The price of gas
Like almost everyone in the US who drives a gasoline-fueled car, I’ve been suffering from sticker shock when I buy gas lately. The last time I filled up, I paid $2.49 a gallon, after driving past two stations at $2.69 and $2.83.
Unlike almost everyone in the US who drives a gasoline-fueled car, I don’t think the government should be doing something about it. If anything, I think gas should probably be more expensive. I don’t think people are ever going to take conservation seriously until it hits them in the wallet, and for both environmental and geopolitical reasons (e.g. not wanting to be dependent on oil-producing nations), I think it’s important that we consume less fossil fuels.
There’s very little evidence that people have started to change their driving patterns in response to the increased cost of gas. At least in the short-run, fuel consumption is not very sensitive to price (e.g. it’s what economists call inelastic). At the margin, people may do less leisure driving, but the cost of gas is still a pretty small fraction of the cost of a trip. And driving is still cheap compared to train and plane tickets, at least for a family. It’s going to cost us about $100 in gas to drive the minivan to NYC this weekend, but train tickets for the boys and me would be around $250, and that’s with N. riding for free. And while I love taking the metro to work (I can read!), for most people, public transit is inconvenient if available at all; as Brett at DadTalk wrote: "despite a frugal streak that runs miles deep, I’m going to continue driving to work just to steal a few extra minutes each day with my family.
The big changes that people can make in response to higher fuel costs — buying more efficient cars, choosing houses closer to work or on public transit routes — all only happen over time, and if people think that gas prices are going to stay high. And I don’t think people have gotten there yet.
I also worry a lot about the impact of higher gas costs on low-income families, for whom an extra $10 or so is a big hit on their budget, and means that they’ll have to cut back somewhere else. I think any proposal to increase the price of gas needs to address this issue, and cushion the blow. One intriguing possibility is Pay at the Pump car insurance, where the price of no-fault car insurance is built into the cost of gasoline. It simultaneously ensures that everyone is covered and changes one of the major costs of car use from a fixed cost to one that varies with the distance you drive. It would simultaneously promote conservation and make car ownership a lot more accessible to poor families.
And yes, in spite of my environmental leanings, I think making car ownership a possibility for poor families is generally a good thing. Many jobs are inaccessible without a car. Groceries are more expensive at the stores you can reach without a car. And commutes by public transit often stretch to 2 or more hours a day, especially when you need to take a child to day care or school en route. A bunch of welfare to work programs have tried to create specialized van routes to bring workers to remote jobs, but my sense in most cases is that it’s cheaper and more helpful to just buy people reliable used cars.