Matthew Yglesias » Gas Or Carbon?

Dec 28th, 2008 at 9:41 am

Gas Or Carbon?

I think a substantial phased increase in the federal gasoline tax of the sort called for by The New York Times would have been great, forward-thinking policy if adopted 20 years ago. And if I were, say, appointed to fill a vacant Senate seat I’d certainly be willing to vote for one. But given what we’ve learned about the risks of catastrophic climate change, it also seems like a concept that’s been somewhat overtaken by events. A carbon tax, or a cap on greenhouse gas emissions with auctioned permits, would constitute a tax on gasoline among other things. And there’s no particular reason that burning fuel in a car should be disfavored versus other carbon-intensive activities.

Comments
27

27 Responses to “Gas Or Carbon?”

Joel says:
December 28th, 2008 at 10:18 am
As a carbon-intesive activity per se, perhaps not.

But there are certain carbon-intensive activities for which petroleum isn’t easily substituted. Local ground transportation isn’t one of them. Selective taxation on gasoline would disincentivize unnecessary use of automobiles and prolong the availability of petroleum until economically viable alternatives are developed and scaled up. So yes, burning fuel in a car *should* be selectively disfavored.
ed says:
December 28th, 2008 at 10:24 am
And there’s no particular reason that burning fuel in a car should be disfavored versus other carbon-intensive activities.

How about that profits from car fuel indirectly subsidized lunatics who fly jumbo jets into buildings? That seems like a good reason to disfavor fuel in a car versus other carbon-intensive activities.
minderbender says:
December 28th, 2008 at 10:34 am
I may be repeating Joel’s point (and I may not), but carbon emissions aren’t the only negative externality associated with gasoline consumption. Burning gasoline also creates other air pollution in a way that, say, natural gas doesn’t. So we could have two Pigovian taxes: one to internalize the costs of global warming (this would apply to all carbon-burning), and one to internalize the cost of local air pollution (this would apply especially to coal, oil, and deisel, but also to gasoline). So I don’t think that carbon taxes somehow make gasoline taxes obsolete, though perhaps they are already high enough if layered on top of a broad-based carbon tax.
bigTom says:
December 28th, 2008 at 10:36 am
Let me count the ways.

(1) Current account deficit: most of our oil is imported, and oil imports put huge strains on the dollar.

(2) Coming oil shocks: peak oil related, most analysts have the world running into serious issues with the oil supply, and they aren’t talking about decades from now, but within a few years. Anything that gets the move away from oil early will be a step in the right direction.

(3) Tax efficiency: On a national scale, a tax on oil (not just gasoline) decreases our demand, and hence the market clearing price of oil would be marginally reduced. In essense at least part of the “tax” will be paid by oil exporting nations.

(4) Paying your own way: Gasoline taxes were supposed to pay for road construction and mantainence, but have not been raised in decades. General revenue is substituted instead.

(5) Paying your own way part two: Securing the oil supply is a big incentive for our military spending. Shouldn’t the consumers of the product be the ones to pay for this?
Noah says:
December 28th, 2008 at 10:56 am
And there’s no particular reason that burning fuel in a car should be disfavored versus other carbon-intensive activities.

I think there is a reason: infrastructure + multi-level government. Taxing gas more than other forms of carbon is needed to incentivize state and local governments to focus on dense development.
Rob says:
December 28th, 2008 at 11:51 am
Noah is on the right track here. Burning fuel in a car should be disfavored since low gasoline costs and other subsidized costs of driving have been a major contributor to the worst sprawl in America; something that other carbon-intensive activities aren’t as directly guilty of.
Kolohe says:
December 28th, 2008 at 12:17 pm
What a few others have said, plus: we know already how to do gas taxes. We have the infrastructure already in place to collect them. A new carbon tax will naturally take some time to come up to full speed, and there will be inevitably some mistakes in implementation that need to be corrected. In contrast, for all practical purposes, we understand the tradeoffs involved in raising gas taxes. Thus, a gas tax increase could probably go into effect within a month (or sooner) of being passed by Congress and signed by the President. And the results of an increased gas tax would be manifest rather more quickly.

There is also that we are likely closer to ‘peak oil’ (which almost certainly exists, but is not and won’t be a cataclysmic event) than to ‘peak carbon’. Raising the price of oil now and artificially lowering demand will likely help to level load the future fluctuations in supply and price.
JonF says:
December 28th, 2008 at 3:43 pm
Re: How about that profits from car fuel indirectly subsidized lunatics who fly jumbo jets into buildings? That seems like a good reason to disfavor fuel in a car versus other carbon-intensive

That’s true of all uses to which we put oil. It’s not gasoline that’s pumped out of the ground in the Middle East.
minderbender says:
December 28th, 2008 at 3:54 pm
Rob and Noah – at the point that the negative effects of carbon emissions are fully internalized, I don’t think we need to fight sprawl anymore. There is some optimal, non-zero level of sprawl, and as long as people are paying the price for their consumption decisions, there’s no justification for using super-optimal taxation to force them into dense residential areas. Another way to put this is, once you’ve removed the negative environmental effects, what’s the matter with sprawl?
BruceMcF says:
December 28th, 2008 at 4:31 pm
Another way to put this is, once you’ve removed the negative environmental effects, what’s the matter with sprawl?

Once you’ve removed the negative environmental effects and have also reflected the rest of free rider costs from sprawl development back to participants in the sprawl development system … then there is nothing wrong with sprawl, as there would be very little left.

