Who supports increasing petroleum fuel taxes (or oil price floor)?
Daniel Akst, journalist. “Anything that reinforces the role of fossil fuels - particularly oil - as the industrial world’s primary energy source is bad, not good. Anything that prolongs the life of the internal combustion engine is a negative, not a positive. Anything that makes it cheaper to pump greenhouse gases into the atmosphere is cause for mourning rather than celebration. What we need is not lower oil prices but higher ones - significantly higher, enough to deter consumption and make us look seriously at alternatives.” (“The good news about oil prices is the bad news,” New York Times, 9/17/06)
Lester Brown, President, Earth Policy Institute. “The gas tax boost should be substantial - a rise that will send a strong, clear signal to consumers - and it should be gradually phased in. A gasoline tax hike of 30 cents a gallon per year for the next 10 years would send the right signal. This eventual increase of $3 per gallon would be offset every step of the way with a reduction in income taxes. . . There is also the pressing question of who gets the revenue from oil price increases. . . If we let OPEC keep raising the price, the increases will end up in OPEC treasuries. . . If we shift taxes, however, more of the additional money spent on gasoline will end up in our treasury, and individuals will benefit from lower income taxes. Higher gas taxes will also reduce the global demand for oil, making it more difficult to raise the price. . . .A world where oil use is climbing is totally unprepared for the peaking and subsequent decline of world oil production. Whether peak oil comes this year, next year, or 10 years from now, we need to be ready for it. The adoption of a 10-year tax shift as outlined above would accelerate the shift to alternative energy sources, and help re-establish U.S. leadership in building a sustainable energy future. (“Raise gas tax $3 a gallon to promote fuel efficiency,” Chicago Sun Times, 5/20/06)
Christopher Farrel, Sound Money. “Raising it to 50 cents or $1 per gallon would push conservation and send a signal to America’s enemies. It’s the surest way to cut oil dependence. The payoff from a steep gas tax could be huge, ranging from reduced reliance on Persian Gulf oil producers to a surge in technological innovation in energy. What’s more, an audacious gas tax initiative would give comfort to our allies and unsettle our enemies – two big pluses during the war against terror and the fighting in Iraq. . . Why wait? A gas tax is efficient. High pump prices are already dampening consumer demand for gas-guzzling SUV’s and spurring sales of fuel-thrifty hybrids such as Toyota Prius. One reason for embracing a tax over, say taxing the Corporate Average Fuel Economy (CAFE) standards is that a tax unleashes the power of the market rather than relying on bureaucratic rule making. The price of gas goes up. Consumers then decide how to spend their money rather than Congressional barons and high-paid petro- and auto-lobbyists negotiating over minimum mileage standards, truck weights, or any of the other controversial issues that dog CAFE. . . .” (“Higher Gas Tax? Smart Move,” Business Week Online, 8/19/05)
Financial Times. “Mark Twain once said everyone complains about the weather but nobody ever does anything about it. Much the same could be said about America’s dependence on oil. . . What is missing is faith in market-driven solutions. . . Mr. Bush could inject courage and realism into the debate by saying why they [fuel prices] ought to go higher still.” (“America’s Continuing Addiction to Cheap Oil,” Financial Times, 5/24/06)
William Clay Ford Jr., chairman, CEO Ford Motor Co. “We know that the days of unlimited, inexpensive gasoline are over.” (Quoted in New York Times editorial, 10/18/06). He supports increasing the gasoline tax by 50 cents a gallon. He says it is essential to drive consumer demand for more efficient vehicles. This is a better way to promote efficiency than CAFE standards. See also (“Bill Ford: Steeper gas taxes would fuel hybrid demand,” The Detroit News, 4/9/04) and (“Ford Chief Supports Higher Fuel Taxes,” Financial Times, 4/8/04)
Robert H Frank, economist, Cornell University. “Gasoline prices are rising because the world’s appetite for oil has been outstripping dwindling supplies. Legislatures cannot repeal the law of supply and demand. To escape the burden of widespread energy shortages, we must consume less energy. And to achieve that goal, gasoline prices need to be higher, not lower. The most efficient means to that end is thus precisely the opposite of what Senator Thune proposes. In my Feb 16 column, I suggested an additional gasoline tax of $2 per gallon. All revenue would go into a common pool, which would then be returned on an approximately equal per capita basis by reducing payroll taxes. Because rebates for individual consumers would be independent of the amount of gasoline tax they paid, the higher post-tax gasoline prices would strongly encourage conservation. This would not only reduce our dependence on foreign oil, but would also alleviate congestion and pollution. And just as a gasoline tax cut would encourage future OPEC price increases, a tax increase would discourage them.” (New York Times, 6/8/06)
Thomas Friedman, columnist. “While enticing Detroit to make these more fuel efficient vehicles is a good idea, we also need a gasoline tax to entice every consumer to buy one. The president rejects a gasoline tax. He’s wrong. He can’t end our oil addiction unless he ends his tax-cutting addiction.” (New York Times, 2/3/06)
Philip Gordon, Director, Center on the United States and Europe, Brookings Institution. Supports a $60 / barrel price floor. “Americans will not take long-term decisions to buy fuel-efficient automobiles, create distribution networks for alternative fuels, or invest in technologies like hydrogen fuel cells, flex-fuel vehicles or wind power unless they know that a future sharp fall in oil prices will not undercut them.” (“An improbable Cure for Oil Addiction,” Financial Times, 5/12/06.)
Al Gore, former senator, former vice president. Supports carbon taxes, off-set by reductions in payroll taxes. (“Talk of Raising Gas Tax Is Just That,” Washington Post, 10/18/06)
Alan Greenspan, former chair, Federal Reserve. Would he like to see an increase in the gasoline tax? “Yes, I would. That’s the way to get consumption down. It’s a national security issue.” (Quoted by Daniel Gross,“Raise the Gasoline Tax? Funny, It Doesn’t Sound Republican” New York Times, 10/8/06)
Mike Jackson, CEO, AutoNation Inc (largest national chain of auto dealers). He calls for a 10 cent per year increase in gasoline taxes to $3 per gallon. He believes this is needed to direct consumer choices toward more efficient vehicles. This would set a positive, stable, long-term oil price environment for the industry. So far he has found few on Capitol Hill who are willing to lead on this. He can’t even find environmentalists who are willing to advocate for it. (“Exec Calls for Raise in Federal Gas Tax,” Detroit Free Press, 10/3/05)
Charles Krauthammer, columnist. Supports a $3 per gallon price floor (“Pump Some Seriousness into Energy Policy,” Washington Post, 11/11/05). “We had a golden moment [in the 1980s when oil prices were falling], and we let it pass. The way to lock in our [fuel efficiency] gains then would have been to artificially raise the price of gasoline with a tax that would depress consumption, maintain consumer demand for fuel efficiency and, most important, direct much of the pump price into the U.S. economy (via the U.S. Treasury) rather than having it shipped to Saudi Arabia, Russia and other sundry, less than friendly places. . . . Keep gasoline prices high and American consumers will once again start demanding and buying lighter and more fuel-efficient cars - exactly as they did in the late ‘70s and early 80s. Prices will continue to drop, and the U.S. economy will capture the difference.” (“Tax and Drill,” Washington Post, 5/21/04)
N. Gregory Mankiw, professor economics, Harvard; former chair, Council of Economic Advisors, Bush administration. “Let’s cut income taxes by 10% and finance it with a 50-cent-per-gallon hike in the gasoline tax. . . By marrying the tax-cutting logic of the Republican right with the environmental concerns of the Democratic Left, this might be a package that works for both. . . Income taxes reduce the incentive to work and save, and thus depress economic growth. . . Gasoline taxes, by contrast, actually improve incentives in various ways. If you have ever been stuck in bumper-to-bumper traffic, you have probably wished there were fewer cars on the road. A gasoline tax would help accomplish this by encouraging people to car-pool, take public transportation, or live closer to work. Another benefit of a rise in the gas tax would be a reduction in the size of vehicles. . . . A gas tax is an indirect way of making people pay when their massive vehicles impose risk on others, which in turn makes them take account of this risk when choosing whether to buy some monster urban-assault vehicle or go with a sensible compact. . . Cutting income taxes while increasing gasoline taxes would lead to more rapid economic growth, less traffic congestion, safer roads, and reduced risk of global warming - all without jeopardizing long-term fiscal solvency. This may be the closest thing to a free lunch that economics has to offer.” (“Gas Tax Now,” Fortune, 5/24/99).
