it in someone else's. Besides, gas taxes put the incentive at the wrong place - at the gas pump, after the buyer has already bought their gas guzzler.
A more effective approach would be to apply price incentives directly to new vehicle sales. Fuel-efficient cars would qualify for low-interest loans in proportion to their fuel savings relative to comparable vehicles, while relatively inefficient vehicles would be assessed a fee to effectively prepay their excess fuel consumption. The loans would be repaid through registration fees, although the loan payments would not exceed the fuel savings. Similarly, the gas-guzzler fees would be reimbursed through registration fee reductions, but the fee adjustment would not be sufficient to offset higher fuel expenditures.
With this kind of pricing mechanism, an incentive on the order of $167/ton might be politically viable. This is about twice the level of current regulatory incentives. Moreover, the price incentive would be maintained as technology evolves (e.g., the price would not drop in response to a threefold reduction in hybrid costs; it would just motivate more adoption of hybrid technology).
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racc Posted 1:00 pm
31 Dec 2008
More at:
http://everyoneforever.org/blogger/
It is not about us, it is about everyone.
http://www.everyoneforever.org/
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GonzoDon Posted 2:52 am
01 Jan 2009
Given the alternative of a broad carbon tax vs. a narrower gas tax, I agree: a tax on all carbon is better.
That said, I'm skeptical we'll see that enacted in the next four years. Too many entrenched big-money interests in this country, and internationally. I'll also point out a couple of other factoids for readers to consider:
Consumers recently got used to paying north of $4/gallon for gas. This week it is $1.42 in my neighborhood. There's an issue of timing at play here -- an unprecedented public awareness of energy issues, a certain sympathy toward the incoming president, and a sense among 'regular people' that gas at this price is cheap. The best opportunity to get Americans to support collective action since 9/12/01 (an opportunity that the Current Occupant of the White House, unfortunately and inexplicably, squandered).
In addition to the NYT, Business Week magazine (that bastion of bleeding-heart liberal opinion) recently had a similar editorial opining that it is high time to raise gas taxes.
European countries have had a high gasoline tax for years -- and methinks that has something to do with their far lower per-capita consumption. Of course those benefits were not immediate -- over decades the economics of expensive gas helped maintain more compact communities and supported good public transit -- but the impacts are obvious, nevertheless.
Maybe you don't think that sending billions of petro-dollars a year to repressive governments like Saudi Arabia (home to 15 of the 19 9/11 terrorists) is a "priority" concern for us right now; I happen to disagree. That expands U.S. debt and enriches anti-democratic regimes.
SUV sales are already picking up in the U.S. relative to other vehicles. We are in a rediculous boom-bust cycle of energy use that needs to be broken. If we can do it with a carbon tax, great. But I suspect a gas tax that is clearly linked/used to either offset other consumer taxes and/or expand public transit options for consumers is something Americans would be willing to swallow in 2009, when they wouldn't have in 2005, and may not in 2012.
We will need an array of tools in our toolbox to shift America in a more sustainable direction. I think higher gasoline taxes should remain one of the tools we consider seriously.
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georgia Posted 6:11 am
01 Jan 2009
Once again, you're debating possible solutions to a NON-problem. Take some time to get away from this group think and do some research into the matter... looking at the actual research, not projections and exagerations by the same band of columnists that couldn't understand a basic scientific paper, let alone one relying on mathematics or physics. Yet we look to these ivory tower blowhards to tell us what to think about everything from polar bears to mass transit.
Every one of these ideas would cripple the economy, which I think many of you would actually like to see.
Public transportation can only work in a few areas, otherwise it needs massive govt. funding. Alternative/additional energy will come to the market when someone invents a better, more efficient technology. Many such inventions and ideas are now advancing. Look wht govt. has screwed up by sticking their know-it-all noses into things. We are now stuck with ethanol, which Grist has exposed many times as a boondoggle. The Govt. mandated MTBE, then wanted to sue companies for producing it. I know. Lets trade groundwater pollution for air pollution! Brilliant!
Making people use inferior products is nothing more than forcing their standard of living down. Who do you think gets hurt the most when that happens.
Regarding carbon, do you really think that China and India are going to somehow reduce their use of coal and oil with populations emerging from third-world standards?
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Bob Wallace Posted 6:46 am
01 Jan 2009
Private money is pouring into wind, solar, and geothermal electricity production. Government money support has nearly completed its job getting wind farms up and going. Thin film solar is not far behind.
If you are a global climate change denier simply because you want smaller, less intrusive government (which most of us desire) then you should be working toward climate fixes.
Just think how oppressive government will become when we have to cram billions of people into a much, much smaller land mass than we now occupy.
(Remember that as things heat up we will be moving toward the poles. Remember that the Southern Hemisphere continents get a lot smaller as one goes south....)
Just think about the food rationing programs that the government will have to implement.
All you right wing wackos - think about lining up three times a day for your government issued food bar. Maybe you can get lucky and get a job as one of the heavily armed guards and then you can steal an extra from time to time....
