Economic reasons for raising the gas tax

[Puppycow]

This explanation by Steven Levitt (http://www.freakonomics.com/blog/2007/06/18/hurray-for-high-gas-prices/) is a compelling evidence-based argument for raising the gas tax. Global warming is not the only reason, BTW.

Levitt names three externalities to driving, but I can think of at least one more.

Levitt cites:
a) My driving increases congestion for other drivers;

b) I might crash into other cars or pedestrians;

c) My driving contributes to global warming.

I could add that:
d) Higher oil prices put more money in the pockets of hostile foreign states.

[BPSCG]

This explanation by Steven Levitt (http://www.freakonomics.com/blog/2007/06/18/hurray-for-high-gas-prices/) is a compelling evidence-based argument for raising the gas tax. Global warming is not the only reason, BTW.

Levitt names three externalities to driving, but I can think of at least one more.

Levitt cites:
a) My driving increases congestion for other drivers;

b) I might crash into other cars or pedestrians;

c) My driving contributes to global warming.

I could add that:
d) Higher oil prices put more money in the pockets of hostile foreign states.Politicians love to grandstand about how gas prices are too high, and how they plan to stop the bad oil companies from price gouging.

Then in the next breath they complain about global warming.

As high gas prices tend to discourage gasoline consumption and alleviate global warming, low gas prices will tend to encourage gasoline consumption and exacerbate global warming.

So those politicians who demand the government stop oil companies from charging too much (Senator Schumer, call your office) are saying they objectively favor global warming.

Doublethink (http://en.wikipedia.org/wiki/Doublethink):
The power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them. ... To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just so long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies—all this is indispensably necessary.

[Beerina]

Politicians picking one philosophy if it supports one position, then pretending it doesn't exist if it contradicts another?

Nevah hoid o' such a ting.

Women have a right to their body. Unless they wanna be a prostitute.

$3.30 gas is real bad. Unless we wanna tax it up to $5.00 to discourage usage.

Lawn clippings in landfills are bad, you should compost them. Unless you wanna bury them in landfills to sequester the carbon.

The way politicians can lead the ignorant masses around with multiple, contradictory carrots on a stick is truly stunning. But remember, it's not about any one position. It's about the power.

Ayn Rand once noted that even highly intelligent scientists and engineers allow themselves to be lead around like this, functionally becoming no more than worker bees who thought up technical solutions while their masters decided their fate. Robert Heinlein also latched onto the concept with Starship Troopers and the "brain bugs", where the non-sentient bug society would, in times of stress, breed "smart bugs" because, evolutionarily, when they had severe problems, breeding these magical creatures solved them.

But the non-sentient bugs remained in control.

Larry Niven, in The Mote in God's Eye, carries it even further, with the Moties having different evolved castes, including a politician class who did all the talking, and an engineer class with an intelligence to shame Newton and Edison rolled into a little ball, but who didn't talk and wasn't interested in politics whatsoever, just taking orders from the political class.

[MilwaukeeMike]

Oh thats a funny one... I live here in Wisconsin, which already has one of the highest progressive gas tax programs in the country. That is, as the cost of gas increases, the tax gets proportionally larger. (Im not sure how thats constitutional, but) And from my experience of the past 10 years, the tax on gas has been going up and so has the number of drivers. I know you can say, "well 10 years ago gas was $1 a gallon, and its $3.25 today, thats not a big enough increase to curb demand." But remember way back to when gas was a $1, I bet all of you would have said, "Ill stop driving if it hits $3 a gallon." Hell, so did I.

The reality, we are so dependant on our automobiles that we are willing to pay the higher prices. So if they raise the tax to the point gas hits $5 a gallon, guess what, people are still going to drive. All its going to do is put more money in sneaky politicians hands, hurt the poor, and take away money I could have spent elsewhere in the economy.

People can spit out all the fancy numbers they want but until I actually see a slow down in demand, Im going to be against gas taxes.

[Katana]

I'm not sure that this is any different than raising taxes on cigarettes supposedly to discourage smoking.

Does anyone believe that the government really wants people to stop smoking or decrease their driving when tax revenue is directly tied to those behaviors?

No. They're banking on people continuing to do exactly what they are doing now but while bending over and paying more to do it.

[Cain]

Oh, great, Ayn Rand, Robert Heinlein, prostitutes and lawn clippings. I like where this is going.

It's relatively standard economics: prices should reflect true costs.

Levitt:
For a long time I have felt the price of gasoline in the United States was way too low. Pretty much all economists believe this.

Because prices are artificially low, it would make sense to add a tax to discourage over-use.

e) The U.S. government spends taxpayer money to protect shipping lanes.... oh, and to invade and occupy foreign lands, subsidize states important states with military aid, and so on.

Steve Levitt talks about increasing taxes by at least one more dollar. He's a center-right UoC economist, though. I've heard hard-core left-wingers claim -- and this was repeated by Thom Hartmann on his radio show recently -- that if gas prices reflected true costs, then they would run about 10 dollars per gallon.

f) more people driving smaller, more fuel efficient vehicles would probably reduce fatalities on the road (I recall the ratio has stagnated). It would also make driving a little more pleasant: SUVs wouldn't be spilling over into other parking spaces, I could actually see oncoming cars when I turn into a street because the behemoths won't be obstructing my view, and they're just more efficient.

Increasing gas taxes is rational long-term policy. The problem is right now we are so dependent on gasoline and cars that will make for a painful transition, especially for low income households. BPSCG's silly non sequitur into politician bashing, and Beerina's classically obtuse analogies do not change the fact that eventually we have to take responsibility for our policies very soon. I'd rather not wait for John Galt to invent his perpetual motion machine.

The reality, we are so dependant on our automobiles that we are willing to pay the higher prices. So if they raise the tax to the point gas hits $5 a gallon, guess what, people are still going to drive. All its going to do is put more money in sneaky politicians hands, hurt the poor, and take away money I could have spent elsewhere in the economy.

People can spit out all the fancy numbers they want but until I actually see a slow down in demand, Im going to be against gas taxes.

What happened to the holy law of supply and demand? Yes, gas is inelastic, but high prices will still encourage people to drive less AND purchase more fuel efficient vehicles.

[Darth Rotor]

Larry Niven, in The Mote in God's Eye, carries it even further, with the Moties having different evolved castes, including a politician class who did all the talking, and an engineer class with an intelligence to shame Newton and Edison rolled into a little ball, but who didn't talk and wasn't interested in politics whatsoever, just taking orders from the political class.
From Tom Lehrer: (Album = That Was The Year That Was, first two verses)

Gather round while I sing you
Of Werner von Braun
A man whose allegiance is ruled by expedience
Call him a Nazi,
he won't even frown
"Ha, Nazi schmazi!" says Werner von Braun

Don't say that he's hypocritical
Say rather that he's apolitical
"Once zee rockets are up, who cares vere zey come down?
Zat's not my department," says Werner von Braun

Circa 1965. Perhaps Larry Niven got some of his inspiration from Lehrer.

