Tom Friedman, in his NYTimes column from 9/21 (Bush's Waterlogged Halo, $$$), says:
Imagine - I know it is a stretch - that the president announced tomorrow that he wanted an immediate 50-cents-a-gallon gasoline tax - the "American Renewal Tax," to be used to rebuild New Orleans, pay down the deficit, fund tax breaks for Americans to convert their cars to hybrid technology or biofuels, fund a Manhattan Project to develop alternatives for energy independence, and subsidize mass transit systems for our major cities.
Could a $0.50/gallon help reduce the deficit? The DOE Energy Information Administration reports that almost 9,000,000 barrels of gasoline is produced each day in the U.S. Multiply this by 42 (gallons per barrel) and 300 (low-ball the days each year) and we get 108
barrels billion gallons of gasoline produced each year in the U.S. Absent any demand response (yes, I'm assuming a vertical demand curve because I'm too lazy to deal with the elasticity and the upper bound number makes sense to use right now), a $0.50/gallon tax would provide additional federal revenue of $54 billion. A big number but not enough to close the $350 billion annual deficit.
Friedman continues, making a $0.50/gallon gas tax sound like the road to utopia:
And imagine if he tied this to an appeal to young people to go into science, math and engineering for the great national purpose of making us the greenest nation on the planet, to help liberate us from dependence on the worst regimes in the world for our oil and to help ease the global warming that is heating up the oceans, making our hurricanes more intense and our lowlands more vulnerable. America's kids are hungry to be challenged for some larger purpose, which has been utterly absent in this presidency.
A gas tax could inspire America's youth? I'm skeptical. I think I'll ask my students (update: 10 am environmental econ class, containing econ majors and non-majors, were not inspired to "do good"):
Americans will change their long-term energy habits, and companies will develop green products, only if they are certain the price of gasoline will not go back down. A gasoline tax (Americans have already shown they'll tolerate higher prices) and stronger regulation would force U.S. companies to innovate in what is going to be one of the most important global industries in the 21st century: green technologies. By coddling our auto and industrial companies when it comes to mileage standards and the environment, all the Bush team is doing is ensuring that they will be dinosaurs and that Chinese, Japanese and Indian companies will take the lead in green technologies - because they have to and ours don't.
If the language were a bit more moderate, I would tend to agree, especially with the first 2 sentences.
By the way, in one of his last Business Week columns, Nobel Prize winning economist Gary Becker also argues for a $0.50/gallon tax on gasoline (Let's Make Gasoline Prices Even Higher). His reasoning is to encourage conservation, reduce oil revenues and reduce terrorism financing ... but it wouldn't hurt emissions either.