NPR's Morning Edition had an interesting story this morning ("High Gas Prices Quietly Welcomed by Environmentalists") about whether gasoline consumption can be better curbed through regulation or through high prices (particularly a tax). Economists feel that gasoline prices would need to double and remain there (i.e. $7-8/gallon) before behavior would really change, and advocate a gas tax to get us there. The externalities (accidents, smog, global warming, etc.) are simply not reflected in the current price of gasoline. Environmentalists, however, feel that a gas tax is a complete political dead-horse, fearing that it would be extremely unpopular with most Americans, and advocated regulations...
Thursday, May 04, 2006
More on fuel prices
Yesterday I briefly adverted to the political realities that make environment groups hesitant to call for tax increases on fuel. Those realities are highlighted in this story from the US: