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Tuesday, June 01, 2004

Why Gas Prices Are Too Low

A good column from David Ignatius in the Washington Post. Excerpt:
The people who make America's gas guzzlers know exactly what would force the country to deal with the energy crunch: higher gasoline taxes. A recent article by Danny Hakim in the New York Times had some astonishing quotes from auto executives. Ford chief executive William Clay Ford Jr. explained: "Every place else we operate, fuel prices are very high relative to here and customers get used to it, but they get used to it by having a smaller vehicle, a more efficient vehicle." GM's chief executive, Rick Wagoner, agreed: "If you want people to consume something less, the simplest thing to do is price it more dearly."

The European market illustrates how higher taxes push greater efficiency. Last week, premium gas prices in Europe were averaging more than double the U.S. level of $2.24 a gallon -- with prices at the pump averaging $5.07 a gallon in France, $5.36 in Germany and $5.59 in Britain. European consumers inevitably have demanded more efficient cars. According to Hakim, overall oil consumption has fallen in Germany and Britain since the 1970s.
I only rant about this topic about three times a week. Substantially higher gasoline taxes would address so many of our problems all at once:
  • Reduce dependence on foreign oil, thereby reducing the need for oil wars and the terrorism that inevitably result, and their associated costs in people, money, and yes, energy (armored Hummers get even fewer miles per gallon than our domestic monstrosities), and tanks, helicopters and jet fighters are even worse;
  • Reduced pollution and greenhouse gases;
  • Turn urban sprawl around--40-mile commutes would be very expensive;
  • Encourage conservation, alternative fuels, mass transit;
  • Provide tax revenues to pay off the Bush debt;
  • Reduce traffic and its carnage (over 40,000 Americans killed per year).