Thursday, November 8, 2007

The Gas Tax - Is It Feasible? (Don't Kill Me!)

I was talking with my friend J-Ro* about his favorite subject, Peak Oil, and we began talking about taxing gasoline. Obviously it's not the most popular of political moves (ok, it's political suicide), and there are concerns about the ripple effects to the economy, including potential recession. But on the upside it could be used to develop renewable energy (see my first post for the benefits of this), and it could speed the consumer's move to reducing energy/oil consumption and demanding renewable energy. So I did what I am wont to do... I opened up an Excel spreadsheet.

People complain to no end about increases in gas prices, and to me it's highly irrational. A tax of $1 per gallon (which would cause large-scale mobs to burn in effigy whomever had proposed such a monstrous tax, which, I now fear, they could think is me!) only costs the average driver $50 per month.

A tax of $0.20 per gallon, which would most likely still be hugely unpopular, would only cost $10/month.

So consumers seem to resist anything that costs them $10/month.

Now let's look at that same average consumer and see what they might save by replacing current 100-Watt bulbs with 26-Watt fluorescent bulbs.

$8.16! That's almost the $10 the gas tax would cost. So it's basically a wash.
I just installed these bulbs and they're actually brighter than the old 100-watt bulbs. So now the consumer is resisting using a better product that saves them the $10 per month they were about to kill me for suggesting I put into renewable energy.

I really believe this is an information war. The ultimate answers to the Energy Crunch will come from rational decisions. We just need to make sure the rational arguments get into the heads of the decision-makers.

*Incidentally, J-Ro, whose full name I won't use to protect his identity, was the one who suggested starting this blog in the first place. Thanks J-Ro!

2 comments:

Anonymous said...

Your spreadsheets are helpful. You are able to make the arguments so clear when you lay them out that way. Keep on posting!

Dave Lauryn said...

With real political leadership we could make a gas tax absolutely painless. The federal government (states as well) could offset gas tax revenue with income tax CUTS. We'd have to credit those with very low incomes but the mechanism for this kind of credit already exists. Actually I'm starting to prefer a carbon tax to a gasoline tax, but either way, governments have long employed tax policy to modify behavior, and it's high time we employ it in the related causes of energy, climate, and health.