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April 02, 2008

Comments

Adam

If only they could be higher! Seriously. We're still way below Europe and Japan. There's no need to wonder why people at my job drive two hours each day in their three quarter ton SUVs. Or for that matter, why my aunt who lives in Miami drives an SUV at all. (There's no snow and no offroading in Miami, last I checked.) We have wasteful practices in this country because we have set up the economic incentives to encourage wasteful practices.

I would advocate putting in something between a $400/ton and $500/ton carbon tax. That translates to another $1.10 to $1.30 per gallon. I would encourage adding another federal gas tax on top of THAT, in whatever quantity is needed to make the interstate highway system (including fixing all those ailing bridges) funded purely through tolls, fees, and gas taxes. That might require as much as another 50 cents per gallon.

Now, the rub. Adding nearly two dollars a gallon to the current gas price does, as you point out, increase the cost of anything that needs shipping. And adding to electricity prices through a carbon tax raises not just the price of energy bills, but also anything that takes electricity to produce. And these things (transportation, electricity, basic products that require shipping) are a much larger part of the monthly budget of the poor than they are of the rich. High gas and energy prices are inherently regressive.

But as I said when I was talking about free trade, this can be solved with adjustments elsewhere. Regressive tax shifts in one area can be compensated by progressive tax shifts. In other words, take the additional revenue and use it to eliminate the bottom tax bracket entirely.

The above is basically the Al Gore platform.

If a carbon cap-and-trade system is implemented through auction, AND PETROLEUM PRODUCERS ARE INCLUDED, then it has roughly the same effect. Anyone who produces or imports a petroleum product should have to buy carbon credits, or it becomes a MASSIVE loophole in the system. One of my concerns about Clinton and Obama's cap-and-trade proposals is that they might be leaving out gasoline. It's not obvious from a casual reading of their proposals whether they would include it.

Bluegrass Poet

Oil industry says they need these high profits in order to be able to keep on finding oil for us oil-hungry Americans. Just doing their patriotic duty.

D. Cupples

Adam,

That's an interesting approach! I'm guessing that you have an engineering background.

Bluegrass,

I figured they were just being patriotic and self-less!

Adam

What, you mean most people don't enjoy converting $/ton(C) to $/gallon(gasoline)? ;)

Yeah, I'm an engineer.

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