Today, the price of crude oil is hovering around $40 a barrel, according to the American Petroleum Institute. The average price of gasoline, as of May 31, was $2.09 a gallon, which is about 58 cents higher than the price per gallon at this time last year. Certainly, the higher price at the pump is causing some financial stress for many Americans, especially because an increase in gasoline prices also increases the price of food and other consumer goods requiring transport. However, the financial strain gasoline prices have caused doesn’t seem to matter much to David Ignatius or Gregg Easterbrook, both of whom recently wrote columns encouraging nothing less than a dramatic increase in the gasoline tax, and, therefore, the price of gasoline.
Ignatius, whose article appeared in The Washington Post on June 1, said he supports a “prospective gasoline tax” proposed by energy economist Philip Verleger. The concept, Ignatius explained, would give Americans several years to prepare before the implementation of a $2 per gallon tax in January 2009. The tax would then be increased an additional dollar every year for the following three years, bringing the total tax to $5 per gallon. To help America prepare for the tax, Ignatius said, the U.S. Treasury would buy back SUVs and other cars getting fewer than 25 miles per gallon so people could buy smaller, more fuel efficient cars. Verleger’s plan, Ignatius explained, would reduce the amount of gasoline people consume by as much as 10 billion barrels per day by 2020.
That’s probably true. Gasoline consumption would certainly decrease because even in the most fuel efficient car available, most people would not be able to afford to travel very far. However, Ignatius fails to realize that a decrease in gasoline consumption should not occur at the expense of people’s livelihoods. People are already suffering under the current gas prices. A CBS poll taken on May 24 showed that 85 percent of people say they have been affected by current gas prices to some degree while 56 percent of people say they have been affected a great deal. Those affected a lot include people living in rural areas and people with incomes of $30,000 or less. These people are suffering with average total prices barely above $2 a gallon. Imagine if the tax alone was $5. Ignatius seems to believe that it does not matter how American citizens are affected by a gasoline tax as long as consumption is cut.
Easterbrook, on the other hand, wants to increase the gasoline tax to help consumers. In an article that appeared in The New York Times on May 25, Easterbrook said he would like to see the government implement the 50-cent increase in the federal gasoline tax that John Kerry supported a decade ago. Easterbrook wrote: “Ideally, proceeds from a revenue-neutral gasoline tax could be used to reduce income taxes and payroll taxes of the poor and lower middle class. Gasoline prices affect this group regressively.”
From this comment, it seems that Easterbrook is saying that because gasoline prices hurt the poor, the government should raise the price of gasoline through taxation in order to help the poor. Easterbrook wants to increase the price of gasoline to help people hurt by the increased price of gasoline. Wouldn’t it make more sense to let lower-income classes keep their money to begin with? Why would Easterbrook want to raise the gasoline tax when he himself believes the price of gasoline has a negative effect on people with lower incomes?
Isn’t the tax on gasoline high enough already? After all, according to statistics from the American Petroleum Institute, the price of crude oil today is still less than the price of crude oil during its record high in 1981, with prices adjusted for inflation. Furthermore, the cost of manufacturing, distributing and marketing gasoline has remained stagnant between then and now. What has increased is the gasoline tax, moving from 30 cents per gallon in 1981 to an average of 43 cents per gallon in 2004, with 18.4 cents per gallon being federal taxes and the rest state taxes.
Of course, if people do want to spend more money on gasoline, they can always start a Voluntary Gas Tax movement like the one in Harrisonburg, Virginia. According to their website, the group had a total membership of 25 in April 2003.