YOU’RE NOT paying nearly enough for gasoline. Especially now.
The price of gasoline has plunged; the nationwide average recently fell to about $2 a gallon. On the upside, Americans get to spend their money on better things. The economy is improving. And if you’re into schadenfreude, you can revel in the woes befalling unsavory oil-rich regimes. But lower prices at the pump also encourage more reckless consumption of a vital but problematic fuel, one whose market price doesn’t take into account the pollution, congestion, or traffic accidents that it enables.
Increasing the federal gas tax would nudge drivers to conserve — and would generate far more for roads and transit to boot. The tax rate, currently 18.4 cents a gallon, was last increased in 1993. That was eons ago, back when American drivers wore acid-washed jeans and listened to the “Bodyguard” soundtrack on cassette tape as they plied the highways. Inflation since then has eroded the buying power of the federal gas tax by nearly 40 percent. Not coincidentally, the federal highway trust fund has been running deficits, to the point that even a few Republicans are talking about a modest gas tax hike.
But a few more cents isn’t nearly enough. Congress should jack up the gas tax now, while prices are low, by a buck a gallon or more.
A decade ago, economists Ian Parry and Kenneth Small calculated that building the cost of pollution, congestion, and accidents into American gas prices would require a total tax level of about $1. If you factor in, as some commentators would, the costs of suburban sprawl or US military entanglements in war-torn regions, the proper tax level is even higher.
But the politics of getting there are tough. Most Republicans in Congress resist all new taxes; Democrats are more amenable to gas taxes but prefer less regressive measures. In 1993, Bill Clinton embraced a 4.3-cent increase only reluctantly, after pooh-poohing Paul Tsongas for proposing a 50-cent hike during the primary campaign. That plan was great, Clinton had sniffed, “if you live in Boston and ride the subway.”
Sure enough, truckers protested even Clinton’s modest hike by slowing traffic on highways and berating state troopers who pulled them over. Today, this grumbling sounds comical. Prices have risen and fallen by far greater amounts. If anything, a consistently higher gas tax would have made those fluctuations less jarring, not least because motorists would have demanded — and carmakers would have happily made — more fuel-efficient vehicles.
Instead, the failure to increase the gas tax in small steps over time has grown, by the power of compound interest, into a major policy problem.
Differences of opinion on transportation, once a nuts-and-bolts area in which lawmakers of all stripes could reach agreement, have taken on a cultural and ideological tinge. In upscale lefty suburbs, a hybrid isn’t a car; it’s a cultural signifier. (If you drive a Prius with Massachusetts plates, don’t even bother with the Elizabeth Warren sticker.) For a growing urbanized overclass, whose members walk to their jobs downtown, gas taxes are something that only Uber drivers need to worry about.
Meanwhile, for harder-pressed residents commuting long miles between suburban office parks and homes deep into exurbia, gas taxes are all too visible. In November, voters in overwhelmingly Democratic Massachusetts undid a measure tying the state’s gas tax, currently 26.5 cents, to inflation.
Even without a stiff federal gas tax hike, there’s been some progress toward reducing automobiles’ impact on the environment. In 2011, President Obama significantly toughened federal fuel-economy standards for new cars.
“I find it a great irony that, because of Republican intransigence on taxes, we’ve been forced to use a more regulatory approach,” says Gilbert Metcalf, an economist at Tufts and a former Obama administration Treasury official. While these mandates force auto companies to make more efficient vehicles, consumers turn back to gas guzzlers when fuel prices inevitably dip.
A stiff gas tax hike would whet drivers’ appetite, year in and year out, for more efficient vehicles. Alas, it’s unlikely to happen. The big environmental measure in the Senate in recent days was a bizarre vote on whether “climate change is real and not a hoax.” At least that passed. But all it did was show the distance between where the debate should be and where it is.