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Raise the gas tax

By Editorial Board,May 25, 2012

AS AMERICANS FILL UP their tanks and hit the road this Memorial Day weekend, they won’t have to pay quite so much for their gasoline. Average prices have dropped a dime since this year’s peak, and they are projected to fall a couple more by the end of the year. This trend will no doubt be welcome to fuel-hungry motorists. Yet an addict rejoicing at a price cut on his drug of choice is still an addict.

The recent gas-price drop, unaided by any big change in federal policy, underscores that economically and psychologically destabilizing short-term price swings are out of the U.S. government’s control, which would be true even if America produced loads more oil.

That, in turn, underscores the obvious on oil policy: The best way to insulate the country from price volatility, and everything else that makes America’s oil dependence unattractive, is to use less. And the best way to make that happen is to raise the federal gas tax.

Yes, doing so would increase the cost of fuel. But experience shows that drivers respond to higher prices by using energy much more sensibly, buying more fuel-efficient cars and cutting out unnecessary trips. A recent Consumer Reports survey found that fuel-efficiency is now the predominant consideration among U.S. car buyers.

And a higher gas tax would accomplish much more than a price blip here and there.

It would provide predictability to consumers and automakers that prices won’t bottom out, thereby ushering in an SUV renaissance. Automakers would design more fuel-efficient cars to satisfy higher demand for them, investing in clean-transportation research and development without a government mandate.

Though raising the gas tax would cost consumers money, it should also produce savings on many other programs they pay for with their tax bill. Because there would be more demand for cheap, green technology, a gas tax of sufficient size could replace the expensive national and local subsidies of electric cars and other government transportation programs in which lawmakers pick favorites.

Critically, a higher gas tax would also raise badly needed government revenue, instead of sending so much of what Americans pay for fuel abroad. As Congress wrangles over how to fund transportation improvements, this is one easy answer. Gas tax revenues could also be a part of a larger debt package, once lawmakers finally decide to compromise on the federal budget.

Even when prices are low, gas is very expensive. Hidden costs come in the form of dirty air, climate change, geopolitical strife and the massive economic risk of unexpected price spikes. Good policy would push the country to pay fewer of these costs on Memorial Days years from now.