gas tax

To tax, or not to tax.

I agree that 10 or 15 years ago when the price of crude was so ridiculously low that a gallon of gasoline was cheaper than a gallon of filtered tap water, a progressively rising tax ought to have been imposed and the proceeds should have been used to lower income taxes, build diversified transportation infrastructure and possibly funnel money into the auto industry to produce more fuel-efficient vehicles. Anyone with even half a cortical network not addled by an oil-induced stupor ought to have noticed that commuting dozens of miles a day alone in a multi-ton behemoth for a Jackson a week was something that we as a society probably ought not engage in because at some point in time that luxury might come to an uncomfortable end.

I suspect that now that the price of a gallon has risen at a far faster rate than an incrementally increasing tax would have made it rise, it'll be awefully tough to pursuade people to artificially increase the price even more. Before we can consider that, the current demand-induced price rise still has to work itself through the market, and some indications are that this is beginning to happen.
"We're noticing an increase in SUV transfers," said Sergio Stiberman, president and founder of LeaseTrader.com, a marketplace for leases that serves both buyers and sellers.

The site's SUV category has gained 30 percent since last year. More than half of the customers who have transferred out of SUV leases have opted for smaller cars, according to the company.
This could suggest that lower income folks are the ones trading up the mpg scale as a result of the increased price per gallon of gasoline. If that's the case, it would seem that no matter what our helpful think-tank pals might want to make us believe about the excessive cost of market intervention--either through a gas tax or tightened CAFE standards--the relatively hands-off free-market approach in the US isn't too kind on lower income folks either these days. According to them, coping with a simulatneous increase in Chinese demand and a potential failure on the part of oil producing nations to keep up is an acceptable burden for a market inundated in inefficient vehicles to bear, whereas a gradual tax increase and fuel-efficiency standards which might help soften the blow of demand spikes are dreadful errors that will lead to DOOM!

On the other hand, about half of new cars sold this spring are still quite thirsty (down by only about 5%), and this might suggest that the expectation of lower gas prices sometime in the future is still alive and well in the US. Fact is, prices will come down. In the fall. But likely not by much unless the Chinese economy overheats in the next few months. Incidentally, what if it does? We might find ourselves in the awkward position of being another decade closer to peak oil--no matter when you believe it may happen, eventually it will--while we're still greedily gulping down every drop at the trough.

So what might politicians do? Being merely a simple-minded dirty blogger who really shouldn't have the right to speak up on issues, I'd suggest the first thing to do is not to raise expectations that prices at the pump will go down. I believe that there will come a time when we will drill ANWR. But it won't be out of a desire to pay for rolling in the newest Lincoln Navigator or Cadillac Escapade. We'll likely be quite a bit more desparate than that. And while it's nice to dream about corporate windfall profit taxes--and really, is it too much to ask these companies to pay royalties for using public land?--it likely won't achieve all that much in terms of the price we pay at the pump. Practically speaking, tightening fuel efficiency standards is what we can do right now and therefore ought to be the first goal to set. Once that's had some time to take effect and satisfactory products begin to roll off the assembly line an incrementally-rising gas tax really ought to still be added into the mix to ensure a healthy demand for the more fuel-efficient vehicles.

As we all know, that should help reduce the enormous sums of money we waft towards foreign oil-producing countries and possibly lead to a more objective middle-east foreign policy, though that might be a false hope. And oh yeah, it might also help with that thing no politician should mention in any deeper context than simply a passing platitude...[whisper] the environment.