Little reason to believe gas price assurances

Whether you believe the Transportation Climate Initiative is a tax or not, state Sen. Christine Cohen admits, in her March 11 op-ed, “TCI a good investment in Connecticut's future,” that TCI will raise the price of gasoline 5 to 9 cents a gallon in its first year, 2023.

Notably, this price forecast is pure conjecture, since nowhere in SB 884, the TCI bill, is pricing mentioned. Without any statutory limits, the bill authorizes the government to change the price of gasoline at its whim. It’s plausible to see this becoming a political football in the future, with Republican governors ratcheting the price down to zero, and Democrats raising it back to new highs.

How high? The sky’s the limit! That’s because gasoline demand is highly inelastic, meaning a big change in the price would result in little or no change in demand, as anyone who’s taken an Econ 101 class could tell you. In fact, if you look at gas prices as reported by AAA or GasBuddy over the past few weeks, you’ll see that prices have increased 15 cents a gallon, triple the 5-cent increase mentioned by the senator. I’d be willing to bet that this recent 15-cent increase hasn’t reduced gasoline sales a whit.

But reducing demand, and hence emissions, is TCI’s goal. So when Cohen writes, “TCI will reduce greenhouse gas emissions from the transportation sector,” that’s at best naively aspirational, since a 5-cent-per-gallon price increase wouldn’t reduce gas consumption in the state by a single gallon. At worst, she’s concealing huge price increases in the future. In order to make a significant dent in gas demand, you’d have to raise gas taxes to punitive levels, like what Norway or Holland do, where gas prices are $7.60 to $7.70 per gallon (globalpetrolprices.com). If that’s the senator’s agenda, then come out and admit it. If she’s truly satisfied with only a 5-cent increase, then do it honestly by just increasing the state’s gasoline excise tax by 5 cents, rather than creating this open-ended TCI scheme.