Raising the price of gasoline without raising the cost of driving
November 11th, 2008 by Al Lewis (alewis)
In energy policy, ThinkOOB always starts with two assumptions:
(1) People use too much gasoline because it is priced far lower than it should be. Even if one does not accept the hypothesis of global warming as a basis for believing that gasoline is underpriced, one cannot dispute the fact that half of our defense budget is used directly or indirectly to protect oil supply lines, and should therefore, using simple accounting and economic principles of matching costs and benefits, be financed by a burden on oil usage rather than on our incomes.
(2) However, a gas tax per se is politically poisonous. Sure, we watched our per-gallon prices rise from $2/gallon to $4/gallon in twelve months and accept it, but, as prices receded, heaven forbid that a small portion of that subsequent decline stay in the USA to encourage conservation. No better political environment to introduce a gas tax than when prices are falling, but the opportunity was lost.
Absent a gas tax, policymakers invent all sorts of market-proxies to discourage fuel use. Because they have denied themselves the obvious way to do it, what remains is hit-or-miss. Corporate Average Fuel Economy standards are probably a “hit,” a way of tricking the market into using less fuel. Carpool lanes on the other hand? Well, when was the last time you specifically convinced someone else not to drive their own car in order for you two to use the carpool lane?[1] Mostly it’s couples, taxis, limos etc. Whatever net fuel is saved by the occasional car being left in the garage is no doubt vastly offset by the additional congestion in the other lanes, as the highway’s effective carrying capacity is significantly reduced.
The dilemma remains: How to apply a much purer market-based mechanism to discourage gasoline consumption in an economically direct and efficient manner, but one which people will accept because it is not a “tax.”
This being ThinkOOB, naturally a solution is at hand. Fold the fixed costs of car ownership, like registration, drivers license fees, and auto excise taxes into the variable cost –the price of gasoline. Those previously fixed costs will now be “paid at the pump.” And when one does actually renew a simple passenger car registration, it would be free.
But aren’t auto excise taxes different because they differ for every vehicle? Yes, of course. What is rolled into the price of gasoline is the average excise tax. Then, just as today, you would receive a notice of your excise tax due, with an amount and a due date. But in half the cases – cheap cars– the “amount” on that notice would be a rebate check. The other half, the more expensive cars, would still have an amount due. But it would be the increment over the average, rather than the full amount, for which the check gets paid.
[1] One which clearly works is at the Transbay Bridge in Oakland, where there is a parking lot right before the tolls. Cars with three occupants pay no toll AND that particular toll has no line, a twofer. You often see people parking their cars in that lot and hitching. The uniqueness of that circumstance shows how special the situation must be for carpooling policy to accomplish its mission.
Tags: CO2 emissions, fossil fuel tax, gas tax, gasoline tax, global warming solutions
December 8th, 2008 at 5:20 pm
YES! I don’t think this would be hard to implement and with the rpice of gas so low, there is a ton of traffic again and I find it really annoying. Gas should be priced higher — everyone who comments on this site tends to agree on that point. THese are both excellent ways to raise the price and discourage use
December 12th, 2008 at 6:24 am
Any idiot who puts any value on their time would much rather pay more for gasoline nad spend less time in traffic. When I was young I went to a B&B in Europe where you turned on the electricity via a meter in the bedroom. You put francs or pounds (I don’t actually remember which country it was) and BOY did it make you thnk twice about consuming electriicy.
December 20th, 2008 at 6:54 pm
truck sales are up again. People have already forgotten high gas prices.