The Federal Gas Tax Was A Huge Climate Change Initiative Missed By the Obama Administration: Biden Can Fix It Now
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The Federal Gas Tax Was A Huge Climate Change Initiative Missed By the Obama Administration: Biden Can Fix It Now

The Democrats last controlled the Senate, the House of Representatives and the Presidency in the 111th Congress from January 2009 to January 2011.   For most of that time, crude oil prices ranged from $100 to $120 a barrel.  Oil prices crashed in 2014 and have remained largely below $60 a barrel since then.

One of the challenges that we have faced as a society in the intervening years has been to reduce our dependence on oil, in order to lower CO2 emissions and to meet the Paris Climate accord standards.   We have done very little to mandate that automobiles become more efficient, and while some states have added small state-level taxes on gasoline, we have had no new federal taxes on gasoline.   As a result, driving is essentially free.   Buying a Tesla would have given you a $7500 tax credit (which it no longer does) but - for anyone crunching the numbers – the actual cost of gasoline remains virtually inconsequential in the purchase decision about whether to drive a Tesla, a hybrid Lexus or a gas guzzling Cadillac or BMW. 

The missed opportunity of the 111th Congress was to begin a transformation by guaranteeing to American consumers that they would always be paying the same price at the pump that we were paying when gas was at $100 to $120 a barrel (about $5 / gallon along the East Coast and in California).  This would have been palpable to the American consumer at the time and it would have forced all automakers to become more efficient over the last decade or to face erosion in demand for their vehicles.

Because that opportunity was missed, we are left with an odd environment where we are continuing to give incentives to electric cars that may or may not be the answer to our environmental issues long-term.  Rather than focus exclusively on incentivizing electric cars through tax breaks, the US needs to implement a gas tax now which will meet much more resistance if it were to come anywhere close to bringing prices back to that $5 level.   Such a tax will fund infrastructure, will result in more environmentally friendly ride sharing, and will lay the foundation for a much quickly move into more efficient vehicles.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to financial literacy and bank transparency. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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