Today’s lead editorial in the New York Times, The Gas Tax, increases already growing momentum to put a price on carbon by making a compelling case that the president-elect and Congress should impose a “gas tax or similar levy to keep gas prices up after the economy recovers from recession.” The Times warns that the multi-billion dollar aid package for the Detroit auto manufacturers doesn’t address the danger that there will be little interest in buying the fuel-efficient cars the American auto industry is expected to build if gasoline prices remain low, noting that sales of SUVs, pick-up, vans and similar vehicles increased when gas prices declined between 1981 and 2005 and decreased substantially as gas prices peaked earlier this year. The bad news, correctly noted by the Times, is that sales of gas-guzzlers are increasing now as gasoline prices have plummeted.
The editorial describes two ways to tax gas: a variable consumption tax that would create a floor of $4 or $5 in 2008 dollars, an idea we’ve previously supported, and a variable tariff on imported oil that would have the same effect and also “stimulate the development of domestic energy sources.”
The Times concludes:
A bitter recession is not the most opportune time to ratchet up the price of energy. But if the Obama administration is to meet its twin objectives of reducing the nation’s dependence on foreign oil and cutting its emissions of greenhouse gases, it needs to start thinking now about mechanisms to curb the nation’s demand for energy when the economy emerges from recession in the future.
This also would serve as a signal to American automakers and American drivers that the era of cheap gasoline is not going to last.
We do have a few serious concerns about the Times editorial. First, an upstream and revenue-neutral carbon tax that comprehensively addresses all fossil-fuel combustion would be far superior to a gas tax, particularly since coal has a higher carbon content per Btu and reduced use of coal for electricity generation and other uses would be a more effective means to reduce greenhouse emissions than a gas tax alone. Second, a tariff on imported oil might stimulate the development of domestic energy sources as suggested by the Times, but would undercut the objective of reducing greenhouse gas emissions; an upstream tax on all oil, imported and domestic, would reduce greenhouse emissions, reduce dependence on foreign oil AND encourage the purchase of the fuel-efficient cars that might save the American auto industry. Third, unlike the Times we believe this is a most opportune time to ratchet up the price of energy, provided that, as we recommend, a carbon tax or gas tax is revenue-neutral.
Finally, we’re sorry the Old Gray Lady prefaced its powerful rationale for a gas tax with the weak “it might be time for the president-elect and Congress to think seriously about imposing a gas tax or similar levy to keep gas prices up after the economy recovers from recession.” Emphasis added. For at least the last two years the Times has powerfully editorialized on the need to put a price on carbon. For example, in November of 2006 it stated:
Since the dawn of the industrial revolution, the atmosphere has served as a free dumping ground for carbon gases. If people and industries are made to pay heavily for the privilege, they will inevitably be driven to develop cleaner fuels, cars and factories.
Today’s editorial describes specific mechanisms to make people and industries pay heavily for the privilege of dumping carbon gases in the atmosphere. It might be time? No, it’s been time for a long time to put a price on carbon.