DR

[MilwaukeeMike]

Oh, great, Ayn Rand, Robert Heinlein, prostitutes and lawn clippings. I like where this is going.

It's relatively standard economics: prices should reflect true costs.

Levitt:


Because prices are artificially low, it would make sense to add a tax to discourage over-use.

e) The U.S. government spends taxpayer money to protect shipping lanes.... oh, and to invade and occupy foreign lands, subsidize states important states with military aid, and so on.

Steve Levitt talks about increasing taxes by at least one more dollar. He's a center-right UoC economist, though. I've heard hard-core left-wingers claim -- and this was repeated by Thom Hartmann on his radio show recently -- that if gas prices reflected true costs, then they would run about 10 dollars per gallon.

f) more people driving smaller, more fuel efficient vehicles would probably reduce fatalities on the road (I recall the ratio has stagnated). It would also make driving a little more pleasant: SUVs wouldn't be spilling over into other parking spaces, I could actually see oncoming cars when I turn into a street because the behemoths won't be obstructing my view, and they're just more efficient.

Increasing gas taxes is rational long-term policy. The problem is right now we are so dependent on gasoline and cars that will make for a painful transition, especially for low income households. BPSCG's silly non sequitur into politician bashing, and Beerina's classically obtuse analogies do not change the fact that eventually we have to take responsibility for our policies very soon. I'd rather not wait for John Galt to invent his perpetual motion machine.



What happened to the holy law of supply and demand? Yes, gas is inelastic, but high prices will still encourage people to drive less AND purchase more fuel efficient vehicles.

The problem people try too put gas in an economic category with other products like toys and dvd's. In reality gas is not like other regular consumer products. If DVD's (just normal dvd's, not HD or Blue Ray) go from $20 to $30, you are going to see demand go way down. But with gas, it has already gone from under $1 to $3 on Avg, and demand his increased.

Gas is more like bread; if bread suddenly went from 85 cents a loaf to $10 a loaf, I would still buy it because I need it, and there is no substitute for bread. So yes gas is inelastic, but I think there needs to be a new category, such as hyper-inelastic or something like that, because no matter what the cost of fuel, we are going to pay it, and demand is likely to increase.

If down the road we have actual choices on what to power our automobiles with, then yes, high gas prices will lower the demand. But the current situation, I see no weakening of demand if gas prices continue to climb. Hell, I need to get to work!

[Kerberos]

Oh thats a funny one... I live here in Wisconsin, which already has one of the highest progressive gas tax programs in the country. That is, as the cost of gas increases, the tax gets proportionally larger. (Im not sure how thats constitutional, but) And from my experience of the past 10 years, the tax on gas has been going up and so has the number of drivers. I know you can say, "well 10 years ago gas was $1 a gallon, and its $3.25 today, thats not a big enough increase to curb demand." But remember way back to when gas was a $1, I bet all of you would have said, "Ill stop driving if it hits $3 a gallon." Hell, so did I.

The reality, we are so dependant on our automobiles that we are willing to pay the higher prices. So if they raise the tax to the point gas hits $5 a gallon, guess what, people are still going to drive. All its going to do is put more money in sneaky politicians hands, hurt the poor, and take away money I could have spent elsewhere in the economy.

People can spit out all the fancy numbers they want but until I actually see a slow down in demand, Im going to be against gas taxes.
Well what you might have said back when gas cost 1$ per gallon is of cause up to you, but no one who knew what they were talking about would have predicted that people would simply stop driving in large numbers. That does not mean they might not drive less. However even under the questionable assumption that people don't drive less when gas prices increase there's still the fact that a car isn't just a car. An SUV consumer significantly more gas than a normal car let alone a hybrid for the same distance driven. I personally doubt it's a coincidence that SUVs are far more common in the US than in for example Denmark where gas is far more expensive.

[MilwaukeeMike]

Well what you might have said back when gas cost 1$ per gallon is of cause up to you, but no one who knew what they were talking about would have predicted that people would simply stop driving in large numbers. That does not mean they might not drive less. However even under the questionable assumption that people don't drive less when gas prices increase there's still the fact that a car isn't just a car. An SUV consumer significantly more gas than a normal car let alone a hybrid for the same distance driven. I personally doubt it's a coincidence that SUVs are far more common in the US than in for example Denmark where gas is far more expensive.

I wasn't talking about sub categories of the demand for gas though, Im simply talking about total U.S. demand for gas, and that has increased over the last 10 years, regardless of whether people traded in their SUV's for hybrids. Its true, I remember years ago when you could drive down the freeway and all you would see are SUV's... Hell, I had a Ford Explorer. But now there are less SUV's, but families have more cars, more people are driving, more things are being shipped, and so on.

[The Painter]

You don’t get it. People have to drive. I have to drive to work. I have to drive to the store. I have to drive to the doctor. I don’t know of anyone who just goes out for a Sunday drive anymore. Increasing the tax on gas will not reduced the need to drive from one place to another. The government already makes more money on a gallon on gas then the oil companies. Now you want to give them more in taxes. That will solve the problem? If more taxes are the answer, why don’t we give the government All our money, then all the problems would be solved, right? Everyone here screams when a parent keeps over feeding an obese child. Why do we keep feeding an obese government?


Oh, by the way an increase in the gas tax will only hurt the poor and middle class.

[Puppycow]

I'm not sure that this is any different than raising taxes on cigarettes supposedly to discourage smoking.

Does anyone believe that the government really wants people to stop smoking or decrease their driving when tax revenue is directly tied to those behaviors?

No. They're banking on people continuing to do exactly what they are doing now but while bending over and paying more to do it.

But it seems to work:
http://media3.washingtonpost.com/wp-dyn/content/graphic/2006/03/09/GR2006030900107.gif

This while the population is rising.
Besides, tax increases for one thing can be offset by tax reductions elsewhere.
The point that Levitt made though is that raising the tax would actually save drivers money by less congestion, lower insurance costs and lower accident rates. You pay a little more for gas but less for insurance, wasted time sitting in traffic, and medical/funeral/legal costs, for accidents, etc.

Bottom line, drivers save money. A few lucky ones even get more years of life.

[MilwaukeeMike]

You don’t get it. People have to drive. I have to drive to work. I have to drive to the store. I have to drive to the doctor. I don’t know of anyone who just goes out for a Sunday drive anymore. Increasing the tax on gas will not reduced the need to drive from one place to another. The government already makes more money on a gallon on gas then the oil companies. Now you want to give them more in taxes. That will solve the problem? If more taxes are the answer, why don’t we give the government All our money, then all the problems would be solved, right? Everyone here screams when a parent keeps over feeding an obese child. Why do we keep feeding an obese government?


Oh, by the way an increase in the gas tax will only hurt the poor and middle class.

Well said... :)

[MilwaukeeMike]

But it seems to work:
http://media3.washingtonpost.com/wp-dyn/content/graphic/2006/03/09/GR2006030900107.gif

This while the population is rising.
Besides, tax increases for one thing can be offset by tax reductions elsewhere.
The point that Levitt made though is that raising the tax would actually save drivers money by less congestion, lower insurance costs and lower accident rates. You pay a little more for gas but less for insurance, wasted time sitting in traffic, and medical/funeral/legal costs, for accidents, etc.

Bottom line, drivers save money. A few lucky ones even get more years of life.


There are some large fundamental differences between gas and cigarettes that makes a comparison hard. First, everyone who doesnt live within a mile radius of everything they need to do in their lives will need to get around by some form of transportation that uses fossil fuels. Either car, bus, train, cab, so on.

With cigarettes, not everyone smokes them, and it is something that is completely unnecessary, that is, we could force everyone to stop smoking and do away with cigs tomorrow, and besides a few million cold sweats the country as a whole wouldn't be affected. I

If we take away all fossil fuels from our society, we would have a total economic collapse that would lead too anarchy on a scale we have never seen.

So comparing cigs to gas is like comparing bread to caviar.

And you also didn't mention the large amount of substitutes for people who are smoking that A) dont want to pay the high prices, and B) want to stop smoking... I-E that gum, patches, pills, and so.

With gas, there really are no substitutes, right now.

Plus you didn't mention the government banning many of their advertisements, the massive law suits against the tobacco companies, and the increasing medical knowledge that smoking causes cancer.

So to say its all because of taxes is a little naive.

[Puppycow]

You don’t get it. People have to drive. I have to drive to work. I have to drive to the store. I have to drive to the doctor. I don’t know of anyone who just goes out for a Sunday drive anymore. Increasing the tax on gas will not reduced the need to drive from one place to another. The government already makes more money on a gallon on gas then the oil companies. Now you want to give them more in taxes. That will solve the problem? If more taxes are the answer, why don’t we give the government All our money, then all the problems would be solved, right?

Oh, by the way an increase in the gas tax will only hurt the poor and middle class.

Wow. Talk about totally missing the point. It will save people money. And yes, there is LOTS of unnecessary driving, maybe not you, but definitely plenty of others. Who said giving all our money to the government would solve anything? This is a straw man.

Please actually read Levitt's argument. There are actual studies backing this up. It's not just armchair theorizing.

[Kerberos]

You don’t get it. People have to drive. I have to drive to work. I have to drive to the store. I have to drive to the doctor.
Do people also have to drive in non-fuel efficient cars? Do they necessarily have to live as far from work as they do? Is it impossible to shop fewer times per week, but buy more each time? Going to the doctor? Somehow I doubt that’s a large contribution to the total mileage. Also there are such things as bicycles, busses and trains. To pretend that fuel usage is perfectly inelastic even in the long run is just plain ignorant, probably wilfully so.

[MilwaukeeMike]

Do people also have to drive in non-fuel efficient cars? Do they necessarily have to live as far from work as they do? Is it impossible to shop fewer times per week, but buy more each time? Going to the doctor? Somehow I doubt that’s a large contribution to the total mileage. Also there are such things as bicycles, busses and trains. To pretend that fuel usage is perfectly inelastic even in the long run is just plain ignorant, probably wilfully so.

I think the issue of non-fuel efficient cars is some what of a non-issue currently. (Thats not to say people shouldn't be driving hybrids... They should)

But like I said earlier, for the last 10 years the demand for gas has increased while the demand for SUV's has tanked. So you need to factor more than just people driving more efficient cars. Because the growth of new drivers is far outpacing the sales of hybrid cars. I think Toyota, since introducing the Prius, has only sold a 100+K of them.

But you are right people should do everything you said, but in reality it just doesn't happen. People are "going" to spend more money instead of changing small things in their lives. I mean, we all know how lazy we Americans are as a whole.

[MilwaukeeMike]

Wow. Talk about totally missing the point. It will save people money. And yes, there is LOTS of unnecessary driving, maybe not you, but definitely plenty of others. Who said giving all our money to the government would solve anything? This is a straw man.

Please actually read Levitt's argument. There are actual studies backing this up. It's not just armchair theorizing.

What is a puppycow?

[MilwaukeeMike]

http://forums.randi.org/imagehosting/10210467a958a66459.gif

http://www.eia.doe.gov/oiaf/aeo/figure_82.html

This is the projected consumption of liquid fuels in the U.S. out too 2030.

[Tailgater]

This only deters personal driving like extra trips to the store, long distance vacations, and driving in circles for no reason. My business survives on gas. I drive the same number of miles no matter what the price is. Not only does the government get more money, you pay more for goods and services.

Oh, by the way an increase in the gas tax will only hurt the poor and middle class.

Yes, most people I know who own Escalades can afford to dump ten dollar gas in it. I own a small, gas efficient hatchback and I'm strapped at the end of the month when prices are high.

[Puppycow]

First, everyone who doesnt live within a mile radius of everything they need to do in their lives will need to get around by some form of transportation that uses fossil fuels. Either car, bus, train, cab, so on.Fossil fuels aren't even the main thing Levitt cited. Either train or bus would reduce congestion, which has the desired effect, saving time and increasing safety. There are also differences in fuel efficiency, so people will start choosing more efficient vehicles. Plus there is freight to consider. More freight could be shipped by train.

With cigarettes, not everyone smokes them, and it is something that is completely unnecessary, that is, we could force everyone to stop smoking and do away with cigs tomorrow, and besides a few million cold sweats the country as a whole wouldn't be affected.I would predict a sharp rise in the murder rate and other violent crime. The point is not to reduce driving to zero, just to reduce it to a more economically efficient. The two are similar in that the alternatives are not nearly the same. Believe me, if it was easy to quit smoking, hardly anyone would smoke.

If we take away all fossil fuels from our society, we would have a total economic collapse that would lead too anarchy on a scale we have never seen.Straw man. Who suggested that?

So comparing cigs to gas is like comparing bread to caviar.Not if their demand curves are similar. Economics is the same.

And you also didn't mention the large amount of substitutes for people who are smoking that A) dont want to pay the high prices, and B) want to stop smoking... I-E that gum, patches, pills, and so.

With gas, there really are no substitutes, right nowIf those are substitutes for tobacco, then bicycles are substitutes for cars.

Plus you didn't mention the government banning many of their advertisements, the massive law suits against the tobacco companies, and the increasing medical knowledge that smoking causes cancer.

So to say its all because of taxes is a little naive.From the economic perspective, those are similar to extra taxes. They have a similar effect. Anyway, the point is that the effect is not zero.

[MilwaukeeMike]

Straw man. Who suggested that?

How is that a straw man, our economy would come to a grinding halt.

How would companies ship products and food to customers?

How would people who live more than a mile from their job get to work?

How would most of the power in the United States be generated?

How would we protect our country without the most necessary thing for out military?

How would farmers grow and harvest food?

The list goes on and on.... Straw man... I think not. Without fossil fuels, the world is back in the 17th century overnight.


If those are substitutes for tobacco, then bicycles are substitutes for cars.

From the economic perspective, those are similar to extra taxes. They have a similar effect. Anyway, the point is that the effect is not zero.

No they are not. You can't ride a bike to the grocery store and pick up enough groceries for a family of four and bike home.

