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Gas Tax Hike Takes Us Where We Need To Go

ANTON RICK-OSSEN

February 22, 2009

Until public transportation and fuel-efficient vehicles become practical, America will remain dependent on foreign oil. We will continue polluting. Sprawl will consume our last tracts of open space and people's hard-earned dollars will continue to support unfriendly nations. To help us change our habits, the state and federal government must tax gasoline at a level that encourages us to drive less or drive more efficient vehicles.

One approach could establish a price floor under a gallon of gasoline. The government could do this by varying an excise tax so that gas never falls below a threshold of — pick a number — $3 to $5 a gallon. This price level could be indexed to inflation so that it rises over time. The price would then encourage more Americans to change their driving habits, and the tax could help build transit for those willing to use it.

Without expensive gas, many people won't use fuel-efficient vehicles and public transportation. A rational person wouldn't pay a $1.25 for the bus when the car commute to work takes half the time and costs about the same in gas. Neither would a rational person pay thousands of dollars more for a hybrid car when the savings in gasoline won't be realized over its lifetime. Unless our psychic gains from "doing the right thing" outweigh the economic losses, most of us will stick with the status quo.

If the decision to tax gasoline is made, and businesses believe high fuel prices are here to stay, their own self-interest will encourage them to provide the conveniences of life with expensive fuel. Realtors will develop apartment buildings and office space in proximity to transit lines. Instead of suburban big box stores and strip malls, mixed-use buildings and higher density living spaces will be the investment of choice in cities and old town centers. More Americans will find opportunities to live and work near transit, making transit that much more convenient.

When Ford and GM see that their customers can't afford to fuel their SUVs, they'll switch production to hybrids and other fuel-efficient vehicles. As we saw in the summer, when gas reached $4 a gallon, truck and SUV sales fell off. But as of December, with gas prices at about half their summer peak, truck and SUV sales had regained a majority share of the market. Until businesses believe that high prices are here to stay, neither they nor their customers will change their habits.

And of course, higher taxes means government will reap larger revenues. That revenue could be earmarked to expand bus and rail service. Longer service hours, more frequent operation and new lines could be developed to connect our cities and towns. By taxing gasoline more heavily, the government would take a slice of the pie from the billions we're spending on foreign oil and could support necessary alternatives.

For many reasons, Americans must change their driving habits. To promote alternatives and help us choose them, we must increase the tax on gasoline.