[Mb-civic] Taxing gasoline the right way - Scot Lehigh - Boston Globe Op-Ed

[William Swiggard]

Taxing gasoline the right way

By Scot Lehigh  |  October 14, 2005

THIS HAS BEEN a year when you could have a European vacation without 
leaving the United States.

Well, a European experience, anyway.

In late summer, our gas prices spiked to levels vaguely reminiscent of 
those in Europe, where taxes have long boosted the cost of a fill-up 
into the stratosphere. Europeans, of course, have adapted with vehicles 
far smaller, lighter, and more fuel efficient than those on US roads.

The benefit of that sort of transport was brought home to me years ago 
during a driving tour of Scotland, when a hardhearted service attendant 
refused to let us gas up after we arrived at her remote station a few 
scant moments past her early evening closing time. With miles to go 
before we slept, we set out over the narrow roads that lead around the 
desolate top of the country, perhaps half a tank of gas in our subcompact.

Long, anxious, gas-station-less hours later, we cruised into our 
destination of Ullapool after even the late-setting Scottish sun had 
said good night, seemingly running on fumes -- and exceeding grateful 
for the miraculous little gas miser we had rented.

Of course, as anyone who occasionally drives in Europe can attest, gas 
prices there make you consider fuel efficiency even when renting in a 
way consumers here simply haven't had to when buying.

As a sprawling nation more dependent on our vehicles than Europeans are, 
we wouldn't want permanent prices anywhere near as high as theirs. (Even 
before the summer, gas, in translated prices, was at $5.54 a gallon in 
France, $5.96 a gallon in Italy, and $5.79 in the UK.)

Yet those driving gas guzzlers probably wish they had had some inkling 
of the summer prices gas would reach when they bought their last 
vehicle. Who, knowing he or she would face weeks of prices well over $3 
a gallon, would eagerly opt for a gas hog?

Certainly large conservation gains would come if American motorists made 
fuel efficiency a much higher priority when buying their next car. Yet 
if, after the summer shock, prices slide back under $2 a gallon, as some 
are predicting, any long-term prod toward conservation will be lost.

''The short-term volatility of gas prices does not send a sufficient 
signal," notes Jeff Faux, a distinguished fellow at the Economic Policy 
Institute. ''People do not make long-term decisions on the basis of 
short-term fluctuations."

That's why we need a gas tax designed to keep gas prices at a level that 
encourages fuel efficiency, while moderating the kind of dramatic 
increases we saw this summer. Such a tax would be adjusted periodically, 
falling when gas prices rise, but rising when gas prices fall.

According to the American Automobile Association, the average price for 
a gallon of regular was under $2 a gallon from November through February 
and under $2.50 from February through August. Since then, however, that 
price has been above $2.75.

Let's say the government's target range for regular was $2.50 to $2.60 a 
gallon. With prices currently well above that, we'd see a substantial 
decline in federal and state gas levies. (The federal government 
currently taxes gasoline 18.4 cents per gallons; most states add at 
least another 20 cents.)

But when the price dropped below the target range, federal and state 
taxes would increase to push it back up.

Such a policy of periodic gas tax adjustments would take careful design 
and coordination.

The result, however, would be a more predictable price for gasoline, 
without the economy-jarring spikes.

Knowing that gas was not going to return to bargain levels, consumers 
would soon start making better mileage a major consideration in their 
purchasing decisions. Myopic Detroit would then head in the direction 
that foreign automakers have: Toward a broader commitment to fuel 
efficiency.

And make no mistake, the technology has been there for significant 
gains. But as writer Gregg Easterbrook has noted, during the era of 
cheap gas, automakers essentially transferred efficiency gains into 
increased power, rather than better mileage.

Perhaps that choice made market sense in an era of plentiful petroleum. 
It makes no sense if we are finally approaching the era of limits we've 
been warned about for several decades.

But even if those warnings are wrong, it's time to put in place real 
incentives for conservation.

An adjustable gas tax would do just that, even while easing our periodic 
pain at the pump.

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2005/10/14/taxing_gasoline_the_right_way/
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