ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, September 29, 1996 TAG: 9609300108
SECTION: EDITORIAL PAGE: 2 EDITION: METRO
HAVE YOU noticed prices at the gas pump have leveled off since this spring, when President Clinton moved histrionically to draw down the nation's Strategic Petroleum Reserve, and Bob Dole, then Senate majority leader, called for a rollback of Clinton's crushing 4.3-cent federal gas tax?
That political drama has vaporized since the summer, which is just as well, since both candidates were pandering repulsively. But, as recent events in the Persian Gulf remind, the economics of gasoline are too important to ignore until the next price scare. We need especially to talk about raising the gas tax.
We ought to because gas remains both more expensive than many of us realize, and cheaper than it should be. This conundrum poses various risks and threats to the nation. Yet elected officials continue to run away from it - except, as earlier this year, when they issue cynical calls for actions that would make the situation worse.
Notwithstanding the hysteria this spring over a temporary, market-driven spike in prices, the real price of gasoline (and of crude oil) has been declining steadily in America since 1981. Adjusting for inflation, the 1996 price of gas, excluding taxes, is less than half what it was 15 years ago, according to a Washington-based think tank, Resources for the Future.
That would be great news, except for the fact that the price is artificially cheap. It hides the true costs of oil consumption. It rewards economically inefficient behavior. And it holds back the development of less expensive, more environmentally benign technologies and solutions.
Much of gasoline's true cost is carried, in fact, by government subsidies: for cleaning up air pollution, for maintaining highways, for dealing with effects of suburban sprawl, for protecting oil suppliers in unstable countries.
Regarding this last subsidy, consider the tens of billions spent annually for security in the Persian Gulf - lately including missile strikes against Saddam Hussein and an FBI probe into the June bombing of a U.S. military barrack in Saudi Arabia. If, into the price of imported oil, you factor one estimate of U.S. security costs in the Gulf - $40 billion annually - then the nominal price that Americans are paying for oil, some $23 per barrel, jumps to nearly $100 per barrel.
Which makes a higher federal gas tax (it now stands at 18.3 cents per gallon) start to look pretty reasonable.
No one likes to pay higher taxes, of course. But consider that, between 1981 and 1994, according to Resources for the Future, the average fuel efficiency of passenger cars rose from 15.9 miles per gallon to 21.4 mpg. When you take this improvement into account, the average fuel cost per mile driven by Americans fell from 12.1 cents per mile in 1981 to 3.4 cents per mile in 1994. In this light, a phased-in gas tax, say, of 50 cents per gallon, would be clearly affordable.
Indeed, it would leave prices at American fuel pumps still significantly lower than they are in the rest of the world. This adjustment, meantime, would recoup more of the public costs of our gas-guzzling habits, reduce the government's distortion of market forces, and aid (by bringing in more revenues) the fight against federal deficits.
The politicians, praise be, have stopped talking about cutting the gas tax. When will they start talking about doubling or tripling it?
LENGTH: Medium: 62 linesby CNB