More Calls for a Higher Gas Tax

By Christian Probasco, 1-03-09

	Photo courtesy Ian Britton

A few things make this story timely. First, I just filled my gas tank for $1.33/gallon. Also, Flying J, the big truck stop chain I once worked for and from whom I bought my fuel while I was driving over the road, filed for bankruptcy on Monday, Dec. 22.

Flying J is (was?) one of the 20 largest privately-owned companies in the United States, according to an article in the Waco Tribune. In the last couple of weeks it has defaulted on loans worth $200 and $120 million. The article says Flying J may have lost money on the oil futures market by locking in a high purchasing prices just before the market, um, tanked. So that should give you an idea how much and how quickly things have changed.

Next, Ray Magliozzi, of public radio’s ”Click and Clack, the Tappet Brothers” show has endorsed the idea

“This new tax,” says Magliozzi, “would generate between 50 and 100 billion dollars every year for the treasury. That money could be used to help rebuild our crumbling roads and bridges, and develop new technologies for more fuel-efficient cars.”

Magliozzi also wants the money to be used by GM and Ford to build a “high speed train infrastructure between major cities.”

New West’s owner, Jonathan Weber, endorsed the idea back on Dec. 6. Michael Kinsley of Time and Slate Magazines said it was time to raise the tax on Dec. 11. New York Times columnist Thomas Friedman has been a champion of the gas tax for a while now . And Dave Demerjian of Wired Magazine endorsed it on Dec. 18.

“We’ve already shown we can live with gas at $4 a gallon (less than half what some European countries saw during the price spikes last summer) without inviting the apocalypse,” says Demerjian, “That pretty much shoots down the argument that people won’t stand for higher gas prices.”

Europe actually lowered its consumption of gasoline by 710,000 barrels a day between 1992 and 2008, according to Demerjian. The have also shrunk their cars.

Weber agrees with Magliozzi on where the money should be used but adds that it could also be harnessed “to help fund the various bailouts and public works programs that are supposed to get us out of a recession.”

The gas tax would be regressive. But Kinsley says it could be offset by cuts in the payroll tax, or FICA, which he describes as a “tax on job creation.” However, he is vague on the details about where congress would then get more money to pay for social security, which is partly funded by FICA.

According to its proponents, the tax would lower our dependence on foreign oil. It would spur development of alternative energy sources and proceeds from the tax could be used to that effect.

Not surprisingly, Jerry Taylor and Peter Van Doren of the libertarian CATO institute released a policy analysis in 2007 calling for the complete elimination of the gas tax. Their argument addresses the premises for raising the tax. If you want to lower tailpipe emissions, they say, punish the emitters. If you want to sock it to the unsavory regimes which are selling us oil, your approach is like “taking out a shotgun to kill a mosquito at 50 yards. You may or may not kill the mosquito, but you’re sure to hit a lot of unintended targets when you pull the trigger.” Any tax high enough (cripplingly high!) to hurt those foreign regimes will also hurt our own economy and that of Mexico and Canada and the U.K. But not for long, because we’re dealing with a world market, and the regimes we don’t like will eventually find buyers.

“Perfectly internalizing motor vehicle externalities,” say Taylor and Van Doren, “would likely make the economy less efficient--not more--by inducing motorists into even more (economically) inefficient mass transit use.”

“There is no market failure associated with oil depletion,” they say, “If oil becomes more scarce over time, prices will rise to reflect that scarcity and resources will be allocated efficiently.” What’s more, higher prices will spur development of huge oil deposits “only lightly tapped at the moment because of high extraction costs.”

“Unlike contractual solutions, governmental solutions have the dubious distinction of being more expensive not just most of the time, but all the time. That is, the ‘alternatives’ to fossil fuels are more expensive than conventional fossil fuels, even when the latter prices are at peak, which is, of course, why such ‘alternatives’ are not embraced without government subsidy or coercion.”

Middle Eastern regimes could pay for their own security, say Taylor and Van Doren, and we could quit our military adventuring in that region, and the price of gas might actually go down. It doesn’t make sense, according to them, to tack on our military costs as a subsidy for oil. Furthermore, “there is no correlation between Persian Gulf oil revenues and terrorist activities.”

Taylor and Van Doren mention a road mile tax as a better solution. Ominously, Oregon Governor Ted Kulongoski is pushing his state’s legislature to adopt just such a measure.

“As Oregonians drive less and demand more fuel-efficient vehicles,” reads the governor’s website, “it is increasingly important that the state find a new way, other than the gas tax, to finance our transportation system.”

Kulongoski suggests affixing a GPS system to cars, which would record miles driven. “Eventually,” reads an article in the Albany Democrat-Herald, “GPS devices would have to start being built into cars.”

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