NPR on a higher gas tax

From the GreenCounsel blog (Gas still too cheap):

NPR's Morning Edition had an interesting story this morning ("High Gas Prices Quietly Welcomed by Environmentalists") about whether gasoline consumption can be better curbed through regulation or through high prices (particularly a tax).  Economists feel that gasoline prices would need to double and remain there (i.e. $7-8/gallon) before behavior would really change, and advocate a gas tax to get us there.  The externalities (accidents, smog, global warming, etc.) are simply not reflected in the current price of gasoline. Environmentalists, however, feel that a gas tax is a complete political dead-horse, fearing that it would be extremely unpopular with most Americans, and advocated regulations requiring 40mpg automobiles (as exist in Europe).  Economists note that the 40 mpg averages in Europe exist, not because of regulation, but because of high prices (through taxes) that have existed for decades.

NPR's Morning Edition had an interesting story this morning ("High Gas Prices Quietly Welcomed by Environmentalists") about whether gasoline consumption can be better curbed through regulation or through high prices (particularly a tax).  Economists feel that gasoline prices would need to double and remain there (i.e. $7-8/gallon) before behavior would really change, and advocate a gas tax to get us there.  The externalities (accidents, smog, global warming, etc.) are simply not reflected in the current price of gasoline. Environmentalists, however, feel that a gas tax is a complete political dead-horse, fearing that it would be extremely unpopular with most Americans, and advocated regulations requiring 40mpg automobiles (as exist in Europe).  Economists note that the 40 mpg averages in Europe exist, not because of regulation, but because of high prices (through taxes) that have existed for decades.

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Comments

[Duncan Brown]

You folks can explain how complicated and thus expensive CAFE-type regulations are, compared with a nice big tax. In addition, it wouuld be a nice simple way to attack the federal budget deficit! Although it sometimes seems as if people prefer complicated solutiions (like nickel and dime tax credits for hybrids or whatever). In additon, I think people are going to have to face the fact that the US flag automakers need serious reform. What better way to induce it than a carbon tax?

[Jacob Rank]

What exactly is it about an increased gas tax that people find so hard to swallow? It seems entirely possible to create a realistic gas tax plan that's neutral both in total revenue and distribution of tax burden on the population. Does it just become a problem of public perception at that point? We Americans DO seem extremely sensitive to anything that touches our cars...

Also, have there been any studies that compare the effectiveness of a gas tax versus an oil tax? By hitting up oil at beginning of the supply chain you'd be able to affect all oil-based products, which seems like a good idea if the goal is to reduce oil consumption rather than simply reduce gas consumption.

[Stephen Filler]

John -- thanks for posting this! I love your site.

Jacob: That's an interesting question about the oil tax, I can see arguments on both sides. One problem with an oil tax is that there aren't many products in our economy that aren't affected by the price of oil, so an oil tax would raise prices generally but would be less likely to change particular behaviors.

Regarding why people dont like a gas tax: as much as I support it, I still feel the pain when everytime I fill up it costs $5 more than the time before. However, there does seem to be a mentality in this country that certain things just can't be done, that Americans wont accept it. Gas tax is one thing, another are is conservation -- I've heard it said again and again that Americans wont give up their big cars, turn down the A.C or turn off the lights. This is an (another) area where political leadership, now absent not just in Washington but in many state capitols, can make a huge difference.