Are you willing to pay $5 or more per gallon for gas if it helps the environment?

Yes, but I don’t think most Americans would be willing to do that.  I find it ironic that the environmentalists are often the ones driving the SUV and the gas guzzlers and they’re the first to bemoan high gas prices.  I’ve spoken at length in the past as to the benefits of higher gas prices.  As gas prices increase, you have fewer people on the roads or people begin to drive less.  Higher gas prices change consumers’ behavior.  If you chart the price of gasoline and gasoline consumption, you’ll find that as prices rise consumption does, in fact, decline.  When gas prices spiked back in 2008, gasoline consumption declined by about 3%.  Prices fell in 2009 and 2010 then rose again in 2011.  When prices rose in 2011, consumption fell by about 3% again.  This doesn’t seem much, but it does illustrate that as prices rise, consumers drive less.  When the gas prices rose to over $4 per gallon, public transportation ridership increased.  It doesn’t seem much in percentage terms, but it equates to about two or three hundred thousand barrels per day.  How much would consumption decrease if we did get to $5 per gallon?  My contention is that the higher gas prices go the sharper the drop in consumption.


So, as prices rise, consumers either drive less or take public transportation or perhaps car pool, though that hasn’t quite caught on with most people.  As we drive less, we pollute less thus helping the environment.  As we drive less the roads are less congested and there are less accidents, which may result in lower car insurance premiums for a lot of people.  We can keep going about the benefits, but I won’t digress.


Like I said, I don’t have a problem paying higher gas prices, but a lot of people won’t like that.  There are those who don’t want higher gas prices because they feel it’s making the oil people richer.  There are those who feel that it’s just an additional tax on people.  To some extent they’re right, but you only pay that tax if you drive.  My grandmother doesn’t drive so the gasoline prices don’t directly impact her, and let me put emphasis on directly.  This does beckon the question whether the $5 per gallon gas is a result of supply cuts or increased federal, state, and local taxes.  The federal gas tax has been 18.4 cents since the early 1990s.  I think it was raised to 18.4 cents in 1993 to be exact, so for two decades it hasn’t changed and it isn’t indexed to inflation.  I don’t think we’re going to raise the gas tax so much as to get the average gallon of gas to $5, so it would likely be the result of lower supply.  But let’s not forget that there are hidden taxes in the price of gas—taxes, fees, and other costs paid by the refiners and producers of oil along the way before it reaches the gas pump.  A lot of these extra costs that drive up the price of oil are the result of environmental regulation.


The money raised from the federal gas tax is supposed to go to road and bridge maintenance and construction.  Doubling the federal gas tax isn’t going to be too noticeable to most people, but I wouldn’t support that until two conditions were satisfied:  1) there must be a guarantee that the money raised by the entire gas tax would go for federal roads and bridges (states should take care of their own roads) and not get used as part of the general fund in Washington, and 2) there must be audits and safeguards in the program to prevent fraud, wasteful spending, kickbacks, and roads and bridges to nowhere.


Ultimately, none of this is going to happen.

Read more here at Thinking Outside The Boxe

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