The Downside to Low Gas Prices

HughPickens.com writes Pat Garofalo writes in an op-ed in US News & World Report that with the recent drop in oil prices, there's something policymakers can do that will offset at least some of the negative effects of the currently low prices, while also removing a constant thorn in the side of American transportation and infrastructure policy: Raise the gas tax. The current 18.4 cent per gallon gas tax has not been raised since 1993, making it about 11 cents per gallon today, in constant dollars. Plus, as fuel efficiency has gotten better and Americans have started driving less, the tax has naturally raised less revenue anyway. And that's a problem because the tax fills the Highway Trust Fund, which is, not to put too fine a point on it, broke so that in recent years Congress has had to patch it time and time again to fill the gap. According to the Tax Policy Center's Howard Gleckman, if Congress doesn't make a move, "it will fumble one of those rare opportunities when the economic and policy stars align almost perfectly." The increase can be phased in slowly, a few cents per month, perhaps, so that the price of gas doesn't jump overnight. When prices eventually do creep back up thanks to economic factors, hopefully the tax will hardly be noticed.

Consumers are already starting to buy the sort of gas-guzzling vehicles, including Hummers, that had been going out of style as gas prices rose; that's bad for both the environment and consumers, because gas prices are inevitably going to increase again. According to data from the U.S. Energy Information Administration, taxes last year, even before the current drop in prices, made up 12 percent of the cost of a gallon of gasoline, down from 28 percent in 2000. And compared to other developed countries, US gas taxes are pretty much a joke. While we're at it, an even better idea, as a recent report from the Urban Institute makes clear, would be indexing the gas tax to inflation, so this problem doesn't consistently arise. "The status quo simply isn't sustainable, from an infrastructure or environmental perspective," concludes Garofalo. "So raise the gas tax now; someday down the line, it will look like a brilliant move."

Comments

Re:Stupid, trucks cause the problem

[Curunir_wolf]

So what would you prefer? Competing on price with Chinese labor, in which case those employed in manufacturing will also fall on food stamps and Walmart crap? Or perhaps you'd like to breath smog, like the Chinese are doing thanks to their lack of pollution controls?

You asked the question and answered it yourself. How to "compete" with the Chiners is about manufacturing, not necessarily labor. Automation improves productivity, efficiency, cost, AND reduces pollution. Yet we just gave China a pass to continue increasing pollution for the long term, while requiring even stricter regulations on our own businesses. Why? Do we hate the Chinese and want to kill them? Or do we hate US businesses and want to kill THEM? What I would "prefer" is some movement toward equitable pollution controls on manufacturers, not assigning China all the manufacturing, and assigning the US all the debt required to keep the unemployed from complete homelessness and starvation.

And the only way to do that without tragedy of the commons rising its ugly head is to force the issue through mandating a higher minimum wage.

And where does all the extra money come from? The government does not have some magic wand that can create increased wages. All it can do is inflate the currency, which does not benefit the working class because they are always at the bottom of the rung of the extra cash, so by the time they get it inflation has already taken its toll. Your idea that you can mandate a better economy has been proven to be a fantasy.

An unconditional citizen pay would be even better

Maybe, but as you say, it's unlikely to happen. A better strategy (and one also politically unlikely, but not as unlikely as the "guaranteed income" plan) is to implement a wealth tax. Don't bother with your bitter arguments about the problems with a wealth tax - I heard it all before, and it is feasible and has a proven history.

Free market is a fine tool for adjusting resource usage for optimal outcome, but labor is not just another resource due to the feedback effect it has to demand, and capitalism simply can't deal with a situation where it's no longer the resource that limits output.

I see you've had a taste of the kool-aid, and it's got you see hallucinations. In this case, you think that the labor pool in the US is operating in a free market. It's not. And that is the problem - not that free markets have failed, but that there is not free market for labor due to excessive central planning and interventions.

China's labor market (for its industry, anyway), operates much more like a free market than the one in the US. And it's starting to raise wages (slowly, painfully). Unfortunately, we've just given them a free pass to NOT pay for ANY of the externalalities associated with polluting the environment. You seem to think that's okay. So I assume that's only because you like getting lots of cheap crap from Chinese factories, and would rather see lots of other people suffer to keep the gravy train flowing. I see this as nothing but a "I've got mine - screw you" mentality.