If you live more than a mile or two from work most won't bike. Either not healthy enough, too old, weather, or commute too long.

You cannot ship 20 tons of material on bikes.

People can not go on trips by biking across country.

Bikes are not a substitute for fossil fuels. Bikes are a substitute for walking or running.

Substitutes for fossil fuels are electricity, hydrogen, ect ect..... And substitutes that, I might say, are expensive, unrealistic, not cost effective... so on...

[Katana]

But it seems to work:
http://media3.washingtonpost.com/wp-dyn/content/graphic/2006/03/09/GR2006030900107.gif

This while the population is rising.
Besides, tax increases for one thing can be offset by tax reductions elsewhere.
The point that Levitt made though is that raising the tax would actually save drivers money by less congestion, lower insurance costs and lower accident rates. You pay a little more for gas but less for insurance, wasted time sitting in traffic, and medical/funeral/legal costs, for accidents, etc.

Bottom line, drivers save money. A few lucky ones even get more years of life.


Concluding that higher taxes would result in all of these wonderful benefits seems like a bit of a stretch to me. The question remains as to whether they will influence behavior. This may be where the issue of driving being fundamentally different than smoking is appropriate to raise. Much driving is done out of need and not discretion.

Having said that, if we accept the arguments put forth, if all discretionary driving is eliminated or drastically reduced to the extent that there is an effect dramatic enough to result in reduced congestion, deaths, insurance costs, healthcare costs (in other words, a significant change), what happens to restaurants, movie theaters, retailers, etc. that people choose not to patronize because they have changed their behavior due to higher gasoline taxes?

Like millions of others, I (sadly) do not live where I have an alternative to my car to get to such places. What happens to the economy locally or even nationally?

As an aside, where public transportation is available and people simply switch to it (which I agree would be a good thing), are the systems capable of meeting such an increase in demand?

While I think that reducing gasoline consumption is a worthwhile pursuit, I'm not sure that a gas tax is the answer.

There are some large fundamental differences between gas and cigarettes that makes a comparison hard. First, everyone who doesnt live within a mile radius of everything they need to do in their lives will need to get around by some form of transportation that uses fossil fuels. Either car, bus, train, cab, so on.

With cigarettes, not everyone smokes them, and it is something that is completely unnecessary, that is, we could force everyone to stop smoking and do away with cigs tomorrow, and besides a few million cold sweats the country as a whole wouldn't be affected. I

If we take away all fossil fuels from our society, we would have a total economic collapse that would lead too anarchy on a scale we have never seen.

So comparing cigs to gas is like comparing bread to caviar.

And you also didn't mention the large amount of substitutes for people who are smoking that A) dont want to pay the high prices, and B) want to stop smoking... I-E that gum, patches, pills, and so.

With gas, there really are no substitutes, right now.

Plus you didn't mention the government banning many of their advertisements, the massive law suits against the tobacco companies, and the increasing medical knowledge that smoking causes cancer.

So to say its all because of taxes is a little naive.


Perhaps it is. I'll admit that I may be when it comes to economic issues, but I just think that it is, also, a bit naive to think that increasing gasoline taxes will result in this rosey picture.

[BPSCG]

Lost in all this is the fact that it's been almost 30 years since gas hit a dollar a gallon. Then, we grimaced, but sucked it up and paid, vowing that if it got up to three dollars a gallon, we'd drive less/carpool/walk/bike/whatever.

Okay, it got to $3 a gallon, but it took almost thirty years. Three dollars today is about the equivalent of one dollar in 1977. I don't doubt that a lot of people would change their driving habits if the price went up to six dollars tomorrow.

So why doesn't congress add another three bucks to the gas tax tonight? Because you would jump and scream and vote the bastards out of office. Because in the final analysis, you don't care as much about global warming as you do about your precious $3 a gallon gas. And your congressman knows it.

[MilwaukeeMike]

Lost in all this is the fact that it's been almost 30 years since gas hit a dollar a gallon. Then, we grimaced, but sucked it up and paid, vowing that if it got up to three dollars a gallon, we'd drive less/carpool/walk/bike/whatever.

Okay, it got to $3 a gallon, but it took almost thirty years. Three dollars today is about the equivalent of one dollar in 1977. I don't doubt that a lot of people would change their driving habits if the price went up to six dollars tomorrow.

So why doesn't congress add another three bucks to the gas tax tonight? Because you would jump and scream and vote the bastards out of office. Because in the final analysis, you don't care as much about global warming as you do about your precious $3 a gallon gas. And your congressman knows it.

Your damn right... High gas prices, global warming... so on so on... Its all about politics and $$$$; nothing else.....

[The Painter]

It will save people money.

How do the goods you buy get to the market? Many goods are flown here or shipped here, and then they are trucked to the market. All of this requires fuel. Raise the tax on fuel and it is passed on to the consumer. So everything you buy will cost more. How does this save me money?

[mumblethrax]

If the goal is traffic reduction, congestion pricing might be a more elegant solution. There's no particularly good reason someone driving to work in one of upstate New York's post-industrial wastelands should pay a higher gas tax so that we can thin out the herd on the West Side Highway. It would also mitigate one of the more odious effects of high gas taxes--charging people more to get to work--since at least some metropolitan areas in the US have transportation alternatives.

[Puppycow]

How does this save me money?

Read the article.

(Time, accidents, and wasted fuel also cost money. So will higher air-conditioning bills in the future.)

[69dodge]

a) My driving increases congestion for other drivers;

b) I might crash into other cars or pedestrians;



Well, sure, but their driving increases congestion for you, and they might crash into you. Instead of drivers paying each other for the problems they cause each other, they might as well all keep their own money and call it a deal.

If a car hits a pedestrian, the driver (or his insurance, which he pays for) already has to pay the pedestrian for any injuries caused.

How are these things externalities?

It only makes sense to tax drivers for problems that they cause nondrivers and that they don't already pay for.

Traffic jams are a direct consequence of too many cars on the road. If you took some cars away, the remaining drivers could get places much faster.


Yes, of course. And the drivers of the cars you took away wouldn't get anywhere at all. That needs to be taken into account too.

The Texas Transportation Institute estimates that in 2000 the 75 largest metropolitan areas experienced 3.6 billion vehicle-hours of delay, resulting in 5.7 billion US gallons (21.6 billion liters) in wasted fuel and $67.5 billion in lost productivity, or about 0.7% of the nation’s GDP.


Does that mean that there would be 67.5 billion dollars more productivity if all the drivers stuck in traffic jams magically got where they were going quickly, or does it mean that there would be 67.5 billion dollars more productivity if some of the drivers were able to get where they were going quickly because some others stayed home?

[Dr Adequate]

How is that a straw man, our economy would come to a grinding halt.

How would companies ship products and food to customers?

How would people who live more than a mile from their job get to work?

How would most of the power in the United States be generated?

How would we protect our country without the most necessary thing for out military?

How would farmers grow and harvest food?

The list goes on and on.... Straw man... I think not. Without fossil fuels, the world is back in the 17th century overnight. And no-one has suggested that we try to get along without fossil fuels, so this is a straw man.

