Raise the Gas Tax!

Low gasoline prices are nice, but they undermine conservation and green energy development. A smart tax policy would help us capitalize on cheap oil.

By Jonathan Weber , 12-06-08

 
 

Like everyone else, I take some pleasure in pulling into the gas station and filling up at $1.60 a gallon - down from $4.10 or so just a few months ago. Low gas prices are one of the few balms these days for worried and cash-strapped families, especially here in the West, where driving distances are long and transit choices few.

Yet I also know that low gasoline prices are the enemy of conservation and alternative energy. When oil prices go up, consumption goes down. When oil prices go high enough, alternatives like wind, solar, geothermal, and ethanol become economically feasible. When oil prices plummet, clean and green just doesn’t add up.

There’s a very obvious policy solution in this situation, one which I hope President Obama will have the political courage to pursue: a tax increase, either in the form of an oil import tax or higher gasoline taxes.

I know it’s heretical to call for tax increases during an economic downturn, but my bet is the vast majority of Americans would be more than willing to pay $2.00 a gallon for gas if that’s what it takes to eliminate our dependence on Middle East oil and build the green energy technology we need. The new tax could be structured to rise and fall with the market, so that if oil prices suddenly spiked again the tax would go down. Price stability is critical for alternative energy development, among other things, and a flexible tax would create more policy options in the future.

Such a tax would also raise a lot of money, which could be used to help fund the various bailouts and public works programs that are supposed to get us out of recession. Thus far, there has been lots of talk about big, expensive new government programs, but very little talk about how we’ll pay for them. Obama has suggested that he’ll call on Americans to sacrifice, but nothing he has proposed so far involves much pain for anyone.

Indeed, Obama on Saturday promised a national public works program along the lines of the interstate highway system, which was launched in the 1950s and is something of a model for how federal infrastructure investment can have both short-term and long-term economic benefits. Yet he apparently didn’t mention the fact that the federal gasoline tax was the primary source of revenue supporting interstate highway construction.

During the campaign, Obama, to his credit, rejected the gas tax “holiday” that was then being supported by both Hillary Clinton and John McCain as a way to ease the burden of then-high gasoline prices. He also advocated a windfall profits tax on oil companies, but is backing away from that now that prices have plunged.

It’s surprising to me that there has been virtually no public discussion of a possible gasoline tax hike, or of new taxes on imported oil. There’s a brief mention of the idea in some of the coverage of the auto-industry bailout, but that’s about all I’ve seen. At a minimum I’d think this obvious option would be on the table.

I’m not eager to pay more at the pump, but it would be worth it if it meant price stability, energy security, a smaller federal budget deficit and less global warming. I think most Americans would agree. 



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Comments

By Mr. Twister, 12-06-08
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