Letters to the Editor
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It's a mistake
to stop taxing gasoline when the prices soar one more reason than the author gives. If we cut taxes to keep the price from increasing, the suppliers will simply reel in that slack in higher profits. We are sending the message that they don't need to worry about raising prices, we will cut taxes. The suppliers will still raise prices and take what used to be tax money in as profits.
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Meanwhile, back in the real world ...
Why is it economists and transportation experts always talk as though people just run out and buy a new car like they'd run out and buy a gallon of milk?
Gas prices being what they are, one has to take out a bank loan just to buy half a tank. Most people can't afford that, much less a new car, no matter how fuel-efficient.
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Perverse Incentives
Low gas prices (or prices that fluctuate) make it more difficult for drivers to make socially useful decisions when buying a car. As the article points out, higher gas prices are starting to have a noticeable effect in California in terms of reduced consumption. What we have been lacking in this country (and none of our presidential candidates are discussing) is a long-range energy policy.
Although gas prices are currently high, there is still disagreement as to whether this will be a permanent condition. Until car-buyers have some assurance that gasoline is permanently more expensive, many of us will not make long-term choices to drive more fuel-efficient vehicles.
Drivers of SUVs, despite their reputations in some circles as being "socially irresponsible morons", are just people who made choices based on the cost of fuel and other transportation considerations...without giving much value to the socialized costs.
Most cars purchased today will last at least 12 years. A long-range energy/ transportation policy would probably have an implementation time-frame of at least 20 to 30 years based on the duration of existing auto fleets and the time required to develop and deploy new technologies. If we had started down that road the last time we had a gas crisis, we'd be there by now.
A gas tax is the way to go. If it was phased-in over 5 to 10 years, car-buyers would have an incentive to not to invest in fuel-wasting private vehicles. Similarly, auto manufacturers would have an incentive to invest in R&D and manufacturing plants for new efficient cars. No car-maker wants to spend a lot of money developing new technologies unless they are very sure there will be a market.
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Again the Federal 14.8 cents a gallon tax won't make much difference either way.
State taxes are generally much higher. And at $3.50/gal that's a 4.2% discount. Not really something that's going to make me run out and consume. The retail price of gas went up more than that in the last 10 days.
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Perverse on many levels
Almost all road infrastructure improvements are funded through fuel taxes. Our infrastructure is already woefully underbuilt in many areas of the country due to increasing population and urbanization and fuel taxes that have not increased since 1993. This underbuilt infrastructure leads to congestion in many parts of the country. Millions of vehicles a day sit idling unnecessarily in rush hour traffic. Productivity suffers. Local air pollution worsens.
The current push within Republic circles is the privatization of roadways--which has been shown to be woefully inefficient (nearly 25% of toll revenues are consumed by the toll-collecting infrastructure) in comparison to the gasoline tax (less that 1% of revenues consumed by collection infrastructure). Of course, the tolls are collected by companies with big checks to give the Republicans though. I work for one of the most highway dependent, anti-tax, anti-government regulation industries in the nation (trucking), and even trucking companies are begging for an increase in the fuel tax to reduce congestion. It's unbeleivable.
We need an increase in the nation fuel tax. We need a policy in place to make sure that that increase keeps pace with inflation. We need corresponding policies that force urban areas to make responsible decisions about long-term growth planning. We don't need county-level officials making decisions to allow tract house development 50 miles from a city center. We need corresponding policies that encourage the purchase of highly fuel efficient vehicles. We don't need billions of dollars going to Ford to develop fuel efficient vehicles (that wont be an issue if demand is there). We need long-term strategies for reducing automobile reliance while recognizing that in the short-term most Americans are stuck in cul-de-sacs with long commutes.
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@ electro robot
the mean state gasoline tax is 20.3 cents per gallon. when weighted by gallons consumed, it's approx 19.25 cents per gallon. The weighted state diesel tax is 20 cents per gallon--less than the Fed tax. This is largely due to pressure from the trucking industry, which is estimated to consume approx 94% of all "on-highway" diesel used nationally.
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Are you INSANE?
Of COURSE cutting the taxes, or eliminating them, from the price of gasoline is a GOOD thing. But doing JUST that won't CUT it.
We need to uncap the wells we've already dug, drill for MORE oil and build more refineries (the last one was built in 1974!) and while doing this search for economical alternate sources of energy.
Only THIS will keep American independent of OPEC.
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@ Williedigital
You make several excellent points, particularly with respect to housing planning policy.
It makes me ill to think of all the housing stock (granite countertops and all) produced over the past 10 years in locations distant from employment centers and with poor public transportation. Many of these homes are oversized for the reasonable space needs of the families who purchased them; these new homes will require a lot of energy to heat/cool. Developers' willingness to build and buyers' willingness to purchase housing of this type was an arguably rational response to a couple of decades of cheap oil.
Unlike cars which have a useful life of maybe 12 years, these homes were built with an intended life of 50+ years. A stunningly wasteful allocation of capital as well as a long-term commitment to the profligate use of fossil fuels.
Senator McCain's "plan" to suspend the gas tax proves that he was right when he admitted to not knowing much about the economy. Apparently, he also doesn't know much the environment or urban planning.
In all the talk about the "mortgage meltdown", I haven't heard much discussion of what type of housing Americans really need. I know, somewhat far afield from the original topic of the gas tax...but it's all interconnected.
It's hard to have a serious public debate about something this complicated when we're busy talking about flag lapel-pins.