[Kerberos]

Concluding that higher taxes would result in all of these wonderful benefits seems like a bit of a stretch to me. The question remains as to whether they will influence behavior. This may be where the issue of driving being fundamentally different than smoking is appropriate to raise. Much driving is done out of need and not discretion.

Having said that, if we accept the arguments put forth, if all discretionary driving is eliminated or drastically reduced to the extent that there is an effect dramatic enough to result in reduced congestion, deaths, insurance costs, healthcare costs (in other words, a significant change), what happens to restaurants, movie theatres, retailers, etc. that people choose not to patronize because they have changed their behaviour due to higher gasoline taxes?

Like millions of others, I (sadly) do not live where I have an alternative to my car to get to such places. What happens to the economy locally or even nationally?
Obviously not all discretionary driving can (or should be) eliminated, but it can be reduced somewhat. As for what happens to those places they obviously loose some custom, because people to a greater extend have to pay the true cost for frequenting them. People will then spend that money elsewhere, so it's not like the economy will collapse. As for those who live far away from everything you would presumably take higher gas prices into account the next time you had to buy either a new car or a new house. It’s a long term effect not something that happens from one day to another.

As an aside, where public transportation is available and people simply switch to it (which I agree would be a good thing), are the systems capable of meeting such an increase in demand?
As with moving, buying more fuel efficient cars and other things this is a long term effect. If people start to use public transportation more then public transportation can be expanded.


Bikes are not a substitute for fossil fuels. Bikes are a substitute for walking or running.
Wait? So I'd be running/walking a half-marathon several times a week? Wow, I rock!

[drkitten]

How do the goods you buy get to the market? Many goods are flown here or shipped here, and then they are trucked to the market.

Well, that's one of the problems right there. Flying goods to a central depot and then trucking them out to a point of sale is a hideously fuel-ineffecient way to transport things. It's fairly cheap in terms of infrastructure, because (at least in the US) there is this wonderful Interstate highways system that has already been installed, but it's a heinous waste of fuel.

The most fuel efficient way to move goods, last time I checked, was by water. The second most fuel efficient way to move goods is by rail. Unfortunately, both of those industries have been more or less driven into the ground by US government policy over the past fifty years, specifically in order to encourage fossil fuel consumption.

[drkitten]

Yes, of course. And the drivers of the cars you took away wouldn't get anywhere at all.

Apparently in your city, it's illegal to have both a driver's licence and a bus pass?

[Charlie Monoxide]

Gas is way under-priced. It does not include an environmental damage cost. Once we started adding that in (and I'm thinking about $5-10US/gal) we'll see all sorts of alternatives and a "real" effort to conserve.

Charlie (getting to first base with trees) Monoxide

[geni]

How do the goods you buy get to the market? Many goods are flown here or shipped here, and then they are trucked to the market. All of this requires fuel. Raise the tax on fuel and it is passed on to the consumer. So everything you buy will cost more. How does this save me money?

Shipping isn't really an issue since the marine direct drive diesel is so fuel efficient. There are various methods of reduceing the amount of stuff flown and trucks can be delt with through building railways or in some cases ship canals.

[Art Vandelay]

This only deters personal driving like extra trips to the store, long distance vacations, and driving in circles for no reason. My business survives on gas. I drive the same number of miles no matter what the price is. If gas prices go up enough, you'll be driving less because you'll be out of business. Sucks for you, but that's how capitalism ensures that resources are distributed efficiently.

Not only does the government get more money, you pay more for goods and services. Which means that people will buy less of stuff that takes a lot of gas, reducing gas use. And how much money the govenrment takes is irrelevant; it can be adjusted by lowering other taxes.

No they are not. You can't ride a bike to the grocery store and pick up enough groceries for a family of four and bike home.You can if you get a trailer.

Substitutes for fossil fuels are electricity, hydrogen, ect ect..... And substitutes that, I might say, are expensive, unrealistic, not cost effective... so on...The reason they aren't cost effective is that gas is so cheap.

Well, sure, but their driving increases congestion for you, and they might crash into you. Instead of drivers paying each other for the problems they cause each other, they might as well all keep their own money and call it a deal.It seems you don't quite grasp the concept of an externality.

Let's say, for some reason, I have to pay for all the water that you use, and vice versa. I might be tempted to waste a lot of water, because, hey, I'm not paying for it. If we switch, so that we both pay for our own water, we both are probably going to use less water, and pay less money.

If a car hits a pedestrian, the driver (or his insurance, which he pays for) already has to pay the pedestrian for any injuries caused.Medical bills, yes (assuming the driver has insurance). But if you were hit by a car, wouldn't you want more than just reimbursement for medical bills?

Furthermore, that's money that's wasted. The whole point of this discussion is how we can minimize the costs to society as a whole. Once someone is hit by a car, there's a cost to society. Which individual ends up paying that is completely irrelevant to what the net cost to society is.

This explanation by Steven Levitt (http://www.freakonomics.com/blog/2007/06/18/hurray-for-high-gas-prices/) is a compelling evidence-based argument for raising the gas tax. Global warming is not the only reason, BTW.

Levitt names three externalities to driving, but I can think of at least one more.I can think of more than just one. Wear on the roads, pollution, etc.

I find it silly that Leftists are willing to mandate higher efficiency by fiat, but not encourage it through higher taxes. Apparently, as long as those big bad corporations are the ones paying for it, it doesn't matter. Never mind that those costs are passed on to shareholders and customers.

First, everyone who doesnt live within a mile radius of everything they need to do in their lives will need to get around by some form of transportation that uses fossil fuels. Either car, bus, train, cab, so on. What about non-fossil fuels, such as bio-diesel?

With gas, there really are no substitutes, right now.Sure, there are.

[BPSCG]

Charlie (getting to first base with trees) MonoxideWow. You finally persuaded one to go out with you? :)

[The Painter]

The most fuel efficient way to move goods, last time I checked, was by water.

That's how the oil gets here. Here's a stock tip, buy Frontline.



There are various methods of reduceing the amount of stuff flown and trucks can be delt with through building railways or in some cases ship canals.

We already have an extensive railway system.

Ship canals??? Are you kidding??? Build one across the Rockies, I dare you. Are you thinking in 18th or 19th century terms? Get real.

[Charlie Monoxide]

Wow. You finally persuaded one to go out with you? :)
They give me wood .........

Charlie (likes a girlfriend who doesn't wander) Monoxide

[Dr Adequate]

I dated a tree once --- I counted her rings.

But she turned out to be a beech.

[69dodge]

Apparently in your city, it's illegal to have both a driver's licence and a bus pass?


No, I was exaggerating for effect.

Pretend I said instead, "And the drivers of the cars you took away would get where they were going much more slowly. That needs to be taken into account too."

The point remains.

[69dodge]

It seems you don't quite grasp the concept of an externality.


I think I do grasp the concept of an externality.

What I don't grasp is why that concept includes a situation where one driver causes congestion for other drivers who are simultaneously causing congestion for him.

