As pump prices dip to an average of $1.67 across the country, the idea of a higher floor price for gasoline is gaining some ground. It’s pretty simple, really. As fuel rose dramatically last summer, Americans finally started to give up on gas guzzlers.
The switch to smaller cars was very significant, and for the first time the actual number of vehicle miles traveled in the U.S. declined. The Department of Transportation reported a 1.8 percent drop in April 2008 when compared to the year before.
But now, thanks to low fuel prices and great deals, SUV and pickup sales are climbing again. Their share of the market was down to 46 percent in July, but now it’s back to 51 percent, once again eclipsing passenger cars.
The New York Times editorialized December 27 that “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.”
Hot, Flat and Crowded author Thomas Friedman likes the gas tax idea. He quotes Johns Hopkins author and foreign policy specialist Michael Mandelbaum as calling it “win, win, win, win, win,” and adding, “A gasoline tax would do more for American prosperity and strength than any other measure Obama could propose.”
Even conservatives seem to like the idea of a federal gas tax to stabilize fuel prices at a higher rate, but some of them want it coupled with tax cuts. In a New York Times op-ed story December 27, Republican Congressman Bob Inglis (R-SC) and Reagan advisor Arthur B. Laffer (“The Laffer Curve,” a key to supply-side economics) said any carbon tax should be accompanied by “pro-growth” tax cuts
“A carbon tax that isn’t accompanied by a reduction in other taxes is a nonstarter,” they said. “Fiscal conservatives would gladly trade a carbon tax for a reduction in payroll or income taxes, but we can’t go along with an overall tax increase. The good news is that both Democrats and Republicans could support a carbon tax offset by a payroll or income tax cut.”
Another conservative, Charles Krauthammer, has consistently advocated for a gas tax in the pages of the Washington Post. "Announce a schedule of gas tax hikes of 50 cents every six months for the next two years," he advises. "And put a tax floor under $4 gasoline, so that as high gas prices transform the U.S. auto fleet, change driving habits and thus hugely reduce U.S. demand--and bring down world crude oil prices--the American consumer and the American economy reap all of the benefit."
One of the saner voices on the gas tax comes from Frank O’Donnell of Clean Air Watch, a nonprofit Washington-based watchdog. “There’s no question that a gas floor would be good for the environment. I’m not sure how politically palatable it is. There’s certainly be some internal conflict in the Democratic Party on the issue.” After all, some of those Democrats are from auto states, including Michigan.