Our appetite for oil contributes to our having the largest per capita carbon emission of major economies, makes us vulnerable to energy imports, and leads to a lifestyle which is ill adapted to changes in oil availability. The easiest and most direct way to address this is to increase the gasoline tax. Unlike CAFE or cap and trade this gives the price signal directly to the user. In inflation adjusted terms we pay less in gasoline taxes than we did 50 years ago. We have the cheapest gasoline in the developed world, primarily because we've externalized all costs possible. But externalized costs are real costs all the same, and are paid elsewhere.
This is a regressive tax, so a restructuring of either payroll or income taxes is necessary to counterbalance the effects on the poor and middle class. But it needs to be done, and done quickly: oil is priced on the margin, and as the economy recovers oil prices will rise quickly and will likely strangle any recovery. We must buffer ourselves from oil shocks, and the easiest way to do that is to become less dependent on it. We also need to invest in sustainable energy technologies before we are forced to buy it from overseas.
This will no doubt be a very difficult sell. But given the costs to climate change, economic recovery, and national security it is necessary to act.
Comments (1)
If you want to decrease consumption of oil, tax it.
If you want to encourage jobs, reduce payroll taxes.
Do both at the same time in a way that the gov't neither receives a windfall not a revenue loss.
Reduce payroll taxes (including FICA) by increasing the personal exemption, not not by reducng the percent in a way that the poor will not be hurt.
Tax all 'energy' at the point of import or production so as not to favor one source over another. Stop subsidizing ethanol, or wind, or whatever is the latest fad. Gradually ramping up to 50% energy tax sounds about right and will favor the alternative energy industry.
Since oil production is available at $10 per barrel cost, it is not obvious to me that taxing oil will result in a higher per gallon price to a consumer.