New York Times. “The best solution is to increase the federal gasoline tax, in order to keep the price of gas near its post-Katrina highs of $3-plus a gallon. That would put a dent in gas-guzzling behavior, as has already been seen in the dramatic drop in the sale of sport-utility vehicles. And it would help cure oil dependency in the long run, as automakers and other manufacturers responded to consumer demand for fuel efficient products.” (“Gas Taxes: Lesser Evil, Greater Good,” New York Times, 10/24/05)
Leon Panetta, former congressman; former budget director, former chief of staff, Clinton Administration. “I don’t think there’s any question that as a matter of policy it makes a lot of sense to move in that direction. But politically it’s a very high hurdle to get over.” (“Talk of Raising Gas Tax Is Just That,” Washington Post, 10/18/06)
Kenneth Rogoff, professor economics, Harvard; former chief economist, IMF. “A sharp hike in energy taxes on gasoline and other fossil fuels would not only help improve the government’s balance sheet, but it would also be a way to start addressing global warming . . . what better way for new U.S. Treasury Secretary Hank Paulson, a card carrying environmentalist, to make a dramatic entrance onto the world policy stage.” See September speech to IMF/World Bank meeting in Singapore. (“Talk of Raising Gas Tax Is Just That,” Washington Post, 10/18/06)
Robert Samuelson, columnist. “Our main energy problem is our huge dependence on imported oil. For years, some remedies have been obvious: Tax oil heavily to spur Americans to buy more fuel-efficient vehicles and to drive a bit less, raise sharply the government’s fuel economy standards so those vehicles are available, and allow more oil and gas drilling. . . Without mandated higher fuel prices, many Americans wouldn’t buy more efficient vehicles. . . With low fuel prices in the 1990s, average annual driving per car rose about 1,500 miles, to almost 12,000.” (“An Oil Habit America Cannot Break,” Washington Post, 10/18/06)
Andrew A Samwick, economist, Dartmouth; former chief economist, Council of Economic advisors, Bush administration. “Given the role that imported oil plays today, you can’t continue to be a responsible economist and not talk about ways to reduce that dependence. If you are concerned about the external consequences of imported oil, then you should raise the cost of it.” (Daniel Gross,“Raise the Gasoline Tax? Funny, It Doesn’t Sound Republican,” New York Times, 10/8/06)
Andrew Sullivan, columnist. “A gas tax helps pay for our current struggle and helps us avoid future ones. Why not therefore a wartime gas tax of a dollar a gallon? If we do not owe it to our fellow citizens, to the environment, to greater fuel efficiency, can we at least owe it to the troops?” (“The case for a war tax - on gas. A conservative argues for $1 a gallon as a sacrifice that will do us a world of good,” Time, 4/19/04)
James M. Surowiecki. Business and finance journalist, The New Yorker. “If we can’t affect the supply of oil, we can affect the demand for it - and the best way of doing that is not to cut gas taxes but to raise them. . . . The gas tax works well for a couple of reasons. First, it relies on the free market instead of trying to tinker with it. Unlike fuel-economy standards, the most common method of reducing demand for oil over the past thirty years, a gas tax doesn’t tell people what kind of car to drive. It simply raises the price of gasoline and lets people adjust their behavior accordingly. The other, more fundamental virtue of the gas tax is that it brings the price of gasoline in line with its true cost. When all is said and done, cheap gas is an illusion, because our reliance on gas creates a whole series of costs that aren’t factored in to the pump price - among them congestion, pollution, and increased risk of accidents. The most rigorous study of these “externalities,” by the economists Ian Parry and Kenneth Small, suggests that a tax that took them into account would come to $1.01 for every gallon of gas. There are also hefty costs that aren’t included in that number. The most notable is the cost of having the military protect world oil supplies. . . A gas tax would at least let us know what the price really is.” (“Pump Pressure,” Financial Times, 9/26/05)
John Tierney, columnist. “If your goal is to get Americans to burn less gasoline, then we’ve already hit on the best strategy. As long as the price of gas is high, people will drive less and buy cars with better gas mileage, just as they did during past price spikes. But there is no guarantee the price of gas won’t soon plummet - unless it’s propped up by a tax. . . The best way to promote alternative fuels is to give them all a chance by imposing a tax on gasoline. That would give investors the incentive to find cheaper alternatives, and the market would sort out the winner - natural gas, ethanol, methanol, soy diesel, whatever works.” (“Fiddling While Fuel Burns,” New York Times, 4/29/06)
Philip Verleger Jr., energy economist; visiting fellow, Institute for International Economics; former Treasury official, Carter administration. “If Bush were the leader he claims to be, he would impose an import fee right now to keep gasoline prices high, and reduce the tax rate on Social Security for low-income workers, so they would get an offsetting increase in income.” (Thomas Friedman, New York Times, 9/27/06)
What good would a gas tax do? “First - global warming. We are burning too much. I think everybody but George Bush and Dick Cheney understands the problem. You have to find a way to force people to use less. Second, were we to adopt a gasoline tax of say $2 or $3 a gallon, offset by a reduction in Social Security [payroll] and come other things to minimize the effects [on working Americans], our consumption would be significantly lower. World oil prices would be significantly lower. And the income that’s flowing to Mahmoud Ahmadinejad, Vladimir Putin, Hugo Chavez, and a lot of the other people we don’t like would be drastically reduced. Right now, we’re paying twice - first for the oil that flows into the hands of our enemies, and then we pay the cost of fighting a war in Iraq. It’s important for the nation as a whole to do something like this.” (Marianne Lavelle, “Why a gas tax is good for you,” US News.com, 5/4/06)
