Out of Gas – Modest Mouse
So gas prices are way down. Good news, right? Well, yes and no. I mean, it’s good news for consumers facing rising costs and stagnant wages. Still, there’s little reason to think that the overall trend in gas production has changed, which means that current low prices are very bad if the remove the incitement for getting something serious done.
It does open up some interesting opportunities. A gas tax, for instance. You could play around with exactly how it gets added but given that people were paying a buck or two more just a few months ago, there’s no time like now to avoid the political firestorm that would normally accompany some changes on that front.
Some environmental folks are talking down the idea. Grist for example points out that price signals won’t be sufficient to really do much about global warming. Which is fair enough, but isn’t really the point. Even accounting for this, the advantages of a gas tax are manifold:
First, price signals do help to reduce consumption. Not by as much as you’d expect, but it does have an effect. This is particularly true when people can’t hold out hope for a long term price reduction. People often underestimate the role that habit plays in all this. People won’t just change their driving patterns overnight – even if the price changes radically. But a long term and apparently permanent increase will inculcate new perceptions of the role that personal transportation plays in peoples’ lives. That’s the danger of the current decline. It won’t last, but people will remember it for years and hold out hope that prices will eventually come back down – and thus decide that it’s not really worth changing their habits.
Second, they produce revenue which can get recycled in all kinds of useful ways. It can be directed at social programs in an effort to mitigate any regressive effects of the tax. It can be focused on funding new leapfrogging energy technologies. My personal favorite idea is to institute pay-at-the-pump auto insurance in the form of a gas tax. It smoothes out both the regressive function of a gas tax and of insurance, ensures universal auto coverage, and helps limit consumption.
Third, the point of a gas tax is to provide a price signal to keep people from shrugging off the very real problem of future oil production. Peak oil may be overstated at times, but there’s no denying that production can’t keep up with current rates of consumption, and the long term economic effects could be disastrous. That’s why we can’t afford for people to get all excited about currently declining gas prices and think that the issue is resolved. We need a lot of lead-time on both the supply and demand side to keep this from turning out badly. A gas tax can help promote that.