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georgia Posted 1:53 pm
01 Jan 2009
As for wind, its getting private funding because it gets subsidized and because it is anticipated that they will make money from carbon credits. As you say and I agree, other technology is coming. However, to pursue alternatives to reduce CO2 is a big mistake in my opinion based on my research.
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Bob Wallace Posted 2:38 pm
01 Jan 2009
Prices for wind production are expected to fall further from their overall average of $0.075 kWh.
Subsidizes were needed to kick start the technology. Now that sufficient manufacturing and installation infrastructure has been created the subsidizes are fading in usefulness.
It might, however, be in our very best interest to keep them in place. It would aid in our rush away from fossil fuel consumption.
--
The CO2 studies are out there. Do your homework.
And accept the denier label. You're just another guy showing up on these sites regurgitating the party line.
Teddy was a huge, huge giveaway. Anyone who gives credence to that stuff is faith based, not data based.
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Peter B. Meyer Posted 1:58 am
02 Jan 2009
Carbon taxation is preferable to be sure. The alternatives that become more viable include renewable energy sources for electricity. But a carbon tax is a vastly more complicated instrument and is much less likely in the short run than taxation of petroleum fuels. (We can measure gas and diesel pumped and tax it. Anyone out there have a simple way of calculating the carbon generated by different parties and taxing it without investing a lot of time and effort and people in administering a tax, even if the entire political establishment agreed on passing it?)
And, sorry folks, but the debate so far is painfully narrow. I have spent a career concerned with equity as well as the environment and a gas tax that hits working people doesn't bother me, if set up properly. Combine a gas tax of $1.00/ gallon or more with exemption from Social Security taxation on the first $20,000 of wages and removal of the cap on social security (under which today, no work incomes over about $95,000 a year pay the tax). The exemption would save that worker $1240 in social security taxes ... and at even 15 miles to the gallon in that old used car, that would over 18,600 miles of driving if the tax were $1/gallon! Pulling the limit on the wages and salaries that pay the tax would replenish that pot -- and some of the gas tax could be used to make up the difference if needed. (I haven't crunched numbers on this, just illustrating the point.)
Not only could there be some funds left over for the various alternatives prior commentators have suggested, but -- and this is the key -- there could be a floor set for the cost of petroleum-fuel transportation that could provide investment certainty to those innovators who had ideas to try out as alternatives ... and that includes the various electrics, hydrogen, or whatever options people may identify. It would also set a minimum cost for those who VOLUNTARILY opt to live far from their jobs, and might encourage some more dense development ... and could also encourage some similarly voluntary reduction in overall vehicle miles traveled, in the use of trucks where rail could compete, and thus along the way reduce wear and tear on highways as well, making other tax funds available for alternatives in transportation.
... and all that from a tax which takes us only half way back to where we were last summer on the price of fuel for transportation. Not bad as a possibility, is it?
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georgia Posted 2:28 am
02 Jan 2009
However, may studies I have seen start with the assmption that CO2 drives climate, That's not science.
Lots of folks on this site like to tell me I'm wrong. I'm okay with that. But I would rather you point me to studies that show me how you are correct. I go where the data points.
As I have stated before, the IPCC report (working group) doesn't support its executive study for policy makers. I suggest you read it. I know its quite long and much easier to read someone else's interpretation of the report.
Many scientists contributing to the IPCC working group reports have spoken out about how the IPCC process was faulty and not reflective of good science.
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amazingdrx Posted 2:38 am
02 Jan 2009
Aknowledging your opinions on climate change is the problem, ignoring irrelevant talking points is the solution.
Become the change we would like to see in the world. Foxnews, rush, drudge... no comment. Denier trollishness... low comedy at best.
The time has come to ignore the wily internet dimbulb limboob, it's an endangered species. Let it fester in its own conclave.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Ken Johnson Posted 3:29 am
02 Jan 2009
Re CO2 studies:
Here's one reference:
Svante Arrhenius (1896). "On the Influence of Carbonic Acid in the Air upon the Temperature of the Ground". Philosophical Magazine and Journal of Science (fifth series) 41: 237-275.
I think the implication of paleoclimate studies is not simply that "CO2 drives climate", but rather that CO2 and climate are strongly coupled - changes in either will affect the other. Recent empirical evidence of the correlation includes the 40% reduction in areal summer extent of the Arctic ice cap over the last two decades.
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Bob Wallace Posted 11:56 am
02 Jan 2009
I think if you carefully read this you will start to gain an appreciation of the role of CO2 in the atmosphere.
http://www.realclimate.org/index.php/archives/2007/06/a-s ...
I know it's from Real Climate and you don't think those people reliable, even though they are well-respected scientists. (Check the site bios.)
You might ask yourself where you obtained the opinion that RC is not reliable. Perhaps from the same people that hold up a failed "amateur climatologist"/astrologer as an expert source?
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