Like many environmentalists, I tend to think that gasoline prices—even at today’s wallet-rending heights—are still too low.
[Picture me ducking under my desk right now, trying to avoid rocks that angry consumers are aiming my way.]
Here’s what I mean. Petroleum has lots of so-called “external” costs—costs that are borne not by the consumer, but by society at large. Whenever I burn a gallon of gas in my car, for example, I’m creating pollution and climate-warming emissions; fostering overseas military entanglements; increasing the risk of oil spills and pipeline leaks; siphoning money from the local economy into the bank accounts of unsavory oil magnates; yadayada. Each of those factors carries a cost—sometimes intangible, often hard to quantify, but real nonetheless.
If I had to pay those costs at the pump—through higher taxes, for example—I’d wind up buying less gas, while also (at least potentially) providing more funding for solutions to the problems I’m creating.
But here’s the funny thing; it seems to me that as the market price of gas rises, the “external costs” could rise too. That is, the more expensive gas gets, the higher the gas tax should be.
Here’s why.
Take, for example, this article from The Christian Science Monitor, covering some of the wacky energy plans that energy companies are beginning to dust off, now that high petroeum prices have made previously uneconomical projects seem profitable. The headline is a pretty good synopsis:
“With oil at $70 a barrel, firms try coal, shale, even turkeys”
That’s right, there are energy companies trying to turn turkey innards into a petroleum substitute. Desperate times, desperate measures, and all that.
The big story here, though, is that high prices are building some momentum building for alternatives to oil. But many of those alternatives—coal-to-diesel projects, extracting oil from oil sands and shale, etc.—may actually be worse for the planet than ordinary petroleum. Many of them involve even greater global warming emissions, while ramping up air and water pollution and scarring previously untouched landscapes.
Just so, high oil prices are ramping up profits for big oil conglomerates that stand in the way of progress on global warming, while boosting incomes for some unsavory regimes overseas.
So while many environmental advocates may be secretly (or not so secretly) happy about rising oil prices, perhaps they shouldn’t be. In the long run, a higher market price for oil may simply increase the environmental and security costs of our oil habit. Even if higher prices force us to consume a bit less, the overall impacts of our consumption may go up.
Now, I’m not sure this line of reasoning would hold up to closer scrutiny. But if it does, it may put enviros in a bind: rising oil prices may make it all the more important to increase taxes on petroleum. Only rising taxes will make consumers pay for the full costs of their petroleum habit.
But how likely is it that we can get politicians to raise gas taxes when outrage over gas prices is at its highest?
sf
The immigration posting two days ago seemed to favor the senate bill which, in addition to legalizing most of the 12-20 million illegal aliens here already, would increase immigration by 20-30 million people in the next few years through increased green card issuance and guest worker permits. Environmentalists ought to be fighting this tooth and nail. A 10% increase in population nullifies a 10% improvement in fuel efficiency. Unleaded is up to $3.27.9 where I live. At least it’s warm enough to ride the bike now.
colin
Clark, great question. You probably know the daily kos and bill mckibben are promoting higher gas taxes. i’m skeptical like you that any politician would touch it. Oil prices will continue to rise. To keep the economy from crashing the politicians will have to enact rationing at some point.In the meantime, the pols should be using windfall profits taxes to begin a crash course in alternative energy.
Charlie
I agree, no politician will touch the idea of HIGHER gas prices. Even Maria Cantwell, who I generally agree with, is trying to get prices down.Me? I think we do need higher gas prices if only to get at less use of the stuff. Though I had not looked at it from the perspective that you did Clark. It would be unfortunate if we went from using gas to coal to power our cars.I edit a publication that covers the energy industry in the Western US and I’ll tell ya, the concepts of “clean coal” and Coal to Liquids ahve always bothered me because, even if they do burn more cleanly, we still have to GET AT the coal. And that’s no walk in the park, it’s tearing up the whole mountain.The question is, can higher gas prices drive the market to explore true alternatives like biodiesel, electric (powered by plugging into a solar/wind powered grid) and Hydrogen? Package it that way and maybe some brave politician will pick it up.
eldan
sf: are you suggesting that these people will simply cease to exist if they are barred from entering the US? Or that somehow environmentalists can afford to consider one country in isolation, ignoring pollution that is emitted elsewhere in the world? Because otherwise, I don’t see how the immigration issue is linked to the environment, especially when we’re talking about immigration into a sparsely populated country.
mtkovacs
The American public is not prepared for the future of energy that costs more. It will squeeze more people out of a normal life. The end of cheap energy is upon us and the solution is very far away.
sf
Eldan: If they don’t immigrate, they will use much less oil, because they won’t be as wealthy and they won’t live in a country that is as dependent on the auto. Also, they won’t have as many children. The birth rate in Mexico City is half that of Mexican-Americans in Los Angeles. The United States is a sovereign nation, and we are entitled to protect the interests of our own citizens. The livable areas in this country are not sparsely populated unless you compare with China.
eldan
so, they should suffer in poverty so that we can carry on consuming blithely? What a delightful attitude. I made no comment about whether the US has the right to do anything, but I think that’s quite a different question from whether it would be a desirable thing to do, and I hope I’m not being too bold in suggesting that the authors of this blog would not support keeping people impoverished as a tactic for protecting the environment.The US is considerably less densely populated than the European Union, just to give you an idea of where I was coming from with that “sparsely populated” comment. I think it’s also less densely populated than all the countries in Asia that don’t have large amounts of tundra or steppe, but I’m not sure about that.
sf
And in Europe, 30% of the original large mammals are now extinct. Most environmental problems are regional, although there are some big ones like climate change and ozone depletion that are worldwide. That’s why this website focuses on the Cascade Region, and why limiting the population of this region is a worthwhile objective. You are advocating national suicide. There are five billion people on the planet who live in countries with a lower standard of living than Mexico, and who would come to this country if they could. Not all of them would actually come here because, by the time the population of this country reached 1.5 billion, the average wage and the general quality of life would be as low as the rest of the world. It is not our fault that Mexico, a land of abundant natural resources, has a feudal economy and a government of kleptocrats. Without the emigration safety valve, the Mexican government might be forced to make real reforms.The world oil market will inevitably push our consumption of oil downward. We are more likely to further reduce our consumption of energy through taxes and credits if we have a strong middle class than if we have hordes of low-wage workers who absolutely can’t afford $6/gallon gasoline.