I’ve made no bones about my preference for, as Tim Haab puts it, reducing “dependence on gas powered vehiclesâ€. For nearly 30 years I’ve supported (the few) candidates who’ve proposed a higher gasoline tax, an efficient means towards that end.
I continue to be idealistic enough to believe that good governance (rather than clever manouevring) is the best road to political influence and, whatever is done about the price of gas, it should be the right thing to do, explained, rather than the popular but perverse thing.
Matthew Yglesias is a very smart young man but I’m afraid he’s succumbing to the temptation to advise injuring his political opponents rather than following sound policy. While this may result in a temporary political victory, it most certainly results in injury to the public interest. When one has made enough such choices it calls one’s fitness to govern into question.
I’d also urge him to think more about the proposed $100 rebate. Gasoline prices will continue to rise. Reduced supply and increased demand, as Charles Krauthammer has noted, proposing that we put the red ten on the black jack. If we have concern about the effects of the increase on those least able to deal with the change, it’s not a bad idea. I’d means test it, of course.
By the way, this post and this post from Will Franklin do a good job on putting the increase in the price of gas into perspective.
UPDATE: I like this post from Sean Aqui over at Donklephant a lot.
There is something that I have never understood about the idea of a massive gas tax to encourage the market to look to other supplies of portable energy. Perhaps as a supporter, you would be so good as to explain. If the goal is to push the market into more efficient alternatives, because this will avoid getting us to $X/barrel oil, then:
1) Why don’t we first remove the arbitrary, built-in inefficiencies (like the multiple different required formulations of cleaner-burning gas – why not just have one or two cleaner-burning variants for highly-polluted places) from the supply system?
2) Why would we want to bring about the effects of $X/barrel oil in order to prevent having oil go to $X/barrel? Isn’t it the effects of the price rise, rather than the price rise itself, that we are trying to prevent? And aren’t those effects, wait for it, higher fuel prices and all that flows from them?
Jeff, I support eliminating the multiple formulations to the extent that we eliminate the need for them by reducing use of gasoline period so that’s not a problem for me. On the second point as far as I’m concerned the purpose isn’t to keep the oil below $X/barrel but to reduce the number of barrels consumed. That’s why I oppose all of the various different consumption subsidies.
In fact, if I were king, I’d design my tax as an oil price stabilization tax i.e. the tax would vary depending on the actual price of oil to keep the price from fluctuating (my sense is that stability is more important than the lowest price). But that would be too much to ask.
If we had an oil tax or a gasoline tax that varied inversely with price, wouldn’t that encourage the price to rise to the point the tax was gone? Why compete on price when the government will just take the difference?
I would suggest a redistributive tax that’s independent of price.
Like, for a start makeit a 50 cent per gallon tax on gasoline. Take the revenues and divide them evenly among the voters. (Or possibly the taxpayers.) Ideally the money might be distributed monthly, so poor people get lots of government checks in the mail (or better, cheaper, by direct deposit).
On average the public is not being taxed. On average they get the money back. But anything you do to reduce *you* gas expense is money in the bank for you. After a few years, when the base price of gasoline is $5/gallon but you pay $7/gallon at the pump, you get $2 of it back provided you aren’t using more gas than the average voter. But if you use less gas than the average voter then you’re paying less than $5 a gallon for it, and if you use more gas you pay more per gallon too. The more incentive we give people to find workarounds, the more likely they’ll do it. And on average it’s all incentive, on average it isn’t a tax. (It would take a bit of tax money to run the program.)
Sorry for the slow response; it’s been busy. OK, so the objective is to reduce the use of oil, period, rather than to stabilize the prices. Imposing a tax would certainly reduce the use of oil. Why is that inherently a good thing?
I could see an argument to get us less dependent on Middle East political instabilities. But that doesn’t get us out of the game, just makes the stakes a little smaller. We could get all the way out of the game by letting prices naturally regulate supply and demand, so that as the supply drops other alternatives take over (as gas took over some markets from wood and whale oil). That is, we could do nothing until the economy reacted by producing better alternatives.
We could get out of the game also by seizing the Middle East oil fields, establishing a buffer zone around them, and selling the oil ourselves. Being nice guys, generally, we’d undoubtedly simply give the money in some way back to the countries we took it from, in the end ensuring distribution by force of arms, but not actually taking the money.
But a tax wouldn’t get us out of the game, so that can’t be the main reason.
Surely, reducing the amount of gas we burn would reduce pollution, but given the very low levels of pollution at this point compared to any point since the beginning of the industrial revolution (and per capita probably since some time before that), I can’t see this being a serious argument. We’d do better here by reducing the interference in the precise formulations of gasoline and simply setting a standard that gas burned in a certain way must produce levels of harmful chemicals below certain values; then let the market work out how to do that. Besides, we could do even better than that by replacing coal- and oil-fired power plants with nuclear plants, but I don’t see that happening, politically, any time soon.
So what is the benefit of reducing oil consumption that outweighs the costs of reducing oil consumption?