Cheaper gas means damage to climate
President Joe Biden and the Democratic Congress have ambitions to fight climate change and legislative plans to match. So far those plans consist almost entirely of clean-energy mandates and subsidies. Biden, and progressives in Congress, have ruled out what the policy economists tell us would permanently curb demand for fossil fuels: a carbon tax, or higher excise taxes on motor fuels.
The costs of this refusal are environmental and geopolitical, as we learned when national security adviser Jake Sullivan-appealed to the “OPEC+” petroleum-producing nations to “do more to support the recovery.”
Republicans attacked Sullivan’s comments as evidence that Biden policies such as the curtailment of domestic oil and gas leases on federal land, and cancellation of the Keystone XL pipeline, were undermining hardwon U.S. energy independence. They have a point: Crude oil is a fungible commodity. It seems strange indeed to encourage drilling in Saudi Arabia and Russia - they call the shots in OPEC+ - while discouraging it in North America. It seems even stranger when you consider the human rights records of these two countries, and other cartel members such as Venezuela and Iran. Why would we cede control of the lucrative global oil market to these repressive regimes, much less make ourselves indebted to them for lowering our gas prices?
The answer is not to “drill baby drill” but to effect a structural shift in energy demand so that this country is less dependent on all suppliers of fossil fuels, both foreign and domestic. Taxes are an inescapable element of that. Even a relatively modest increase in the federal gas tax could make a real difference: Twenty-five cents per gallon would save 1.3 billion barrels through 2050, according to Energy Innovation, a nonpartisan climate policy think tank. Twenty-five cents may sound like a lot compared with the current tax of 18.4 cents (though not with the $2.35 average in the European Union). In fact, much of the increase would simply recoup the 40 percent decline of the gas tax’s real value since 1993, when Congress last raised it.
Considered as an imposition on consumers politically, although many states have raised their levies to fund transportation infrastructure and other needs in recent years. Viewed more realistically, as an investment in undermining both Big Oil and OPEC+, they seem rather more attractive. Yes, as the cost of crude oil inputs moderated, taxes would form a larger share of the price at the pump. But the revenue would belong to the public. The $840 billion a 25-cent gas tax increase could raise by 2050, according to Energy Innovation’s estimates, could buy a lot of roads, bridges and tunnels.