Posts tagged “gas tax”
Bringing together climate policy and innovation to form a cohesive carbon tax proposal reframes U.S. climate advocates’ near-myopic focus on carbon pricing, mandates, and subsidies and expands the discussion on how we can use those tools to spur innovation, writes Matthew Stepp.
Gasoline prices differ substantially across different parts of the United States. For example, the average price in Illinois is currently 70 cents/gallon higher than that in Wyoming, and California motorists pay 86 cents/gallon more than the folks in Wyoming. Why is that? Source: GasBuddy.com. The biggest single factor is taxes. The tax on a gallon of gasoline in Illinois is 25 cents higher than in Wyoming, while the California tax is 35 cents higher. Source: American Petroleum Institute. But that still leaves 45 cents of the Illinois premium and 51 cents of the California premium unexplained. Political Calculations has created a map of average gasoline prices once you subtract out taxes. (His original map, like that from GasBuddy above, also… Continue»
Newt Gingrich — Gas Price Fairy
If you have been following the news at all, you know that President Obama is catching a lot of heat over rising gas prices. He used his weekly radio address this week to talk about the issue:
Most of his critics are way off the mark, for reasons I will get into below, but Newt Gingrich is perhaps the most out-of-touch with reality:
“If you would like to have a national American energy policy, never again bow to a Saudi king and pay $2.50 a gallon, Newt Gingrich will be your candidate,” he said to cheers. “If you want $10 a gallon gasoline, an anti-energy secretary, and in weakness requiring us to depend on foreigners for our energy, Barack Obama should be your candidate.”
MIT Professor Christopher Knittel has a new paper on the potential for the United States to reduce petroleum consumption.
From the paper’s abstract:
The United States consumed more petroleum-based liquid fuel per capita than any other OECD-high-income country– 30 percent more than the second-highest country (Canada) and 40 percent more than the third-highest (Luxemburg). This paper examines the main channels through which reductions in U.S. oil consumption might take place: (a) increased fuel economy of existing vehicles, (b) increased use of non-petroleum-based low-carbon fuels, (c) alternatives to the internal combustion engine, and (d) reduced vehicles miles traveled. I then discuss how the policies for reducing petroleum consumption used in the US compare with the standard economics prescription for using a Pigouvian tax to deal with externalities. Taking into account that energy taxes are a political hot button in the United States, and also considering some evidence that consumers may not correctly value fuel economy, I offer some thoughts about the margins on which policy aimed at reducing petroleum consumption would have the largest impact on economic efficiency.
Knittel begins by noting that fuel taxes differ tremendously across OECD countries.
And these differences in taxes are associated with huge differences in per capita consumption. The graph below shows a pretty strong correlation: countries with lower fuel prices have higher fuel consumption. The slope of the fitted curve raises the possibility that, given time, long-run responses to higher gasoline prices could be substantially stronger than time-series correlations might suggest.
Following my recent essay on the elimination of the VEETC, the major ethanol subsidy in the U.S., some ethanol supporters argued for continuing the subsidies because oil companies receive subsidies. There are many versions of the oil subsidy argument – some of them grossly in error – but I won’t argue about what is and is not an oil subsidy. I do believe that gasoline at the pump is subsidized in various ways. But these subsidies aren’t as simple as a credit based on the number of gallons of gasoline sold – as is the case with the ethanol subsidy. If they were, they would be much easier to eliminate. My solution to addressing these hidden subsidies would be to… Continue»
State legislature hopes to offset budget problems by increasing the barrel tax by 2000%.
Some readers strongly disagreed with me when I placed Climategate as one of the Top 10 Energy Related Stories of 2009. However, I have not changed my mind about what I think will be significant and lingering impacts from this event. I am acquainted with a number of Global Warming skeptics, and I know many more who are on the fence. Many in the U.S. Congress fall into those categories. A story indicating possible data suppression/manipulation of climate data was going to get a lot of mileage. Skeptics are going to use it to full advantage, and many fence-sitters are going to be swayed. So my reasoning was that it would ultimately have significant long-term implications. In fact, I think… Continue»
I consider the level of dependence of the U.S. on imported petroleum to be a very large financial risk endangering the country’s future. There are certainly other import-related risks as well, but here I want to talk about the financial risk. I consider it similar to having a mortgage upon which you pay interest each month – but in which the interest rate can fluctuate wildly. If you typically pay 7% interest on your mortgage, but your rates quickly climb to 12%, a lot of people would find themselves in a deep financial hole. Come to think of it, a lot of people did when they found themselves in a similar situation. They gambled on the future and lost. With… Continue»
I am going to be pretty busy for the next few days, and probably won’t be able to put anything new up until at least mid-week. Until then, over the past few days there have been a lot of headlines about a recently released study from the Environmental Law Institute. The study concluded that over the past seven years, fossil fuels have benefited from some $72 billion in subsidies. Their headline was innocent enough:U.S. Tax Breaks Subsidize Foreign Oil Production (Washington, DC) — The largest U.S subsidies to fossil fuels are attributed to tax breaks that aid foreign oil production, according to research to be released on Friday by the Environmental Law Institute in partnership with the Woodrow Wilson International… Continue»
Yesterday the American Petroleum Institute conducted a blogger’s conference call to talk about various energy issues that they are focused on. I used to regularly attend these calls, but things have been quite busy and it has been a while since I participated. But I thought it would be worthwhile to check in and find out which issues they are currently occupied with. I asked one question on cap and trade during the call (see below). The API listed three key areas that they are focused on. These are the Waxman-Markey climate bill, which they think will cost jobs (particularly in the energy industry), domestic access to petroleum resources, and taxation of the oil and gas industry. Participating from the… Continue»