Should Gas Prices Be Higher?

Drivers nationwide are learning that at $3 a gallon, everything from commuting to vacations will be a lot less affordable in the future. And even as Congress and state legislatures are dreaming up new ways of cutting gas taxes, folks like the Earth Policy Institute's Lester Brown are arguing that the gas tax should be much higher. In a recent Chicago Sun-Times op-ed, Brown argues that we should hike the federal gas tax by $3 per gallon over the next decade. Tom Friedman makes the same point in a recent New York Times op-ed.

The most obvious fairness argument against gas taxes is that they hit low-income drivers much harder. As with anything else families spend money on, spending on gas take a much bigger chunk out of low-income families' wallets than from the wealthy. Greens who want higher gas taxes recognize this, and pretty universally recommend coupling the tax hike with a payroll tax cut, or a low-income credit-- something that will mitigate the impact on low-income working families.

But for most Americans, the more salient fairness argument is that they've been conditioned to expect that gas prices will remain lower than in most other developed democracies. Since the interstates got built, Americans have been given every reason to live wherever the hell they want to, without thinking about how far they'll have to drive to get to work. Good Jobs First and others have documented how public policies have encouraged sprawl. And gas prices have stayed well below what's charged in other nations for decades.

Hiking gas prices to better reflect the social and environmental costs of oil consumption amounts to pulling the rug out from under families who (however myopically) have chosen to live in less-expensive suburbs or "exurbs" at the price of spending two hours a day in their cars. And as long as the incentives created by high gas prices are being offset by the sprawl-creation incentives that result from other areas of public policy, such as the economic development incentives cited by Good Jobs First, the result will be an incoherent set of policies that work against each other.

At least some Americans will almost certainly change their driving patterns (and living patterns) as a result of what looks like permanent $3 a gallon gas. But in the short run, most people don't have a real choice to adjust. They can't just quit their jobs, can't just move-- they're stuck paying higher prices for gas. Friedman may well be right in his apocalyptic assertion that "The major industrial country that gets the greenest the fastest, with the smartest technologies —that's the country that will lead the 21st century." But if we're going to achieve this with the stick of higher gas taxes, it's important to do it in a way that will be fair to low-income working families.