OPEC announced yesterday they would not increase oil production in the near future. The price of oil remains elevated, at around $100 a barrel, and this means prices will stay high. Goldman Sachs has estimated that gas prices could hit $5 a gallon this summer. The speculation embedded in the system of oil trading is adding close to $30 per barrel, according to the CEO of Exxon. Lowering gas prices (which have fallen slightly in recent weeks) is a function of cracking down on overspeculation, at least in the near term.
In the long term, there’s a credible argument that, to spur alternative, cleaner-burning fuels and transit options and lower greenhouse gas emissions, we need to increase the cost of gas. Here’s an unusual ally in that debate: the CEO of General Motors.
General Motors CEO Dan Akerson said his company and his industry would be helped, not hurt, if consumers paid higher gas taxes.
In an interview published in Tuesday’s Detroit News, Akerson floated the idea of a $1 a gallon increase in the gas tax as a way to encourage buyers to purchase smaller, more fuel efficient cars. Greg Martin, spokesman for GM’s Washington office, confirmed that the quotes reflect Akerson’s and GM’s view.
Akerson said he would support a jump in the gas tax if it came instead of tighter fuel economy regulations that GM and other automakers will have to meet in coming years. By the year 2025, automakers could be forced to hit fuel economy averages of as much as 62 mpg.
Notice here that he wants an increase in the gas tax INSTEAD of mandates on fuel economy. There’s no reason why you can’t have both. Higher gas taxes would encourage people to seek lower-cost options like cleaner cars and mass transit, and fuel economy mandates would force the provision of those cleaner cars. Theoretically they could work in concert.
At this time, however, the mass transit and clean car options simply don’t exist for the vast majority of people, particularly those in a lower income class. You would just make it unaffordable to own a car for a lot of low-income people, reducing their mobility and probably their job prospects. Currently, most Americans who don’t own a car are poor.
There’s a balancing act here. The gas tax is too low, it makes it unable for the government to finance the externalities of greenhouse gas emissions. But that gas tax needs to finance alternatives, which it does not currently.
The other option is to replace the income tax with a carbon tax that could be designed to be pretty progressive. But of course, the word “tax” makes all of these debates theoretical in a time when modern Republicans have even a modicum of power.