Let's say, for some reason, I have to pay for all the water that you use, and vice versa. I might be tempted to waste a lot of water, because, hey, I'm not paying for it. If we switch, so that we both pay for our own water, we both are probably going to use less water, and pay less money.


How is this related to the question of whether congestion is an externality?

It's easy for one person to use a lot more water than another person. So it makes sense for everyone to pay for his own water usage.

How would you measure the amount of congestion a driver causes for others (to determine how much he should pay them)? How would you measure the amount of congestion a driver is caused by others (to determine how much he should be paid by them)?

Wouldn't the two be very nearly the same in almost all cases?

So, as I said, why bother having drivers pay each other for the congestion they cause each other? They'll just end up with the same amount of money they started with, anyway.

A driver who causes congestion for other drivers effectively "pays" them by allowing them to cause congestion for him without paying him.

Or are some drivers entitled to congestion-free roads, so that they deserve to be paid if others cause them congestion, while other drivers aren't entitled to roads at all unless they pay for the congestion they cause?

The relation between drivers is quite symmetric. Who is supposed to pay whom? I don't get it.

Medical bills, yes (assuming the driver has insurance). But if you were hit by a car, wouldn't you want more than just reimbursement for medical bills?

Furthermore, that's money that's wasted. The whole point of this discussion is how we can minimize the costs to society as a whole. Once someone is hit by a car, there's a cost to society. Which individual ends up paying that is completely irrelevant to what the net cost to society is.


Getting hit by a car is no fun, I'm sure.

Minimizing costs to society as a whole is a good idea.

Paying higher taxes for gas or doing without gas because it's too expensive, whichever option gets chosen by someone who would have bought cheap gas, is also a cost.

[BPSCG]

I dated a tree once --- I counted her rings.

But she turned out to be a beech.I knew her. I still pine for her.

[Kerberos]

I think I do grasp the concept of an externality.

What I don't grasp is why that concept includes a situation where one driver causes congestion for other drivers who are simultaneously causing congestion for him.
The problem is that the marginal social cost is still greater than the marginal personal cost. Each car creates more congestation than the last one, so there remains an externality that is not fully internalized. If I choose to drive less the roads will be less congestated when I'm not driving on them providing a social benefit, but they will remain fully as congestated when I do it anaways so I get no benefit from my behaviour even if it is socially optimal.

[BPSCG]

Pretend I said instead, "And the drivers of the cars you took away would get where they were going much more slowly. That needs to be taken into account too."

The point remains.There's a metrorail station about a mile from our house. When I worked in downtown DC, I would ride my bike to the railroad station, lock it up, and take the train to work. I know there are people there who find it startling that I would bike and train to work because everyone knows that us conservative crypto-fascists all drive Hummers everywhere we go, even when it's to just visit the neighbors across the street. Door to desk in about 40 minutes.

My office relocated to suburban Maryland last year. I could still bike to the metro station and take the train, but the total commute would be about twice as long - about an hour and twenty minutes. Instead, I drive. My ten-year old Hyundai gets 30-33 mpg so I'm not guzzling gas and I'm not robbing the earth's precious resources to get a new car every two years so shut up, Al Gore.Door to desk in +/- 35 minutes.

Why should I take public transportation and spend an extra hour and a half getting to and from work every day? Yes, it costs me more to drive than it would to take the train, but I weighed time vs money and decided my time was more precious. YMMV.

[69dodge]

The problem is that the marginal social cost is still greater than the marginal personal cost. Each car creates more congestation than the last one, so there remains an externality that is not fully internalized. If I choose to drive less the roads will be less congestated when I'm not driving on them providing a social benefit, but they will remain fully as congestated when I do it anaways so I get no benefit from my behaviour even if it is socially optimal.


I don't understand this. Each car creates more congestion for other cars, but they create congestion for it. So who should pay whom?

But, actually, I forgot about buses (even though drkitten mentioned them explicitly!), probably because I happen to use them only rarely. Depending on the situation, I walk or drive or take the subway.

Thirty people in cars create more congestion for thirty people on a bus than the other way around. So I can see some externalities there.

[geni]

We already have an extensive railway system.

I don't think it is as extensive as say the UK pre Beaching cuts.


Ship canals??? Are you kidding??? Build one across the Rockies, I dare you.


Assuming you have a remotely competent strip mining and quarrying industry it's doable.


Are you thinking in 18th or 19th century terms? Get real.

18th century ship canals were not really posible you need at the very least steam power. More late 19th early 20th(Suez is something of an exception).

However the Panama Canal is looking to expand as is the Suez and there are the Kra Canal and Nicaragua Canal (again) propopsals. Also there is there are the future plans for an elarged Welland Canal.

[Art Vandelay]

I think I do grasp the concept of an externality.So what do you think it means?

It's easy for one person to use a lot more water than another person. So it makes sense for everyone to pay for his own water usage.But even if everyone uses the same amount of water, it still is inefficient for the cost to be shared, rather than for everyone to pay for their own.

How would you measure the amount of congestion a driver causes for others (to determine how much he should pay them)?Isn't that a separate issue?

So, I guess that the basis of your argument, which you didn't really explicitly state, is that no one is harmed by congestion except for other drivers. But that's not true. People who would like to drive on empty roads, but decide to stay home because the roads are too congested, are also harmed.

Suppose you have a city in which everyone drives the same. The city decides to impose a fee for every mile driven, to be distrubted equally among all city residents. Due to the increased cost of driving, people reduce their driving. But because everyone drives the same amount (both before and after the imposition of the fee), everyone ends up not having to pay any net fee. Yet they all enjoy less congested roads.

Also, people in small vehicles cause less congestion that people in huge pick-ups. And people in motorcycles, or who carpool, cause even less.

Paying higher taxes for gas or doing without gas because it's too expensive, whichever option gets chosen by someone who would have bought cheap gas, is also a cost.No, it's not. Not a net cost. If people pay taxes, that just moves money around. It doesn't cost society anything.

I knew her. I still pine for her.Wood it really be so hard to do without these juvenile puns?

[69dodge]

So what do you think it means?


The Wikepedia article on externality (http://en.wikipedia.org/wiki/Externality) seems good. I guess there's no reason to repeat it here?

But even if everyone uses the same amount of water, it still is inefficient for the cost to be shared, rather than for everyone to pay for their own.


I don't disagree. But I still don't know why you brought water up. How is it related to whether traffic is an externality?

Isn't that a separate issue?


I'm not sure. It seemed relevant.

So, I guess that the basis of your argument, which you didn't really explicitly state, is that no one is harmed by congestion except for other drivers. But that's not true. People who would like to drive on empty roads, but decide to stay home because the roads are too congested, are also harmed.


That makes some sense.

But why is it a bigger problem if people stay home because they don't want to deal with congestion than if people stay home because they don't want to pay extra taxes for driving?

Why is it ok to tell people, "You don't want to pay extra taxes? Well, then, don't drive," but it's not ok to tell people, "You don't want to deal with congestion? Well, then, don't drive."?

