Articles by Clark Williams-Derry

Gas fees: The good, the bad, and the curious

I'm not sure, exactly, whether this news is promising or disappointing: The San Jose Mercury News reported last week that environmental advisers to Governor Schwarzenegger are calling for a new fee on gasoline. Money raised by the measure would fund incentives for reducing climate-warming emissions.

The good news here is that they're considering fees on gasoline in the first place.

The bad news is that the proposed fees are tiny -- just 2.5 cents per gallon, which isn't enough to affect consumption more than a nominal amount.

The good news is that the fees will go to a good cause: There are a lot of inexpensive ways to reduce emissions, so the fees, as small as they are, could do a lot of good -- especially considering that California uses about 15 billion gallons of gasoline per year, so a 2.5 cent per gallon fee would raise $375 million annually.

The bad news is that opponents are already up in arms, blasting the idea as an unnecessary new tax on gas.

Green mayors and red queens

Apropos of the recent climate shindig in Montreal, the Seattle P-I reports on the Seattle mayor's decision to roll his own Kyoto by setting CO2 reduction goals for the city.

To me, the thing that's most noteworthy here is the admission that, if greenhouse-gas emissions are really going to fall in a city like Seattle, a lot of the reduction will have to come from the transportation sector. Seattle's electric utility is already climate neutral, at least nominally. So while there's plenty of potential improvements in heating efficiency for buildings and in the city-owned vehicle fleet, the real action is going to be in reducing emissions from private cars and trucks.

All of which makes it a pretty risky commitment by the mayor, given the relatively limited range of policy tools available to city governments. And some of the steps to help Seattle residents use less fuel happen to involve attracting a lot of new residents to Seattle. Which puts the city in a bit of a bind -- like the Red Queen in Alice and Wonderland, the city could wind up working harder and harder just to stay in one place.

Environmental taxes: a good thing

A few days ago the New America Foundation's Fiscal Policy Program came out with a proposal to completely re-engineer (PDF) the federal tax system in the United States. I'm not enough of a tax geek to cast judgment on the specifics, but some of the details look very intriguing. In particular, the idea of "environmental taxes" -- taxing, say, global-warming emissions, or natural-resource consumption, or pollution -- makes loads of sense.

Are gas prices and gas consumption connected?

It may come as a bit of a surprise: Despite rising gas prices over the past few years, total consumption of highway fuels in the U.S. has actually increased rather than fallen. Some have seized on this phenomenon -- prices and consumption rising in tandem -- to suggest that changes in gas prices have no discernible effect on how much gas we actually use.

The idea that gas prices have no effect on consumption doesn't square with economic theory, to put it mildly. And this Excel spreadsheet (courtesy of Charles Komanoff and the ever-informative Todd Litman) sheds some light on what's really going on. Apparently, even as U.S. gas prices have risen, so have population and GDP. And GDP growth tends to push consumption levels up -- in fact, over the short term, gas consumption seems to be far more responsive to changes in GDP than to changes in prices.