standby energy tax
Last night on the way home, I heard David Frum on Marketplace. Frum is a former speechwriter for President Bush, and a fellow at the American Enterprise Institute, so I pretty much assume that I’m going to disagree with everything that comes out of his mouth.
But this is part of what he said:
"OK, the price [of energy] is high again. This is the perfect moment to pass a
standby energy tax, a tax that would kick in when the price of oil
falls below say $60 a barrel. Consumers could feel secure that if they
make the investment in a hybrid car, or a smaller house with a shorter
commute, they won’t feel like fools in four or five years…"
This makes a great deal of sense to me. I think we’ve talked about it here before, but it’s pretty hard for most people to significantly reduce their driving in the short run in response to increased gasoline prices. As a recent CBO study shows, the highest response is in those areas where there is existing mass transit as an alternative. And if the price gets high enough, people start limiting leisure travel. And indeed, there’s some evidence that gas consumption is finally starting to drop a bit. But most people can’t just decide not to drive to work or the grocery store. However, if people know that gas prices are going to stay high for long periods, they’re more likely to make the sort of big changes that Frum mentions.
So, what am I missing? Is there a hidden problem with it that I’m not seeing? Or if it’s really something that a libertarian true believer like Frum and a green progressive like myself can agree upon, why aren’t any politicians talking about it?
March 7th, 2008 at 10:02 am
I’ve always thought that we have to move towards a more cost based scheme for measuring driving (i.e. I think cars should come with meters in them, and we should charge people taxes by the number of miles they drive), and want to work towards that scheme. So, I think the concern that “driving taxes” (like other consumption taxes) are regressive doesn’t bother me as much. (But, I don’t work with poor people, and can be admittedly clueless about some of the impact).
I think you and Frum agree ’cause Frum isn’t being a libertarian. He’s thought of a reasonable way to add a consumption tax in a way that doesn’t cause the immediate regressive impact that you’re worried about.
March 8th, 2008 at 7:41 am
I’m a happy subway commuter. I can walk to a station from my house, and my office is close to a station at the other end. I have real doubts about the Frum proposal, though: gasoline doesn’t cost very much right now. Somebody living in Chantilly and driving to the a close-to-Metro building in the District with, say, a 20-mpg car and a 20-mile commute faces $3.50 in gasoline costs each way, $7/day. Probably that’s about half of what this person is paying for parking in a downtown garage, and if this commuter makes $25 an hour s/he is still ahead if s/he saves an hour over transit in making the commute by car. If you guarantee them, with this tax, that their cost for gasoline won’t go down – okay. But it doesn’t push for a change in behavior, I think. If gasoline doubles, you still have barely made it the majority of the dollar cost of commuting by car. And the time cost of commuting by non-car is huge – if the Chantilly commuter is going to, say, an office building in Bailey’s X-roads or McLean then there is a big shlep at the end of the commute as well as its beginning – not an attractive prospect. A friend of mine set out to do the right thing and commute by subway from Arlington to a place in Montgomery County which was a bus ride from a Metro stop and he was spending almost two hours each way, for a trip which was 40 minutes by car during commute hours and 25 minutes by car in non-commute hours.
As to Frum-the-libertarian, Timothy Noah says he useta be – http://www.slate.com/id/2077680/
and I see him as a fairly authoritarian figure these days myself. I’m inclined towards bj’s position that folks should be charged on a miles-driven basis, though rather than simply metering miles driven I would favor a gps-based system which can charge much more for miles driven at rush hour and on congested roads.
March 9th, 2008 at 6:03 pm
Charts ‘n’ graphs which say gas is still cheap:
http://mjperry.blogspot.com/2008/03/gas-prices-as-percent-of-income-are.html
March 9th, 2008 at 11:29 pm
Here in the Midwest, we need something like that.
No one, and I mean no one, uses public transportation. The roads are too plentiful – parking too easy.
When I lived in DC – I rode buses, walked, biked or took the metro almost everywhere.
Here, in WI – I drive. There is no good public transportation. I think America’s midsection needs a tax on gas that will fund the development of reliable public transportation.
March 11th, 2008 at 3:20 pm
When I bought my Prius alot of peole told me it was not worth it unless gas prices skyrocket. Well, guess who is eating their words now. All I can say is that what most people spend on gas in a week is what I spend in a month. The cost of home energy has skyrocketed and I guess the only solution is alternative energy or solar panels. I think high cost will force people to start looking for alternatives.
March 22nd, 2008 at 9:22 pm
another view that gasoline is relatively cheap now: http://energytechstocks.com/wp/?p=824