That is not to say that everyone would live in a densely populated large urban area … but that the “sprawl” option would drop out of the mix of settlement choices.

After all, bear in mind that sprawl development is not just “low population density”. It is a whole system of subsidies and regulatory restrictions to create segregated activity zones and the subsidized point to point mixed public/private transport system required to access those dis-integrated locations for distinct activities.

So people living at exurban population densities that have 80%+ of their local trips to a common suburban village center and 80%+ of their ex-local travel occurring via dedicated transport corridors accessed at a common suburban village center … would not be living in “sprawl”. It would be something else, much more similar to living in the close hinterland to a small town before the rise of sprawl development.
BruceMcF says:
December 28th, 2008 at 4:42 pm
There are two different levels of gas tax that are desireable, and they call for two distinct types of gas tax.

The first is the gas tax that is presently collected for the US Highway Trust Fund. That should be lifted by the amount required to fund road maintenance and transport improvement over the long term, with funding for all new transport infrastructure, whether road building or road replacing, required to pass a common hurdle including energy efficiency, petroleum independence, and reduction in VMT included as part of the criteria to gain funding.

The second is the shock absorber provided by a substantial gas tax that ensures that crude oil prices shocks do not have the massive impact on family budgets that they will in a world where crude oil can swing from a cost of production price of $40/barrel to a demand-destruction price of $100/barrel, $140/barrel, or as much more as is required. At a bare minimum, there should be a $40/barrel tax on petroleum and petroleum products.

Now, politically, the easiest way to get that second crude oil tax passed is if it is an import tax, which will wedge opposition from oil companies based on the windfall gains they can expect from domestic oil production behind a substantial import oil tax.

The second side of a substantial crude oil import tax would be to redistribute it as a social dividend. Then during slack demand periods, when the import oil tax is paid by consumers, the net effect of the tax is still progressive … and of course during growth periods when the import oil tax comes in part out of windfall profits of producers, it would be an automatic stabilizer that would cushion the impact of an oil price crisis on effective demand.
sp6r=underrated says:
December 28th, 2008 at 4:49 pm
There is free rider costs in nation health care which I support as well. As long as the environmental impact is factored in through a carbon tax, I see little harm in sprawl. Making a case against sprawl through free-ridership, opens up the Left to well-founded claims of hypocrisy.
drinkof says:
December 28th, 2008 at 6:41 pm
There are 2 related additional reasons to raise the gas tax, and do it now. 1) the current price at the pump is low, and so the short run consumer shock will be low. Take that opportunity while it’s here. 2) we need some dough to pay for all these bailouts. So long as the price / gallon + new tax stays below a certain amount (still, for now, way below $4), it’s win-win, isn’t it?
Kyle says:
December 28th, 2008 at 8:03 pm
Well, not for carbon reasons. But roads and parking certainly.
withrow says:
December 28th, 2008 at 8:07 pm
My first vote for president was for John Anderson in 1980 and the guy’s looked prescient ever since. He’s still alive btw. And it’d be nice if people acknowledged that he was wise enough to suggest a 50-cent/gallon gas tax back when 5- cents meant something. Under his plan, the tax would have been used to cut Social Security payroll taxes.
JohnH says:
December 29th, 2008 at 11:56 am
Others have given good reasons for a gas tax. I’d like instead to question the reasoning of the post in the first place. Does it really make sense to criticize the gas tax as singling out one source of carbon emissions, albeit a major one that consumers rather than industry can help reduce?

It’s like criticizing cigarette taxes on the grounds that they single out one health risk among others. But there’s nothing wrong with that. Sure, they don’t get people to eat less. (Quite the opposite, no doubt.) But they do get people to smoke less, and that’s all they’re for.

Same thing here: if people drive less, that’s a good in itself, and I see no reason to complain that it doesn’t get them to put solar panels on their homes as well.
Trollhattan says:
December 29th, 2008 at 5:03 pm
I’d instead pursue further ratcheting up of CAFE standards–or more specifically, eliminating the separate standard for “light trucks” and concentrating on taxign carbon overall. Coal’s price per megawatt is artifically low if considered on the basis of its pollution cost, and coal’s very large reserves make it unlikely for “the market” to raise its cost.
viagra says:
March 11th, 2009 at 4:16 am
If you have to do it, you might as well do it right
zyban says:
March 12th, 2009 at 10:48 pm
I want to say – thank you for this!
tramadol says:
March 17th, 2009 at 2:18 am
Great site. Good info
tramadol
tramadol says:
March 22nd, 2009 at 5:55 am
tramadol
Excellent site. It was pleasant to me.
buy viagra online says:
March 22nd, 2009 at 10:19 am
buy viagra online
I want to say – thank you for this!
viagra says:
March 23rd, 2009 at 4:23 am
viagra
It is the coolest site,keep so!
brand viagra says:
April 2nd, 2009 at 4:56 am
Great site. Good info
buy cheap viagra
viagra brand says:
April 3rd, 2009 at 3:59 am
It is the coolest site,keep so!
cheap brand pfizer viagra
Ex Girlfiend says:
April 8th, 2009 at 7:15 pm
Hey, nice tips. Perhaps I’ll buy a bottle of beer to the person from that forum who told me to visit your site
Vince Delmonte says:
April 15th, 2009 at 5:09 am
This topic is quite trendy on the Internet right now. What do you pay the most attention to when choosing what to write about?

Matt Yglesias

Gas Or Carbon?

27 Responses to “Gas Or Carbon?”

Blogroll