The question seems to be, what will we take as our starting point? What will we consider people to be entitled to, to begin with? Then, if I prevent them from getting that, I'm "harming" them; if not, I'm not. If I buy something from you, we don't say that I'm harming everyone else who now won't be able to buy it; they never had any more right to it than I. I don't have to pay them; I only have to pay you.

So, what should we suppose people are entitled to, regarding road usage? Congestion-free roads, but only some of the time? Full-time access to possibly congested roads? That seems to be the issue.

Suppose you have a city in which everyone drives the same. The city decides to impose a fee for every mile driven, to be distrubted equally among all city residents. Due to the increased cost of driving, people reduce their driving. But because everyone drives the same amount (both before and after the imposition of the fee), everyone ends up not having to pay any net fee. Yet they all enjoy less congested roads.


When they're on the road, they enjoy less congested roads. But sometimes they stay home when they really want to drive, because driving would be too expensive. They don't enjoy that. How do we decide whether it's worth it?

It seems quite unrealistic to suppose that everyone will reduce their driving by the same amount, as a result of an increase in the cost of driving. People who can afford it will tend to drive happily on less congested roads, while people who can't will tend to stay unhappily at home.

Hmm... Actually, that seems like a reasonable outcome, from a market point of view: rich people get to buy stuff that poor people don't. But what is the "right" price? Normally, prices are set by the owner, in the presence of competition. There's no competition to provide public roads, and they have no owner.

Interesting. I don't know.

Also, people in small vehicles cause less congestion that people in huge pick-ups. And people in motorcycles, or who carpool, cause even less.


Yes, I agree.

No, it's not. Not a net cost. If people pay taxes, that just moves money around. It doesn't cost society anything.


Yes, that's true about taxes. I made a mistake there. But what about the inconvenience of not driving because it's too expensive, when that's the option that's chosen? That's a real cost, which needs to be weighed against the benefit of reduced congestion for those who are on the road.

[Kerberos]

I don't understand this. Each car creates more congestion for other cars, but they create congestion for it. So who should pay whom?

But, actually, I forgot about buses (even though drkitten mentioned them explicitly!), probably because I happen to use them only rarely. Depending on the situation, I walk or drive or take the subway.

Thirty people in cars create more congestion for thirty people on a bus than the other way around. So I can see some externalities there.
Well that's the core of it, If you can see how this works for busses it should be easy to expand it. Carpooling works like busses because 4 people in one car takes up less space than 4 cars. Bicycles take up less space than cars. People who take trains or subways or walk also takes up less space and obviously people who don't go out take up no space at all.

[Art Vandelay]

I don't disagree. But I still don't know why you brought water up. How is it related to whether traffic is an externality?I think that the analogy is clear. What differences between the two cases do you think there are?

But why is it a bigger problem if people stay home because they don't want to deal with congestion than if people stay home because they don't want to pay extra taxes for driving?Because the latter can be adjusted.

The question seems to be, what will we take as our starting point? What will we consider people to be entitled to, to begin with?I don't think that's really a question that needs to be answered. People who take public transit help drivers out by reducing congestion, and drivers arguably should pay for that benefit.

If I buy something from you, we don't say that I'm harming everyone else who now won't be able to buy it; they never had any more right to it than I. I don't have to pay them; I only have to pay you.But the amount that you have to pay me actually depends on how much you're harming the other guy. Suppose I have something with only two potential buyers. To the other buyer, it's worth $500, but if it weren't for you, he would be able to get it for $1, since I wouldn't have anyone else to sell it to. But say you value it at $1000. So the two of you bid the price up until it gets to $501, at which point he drops out. You cost him about $500, because without you, he would have been able to pay about $500 less than it's worth to you. And you have to pay about $500. So while you don't pay him anything, you do have to pay ME for the harm you caused him. And from your point of view, what's the difference? You're still out the money, no matter who you pay.

When they're on the road, they enjoy less congested roads. But sometimes they stay home when they really want to drive, because driving would be too expensive. They don't enjoy that. How do we decide whether it's worth it?We vote on it.

It seems quite unrealistic to suppose that everyone will reduce their driving by the same amount, as a result of an increase in the cost of driving. You're the one who claimed that the relationship is symmetric. I accepted that to make the issue simpler. But if different people reduce by different amounts, that makes the system even more profitable. The people that keep driving get to drive on congestion-free roads, while the people who stay home now get a bunch of extra money.

People who can afford it will tend to drive happily on less congested roads, while people who can't will tend to stay unhappily at home.If they're unhappy, that's irrational. They clearly value the free money more than driving, so they should be happy that they're getting paid for doing nothing.

There's no competition to provide public roads, and they have no owner.They're owned by the state, and the state, through elections, decides what is the right price.

[JonnyFive]

I'm not sure that this is any different than raising taxes on cigarettes supposedly to discourage smoking.

Does anyone believe that the government really wants people to stop smoking or decrease their driving when tax revenue is directly tied to those behaviors?

No. They're banking on people continuing to do exactly what they are doing now but while bending over and paying more to do it.

This really gets down to the concept in economics known as "price elasticity of demand" - how much a given percentage change in price of a good will impact the percentage change in consumption. (The actual formula for it is $\tiny \frac{\Delta Q}{Q_d} \div \frac{\Delta P}{P_d}$ - change in quantity over original quantity divided by change in price over original price)

In the case of both gasoline and cigarettes, the goods are considered highly inelastic. That is, if prices are raised, consumption will decrease with a less than 1:1 correlation. I can't remember the number of cigarettes, but the elasticity for gas is something like 0.30, indicating a 10% change in the price of gas results in roughly a 3% decrease in consumption, IIRC.

The reasons for the inelasticity are varied, but the point is that people will, as you say, continue to use the goods. It's a nice way of increasing revenue, but a relatively poor way of discouraging consume behavior.

From reading that article, it sounds like a large part of what the author is discussing is getting drivers to pay for more of the incidental costs associated with their use of the roadways, and the risks associated with that (e.g. accidents).

I suppose, in the case of driving, you could increase the tax enough to gain some reduction of consumption (more people, for example, choosing to carpool or use mass transit when possible) while getting more money for the government to keep roads maintained and what-not. I suppose, in theory, it could actually help the situation if properly implemented.

[Beerina]

Politicians love to grandstand about how gas prices are too high, and how they plan to stop the bad oil companies from price gouging.

Then in the next breath they complain about global warming.

Politicians love to grandstand about how oil companies should pay billions to open new refineries.

Then in the next breath they complain about how they're gonna drive oil consumption down, making the billions invested in new refineries wasted money.

If I were an oil company, I'd do what I'm doing now. Drag my feet on opening new refineries, take the big profits, and wait for the electorate to get rid of these politicians.

[JonnyFive]

Politicians love to grandstand about how oil companies should pay billions to open new refineries.

Then in the next breath they complain about how they're gonna drive oil consumption down, making the billions invested in new refineries wasted money.

If I were an oil company, I'd do what I'm doing now. Drag my feet on opening new refineries, take the big profits, and wait for the electorate to get rid of these politicians.

Sometimes I think that politicians understand the concept of economic incentives in the way that my cats understand the phrase "please stop vomitting on my shoes."

[Beerina]

e) The U.S. government spends taxpayer money to protect shipping lanes.... oh, and to invade and occupy foreign lands, subsidize states important states with military aid, and so on.

This is what governments are supposed to do. Keep the trade routes open.

That's what's at the core of every historical great nation or empire. "All roads lead to Rome" and all that.

This is economic freedom, which allows prosperity and growth. One need not worry too much about bandits (see coast of Africa), or local political thugs (see Mexico, India, China) inside the realm of influence. Prosperity, and power, soars.


As for gas taxes, they're "too low" only if:

1. You have some agenda. This is nothing new historically.

2. You want to roll in the costs of defense of these trade routes. But it's precisely this defense which leads to benefits in the form of a more stable, open economy.

Steve Levitt talks about increasing taxes by at least one more dollar. He's a center-right UoC economist, though. I've heard hard-core left-wingers claim -- and this was repeated by Thom Hartmann on his radio show recently -- that if gas prices reflected true costs, then they would run about 10 dollars per gallon.

A similar argument could be made regarding just about any product produced in a free society by amortizing the government's spending across it. And this is not a defense of the current situation in Iraq whatsoever.

f) more people driving smaller, more fuel efficient vehicles would probably reduce fatalities on the road (I recall the ratio has stagnated). It would also make driving a little more pleasant: SUVs wouldn't be spilling over into other parking spaces, I could actually see oncoming cars when I turn into a street because the behemoths won't be obstructing my view, and they're just more efficient.

In a free society, you're free to try to convince people to do this.

What? It ain't working?

Imagine that. Free people don't want to buy tiny cars. Oh, sure, they want all you guys to buy them! But not me. No way, Jose!

Increasing gas taxes is rational long-term policy.

A few tiny changes in policy and prices would collapse.

- Get rid of ethanol requirements.

- Allow drilling in Alaska, off the coast of California, et al.

- Stop telling oil companies the government is going to keep doing its best to put them out of business, and thus they'll be confident to open new refineries, etc.

This won't solve any environmental problems, but it does shoot down other objections to high gas prices or problems with small cars vs. big cars.

[DanishDynamite]

This explanation by Steven Levitt (http://www.freakonomics.com/blog/2007/06/18/hurray-for-high-gas-prices/) is a compelling evidence-based argument for raising the gas tax. Global warming is not the only reason, BTW.

Levitt names three externalities to driving, but I can think of at least one more.

Levitt cites:
a) My driving increases congestion for other drivers;

b) I might crash into other cars or pedestrians;

c) My driving contributes to global warming.

I could add that:
d) Higher oil prices put more money in the pockets of hostile foreign states.
The main reason why super-taxing oil as a fuel is a good idea is that oil is an ever more finite resource and it is in the interest of everyone to promote and encourage alternatives. In capitalist societies this is most easily done by artificially increasing the price of this fuel. It makes the transition smoother.

[Newtons Bit]

The main reason why super-taxing oil as a fuel is a good idea is that oil is an more finite resource and it is in the interest of everyone to promote and encourage alternatives. In capitalist societies this is most easily done by artificially increasing the price of this fuel. It makes the transition smoother.


I actually view that as a decent reason. The major problem with it that I see is that the politicians will recieve record levels of taxes and spend spend spend!!!

If we could trust them to only spend it on permanent infastructure items, such as bridges and roads and school buildings, I would say it's a good idea. But there will eventually come a time when the politicians will have to cancel all of their neat programs they enacted with that money OR find a new source of revenue. That new source of revenue will likely be taxing the new fuel source.

Remember a few years back how there was a big push in california to tax people by the miles they drove rather than fuel consumed? It really pissed off the people who just spent a bunch of money buying brand-new hybrids.

[DanishDynamite]

I actually view that as a decent reason. The major problem with it that I see is that the politicians will recieve record levels of taxes and spend spend spend!!!
Even super-taxing gas doesn't raise much revenue compared to income tax, company tax, real-estate tax, etc, etc.
If we could trust them to only spend it on permanent infastructure items, such as bridges and roads and school buildings, I would say it's a good idea. But there will eventually come a time when the politicians will have to cancel all of their neat programs they enacted with that money OR find a new source of revenue. That new source of revenue will likely be taxing the new fuel source.
Not understood. Tax revenues from taxes on gas are peanuts in the greater scheme of taxes.
Remember a few years back how there was a big push in california to tax people by the miles they drove rather than fuel consumed? It really pissed off the people who just spent a bunch of money buying brand-new hybrids.
Which is the point. The revenue itself is pocket change. The point of the tax is to change behaviour and investments.

[Newtons Bit]

Even super-taxing gas doesn't raise much revenue compared to income tax, company tax, real-estate tax, etc, etc.

Not understood. Tax revenues from taxes on gas are peanuts in the greater scheme of taxes.

Which is the point. The revenue itself is pocket change. The point of the tax is to change behaviour and investments.

There's currently approximately 8.84 million barrels of gasoline consumed in the US today. Got the number from http://www.agmrc.org/NR/rdonlyres/A24B5841-2846-42E6-9C4C-D30C49D06B0E/0/energyoverview.pdf

42 Gallons per barrel, that's 371.3 million gallons consumed daily. Assuming that the tax required to make gasoline unattractive is 2 dollars per gallon, the total tax income is 742.6 million dollars a day or 271 billion dollars a year. That's roughly 10% of the current federal budget. I think they'd have a hard time dealing with having to give that up.

[Dan O.]

The elasticity for gas is something like 0.30, indicating a 10% change in the price of gas results in roughly a 3% decrease in consumption.

This is exactly why the government needs to step in with an increased tax on gas to stabilize prices and insure a surplus capacity to cover disasters that reduce supply.

With elasticity at 0.3, if the oil industry builds a new refinery they will loose revenue. Assuming 371.3 million gallons consumed daily at $3 per gallon is a gross revenue of $1114 million/day. Adding a new refinery to increase production by 3% to 382.4 mg/d would reduce the price to $2.70/g for a gross revenue of $1033 million/day (a loss of $81 million/day).

[fuelair]

Apparently in your city, it's illegal to have both a driver's licence and a bus pass?No offense, but without the car we add: and the bus will have no trouble accomodating you and your 3 or four bags of food/books/house supplies - and same for others. I could not carry the normal amount of material I would pick up on the average shopping trip I now make (to save gas by the way) nor could I easily get from place to place as needed (and I do a lot of my other purchasing on the 'net).

[fuelair]

Gas is way under-priced. It does not include an environmental damage cost. Once we started adding that in (and I'm thinking about $5-10US/gal) we'll see all sorts of alternatives and a "real" effort to conserve.

Charlie (getting to first base with trees) Monoxide

Actually, what you will likely see is removal of all officials involved/ a revolution - if that is prevented in any way or full on dictatorship. By the way, I do not assume there is no problem - there is. But that attempt to halt it will die or be killed.