A reader, apparently doubting the Energy Party axiom that sharply increasing the price of gasoline via a tax increase would lower consumption, defund our enemies, clean our air, prevent catastrophic climate change and help the Cubs win the World Series, raised this point on my last post:
Hasn’t the price of gas gone up about $1 over the past 2-3 years?
People were saying in 2005 that a $1 increase in the gas tax would
reduce consumption. Did it?
Posted by: Gary | Oct 9, 2007 1:39:59 PM
Yes, it did (go up a dollar) and no it didn’t (depress demand). But I believe that’s because the price was so low to start with — near historic lows, adjusted for inflation.
I’m sort of reminded of one of my favorite books and movies, "The Right Stuff." The filmmakers had the brilliant stroke of having Levon Helm narrate the film, enabling him to say such things as (and you have to hear it in that gravelly Arkansas accent):
There was a demon that lived in the air. They said whoever challenged
him would die. Their controls would freeze up, their planes would
buffet wildly, and they would disintegrate. The demon lived at Mach 1
on the meter, seven hundred and fifty miles an hour, where the air
could no longer move out of the way. He lived behind a barrier through
which they said no man could ever pass. They called it the sound
Well, as it turned out that, to paraphrase Sam Shepard as Yeager, the damned thing didn’t even exist. At least, it didn’t exist in the sense of being something that would rip your ears off if you tried to go through it. So test pilots kept pushing the limit back. When Scott Crossfield actually passed Mach 2, Jack Ridley (also portrayed by Levon Helm), assures Yeager et al. that there are still frontiers to be challenged:
The real test wasn’t Mach 2. That demon lives at about 2.3 on your machmeter.
So it is that I find myself saying that ol’ demon that’ll kill the SUV wasn’t really to be found at $3 a gallon. That demon lives more at about $4 or $5 on your gas pump.
Kidding aside, I think an immediate, all-at-once increase of a dollar or even two — something that can only be achieved with a tax increase — would have a shock effect that gradual increase would not. The debate leading up to such an increase would be filled with such emotion, such doomsday moaning and crying, that when it actually happened, it would have a tremendous psychological effect.
Admittedly, that effect might wear off if that was then the permanent price, as others have suggested and I have endorsed. But even if consumption crept back up, less of the money would be going to the petrodictators, and more would be going into paying for research for ways to become independent of those sources for good.