One of the hallmarks of being a politician is the ability to convince yourself and others (meaning both other politicians and your constituents) that it makes perfect sense to believe two contradictory things at the same time. In the endlessly debated issue of “putting a price on carbon” we have a nearly perfect breeding ground for this opportunity.
Specifically, as the LA Times points out, Senators consider gasoline tax as part of climate bill:
Leading voices in the Senate are considering a new tax on gasoline as part of an effort to win Republican and oil industry support for the energy and climate bill now idling in Congress.
The tax, which according to early estimates would be in the range of 15 cents a gallon, was conceived with the input of several oil companies, including Shell, BP and ConocoPhillips, and is being championed by Republican Sen. Lindsey Graham of South Carolina.
It is shaping up as a critical but controversial piece in the efforts by Graham, Sen. Joe Lieberman (I-Conn.) and Sen. John Kerry (D-Mass.) to write a climate bill that moderate Republicans could support. Along those lines, the bill will also include an expansion of offshore oil drilling and major new incentives for nuclear power plant construction.
Environmental groups have long advocated gasoline taxes to reduce fossil fuel consumption; the oil industry has spent heavily in recent years to fight taxes, which it says would harm consumers.
In this case, though, several oil companies like the tax because it figures to cost them far less than other proposals to reduce greenhouse gas emissions, including provisions in the climate bill the House passed last year.
The Senate bill’s sponsors appear to want the revenue raised from the tax to fund a variety of programs that would lower industrial emissions, including helping manufacturers reduce energy use or boosting wind and solar power installations by electric utilities.
But the tax has encountered stiff behind-the-scenes resistance from some Democrats, who fear the political specter of increasing gasoline prices as the national average cost of gasoline is expected to crest $3 a gallon this summer.
Fifteen cents a gallon? Seriously? That’s not putting a price on carbon; if anything, it’s giving the oil business a gigantic shortcut around any meaningful price we put on carbon in other sectors. A person who drives 12,000 miles a year in a 25 MPG car would pay a whopping $1.38 more per week for gasoline. I doubt the average American consumer knows to within $1.38 how much money is in his/her pockets/purse/wallet at any given time. I sure couldn’t, and I’ve been accused of being pathologically thrifty by more people than I care to think about.
The political difficulty here is that if you impose a price on carbon high enough to get the broad expanse of private, business, and institutional consumers to curtail their gasoline consumption significantly, then you’ve willingly sprinted into a mine field. The overwhelming majority of Americans know almost nothing about climate change or “global warming” except Al Gore believes in it, the animal lovers keep talking about polar bears, and Rush Limbaugh and everyone on Fox doesn’t believe in it. They’re at least two steps away from taking it seriously as an issue and a sufficiently urgent threat to the world their children will inherit and most of them will live to see. Therefore, they won’t change their consumption patterns unless given a large enough economic incentive to overcome their lack of understanding and inclinations. That incentive could be a carrot, like a gigantic tax break for those who buy PHEVs and EVs, or it can be a stick, like a painfully high gasoline tax. Fifteen cents per gallon, which is about $16.50/metric ton of CO2 emitted or 5% on a base of $3/gallon, isn’t nearly enough to move consumers to do anything except vote against any politician who supported it.
Is it any wonder why the oil companies suddenly like this idea? They see it as a way to shift all the pain of the plan to politicians while ensuring that they won’t be impacted even if it happens. It’s the economic equivalent of “let’s you and him have a fight”.
I certainly realize that there’s another side to this — the green projects that could be funded with that immense flow of money. So even if the gasoline tax produces virtually zero reduction in gasoline consumption it might still be a good idea, provided that the money is spent widely. If that $20 billion/year[1] is spent on projects that directly produce reductions in CO2 emissions, like expanding wind and utility-scale solar power (including grid upgrades) so we can retire coal plants quicker, then we could set a very useful mechanism in motion. But I don’t believe for a second that $20 billion/year would escape the clutches of pork-barrel-minded politicians who would want to give research grants to every company or university in their district. More research, if funded appropriately, would be a good thing, but the number one thing we need right now is to start using the proven technology we already have. Using that money to fund a steady roll out of existing technologies would mean real jobs and at least some real CO2 reductions quickly, likely within a year.
And lest I forget — how long would even a piddling 15 cents/gallon tax last over the course of several elections controlled by the borderline psychotic American electorate? Anyone care to hazard a guess?
The basic model of taxing carbon, with some sectors receiving preferential treatment, and then allowing that new stream of revenue to be handled according to politicians’ business as usual procedure, would be an enormous wasted opportunity.
[1] In 2008, just the gasoline portion of our vehicle fuel consumption (e.g. not including diesel fuel), the revenues from 15 cents/gallon would amount to over $56 million/day, or over $20 billion/year.
