Back in September, some in the media warned that California’s upcoming carbon tax “could slam drivers” by increasing retail gas prices up to 76 cents per gallon. At the very least, predicted U.S. News & World Report, drivers could expect a “15-cent increase beginning in 2015.”
Few Californians may even be aware that the tax went into effect last Thursday.
Make no mistake, the price of gas did go up. In fact, it suffered the largest daily increase since April 13. It went up two cents.
On Saturday, Fox News pointed out that the carbon tax interrupted what was a 92-day streak of decreasing gas prices by shooting up eight-tenths of a cent. It also admitted that the average price for a gallon of gasoline in LA was $2.67 – about 2.2 cents lower than one week ago.
The reason most Californians may be unaware of any significant change in gas prices is because oil is now hovering a little over $50 per barrel – the lowest it’s been in six years. According to former Treasury Secretary Lawrence Summers, this makes it the perfect time to pass a national carbon tax. In an op-ed he wrote for The Washington Post, Summers warns that cheaper gas makes consumers more apt to overuse it. Currently, “[e]ven if the government had no need or use for revenue, it could make the economy function better by levying carbon taxes and rebating the money to taxpayers.”
The move would also be a significant and symbolic gesture ahead of the Paris 2015 Climate Summit as well as highly profitable for the country. A $25 tax per every ton of carbon would raise approximately $100 billion of revenue per year, which could be invested back in American infrastructure or literally anything else. Louisiana needs $50 billion to keep its coastline from slipping into the Gulf of Mexico – that would be a neighborly thing to do.
California passed AB 32, the law that penalizes carbon emissions, as a way to incentivize the fossil fuel industry to use lower-carbon fuel stocks and reduce their overall impact on atmospheric pollution. At this point, limiting global warming to within two degrees Celsius by 2100 is unlikely, but if we stop trying the damage will be much worse.
California’s cap-and-trade program was initiated back in 2006 with the passage of the Global Warming Solutions Act, and ever since the carbon lobby has been wailing that it will be devastating to the state’s commuters. Yet here it is and the sun is still shining.
The truth is, gas is still a dollar cheaper than it was a year ago (according to AAA and the Oil Price Information Service) – and that’s great. But even when Americans were paying nearly $4 per gallon, we were still paying far less than the developed world.
As CityLab points out, American fuel prices have been kept artificially low by stagnant gas taxes that have remained unchanged – at the federal level – since 1993. If you want to know what the rest of the world is paying, check out GlobalPetrolPrices.com, which maintains an up-to-date listing of gas prices for most major countries.
The most expensive gasoline right now is found in Norway, where they pay $7.26 per gallon. Next comes Italy ($7.23/gallon), the Netherlands ($7.23/gallon), Hong Kong ($7.14/gallon), Turkey ($6.72/gallon), Denmark ($6.65/gallon), Malta ($6.55/gallon) and the UK ($6.51/gallon).
Let’s compare that again to America, sandwiched between Yemen and Russia, at an average $2.50/gallon.
In 2007, UC Davis Scholar Mark Delucchi made the unfortunate but inescapable observation that the U.S. gas tax no longer covers the costs of road and bridge maintenance – as it was originally intended to do. In fact, it falls well short of that by “approximately 20-70 cents per gallon of all motor fuel.”
Where does the money to cover those costs actually come from? Taxpayers like you and me, whether we drive or not.
Economist Stefan Tscharaktschiew of the Dresden University of Technology went even further and incorporated the societal costs of our mobile lifestyle – things like time spent in traffic jams, deaths from car collisions, the health risks from air pollution, the accumulating dangers of climate change, etc. A gas tax that accounts for all of these factors would add somewhere in the vicinity of $4.32 to whatever your average American is already paying at the pump.
Compare that to the California carbon emissions tax – the first in the nation – which currently adds about $0.02.
As in most news regarding fossil fuels in America, we’re simultaneously so much better and so much worse off than we realize.