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SCOT LEHIGH

Taxing gasoline the right way

THIS HAS BEEN a year when you could have a European vacation without leaving the United States.

Well, a European experience, anyway.

In late summer, our gas prices spiked to levels vaguely reminiscent of those in Europe, where taxes have long boosted the cost of a fill-up into the stratosphere. Europeans, of course, have adapted with vehicles far smaller, lighter, and more fuel efficient than those on US roads.

The benefit of that sort of transport was brought home to me years ago during a driving tour of Scotland, when a hardhearted service attendant refused to let us gas up after we arrived at her remote station a few scant moments past her early evening closing time. With miles to go before we slept, we set out over the narrow roads that lead around the desolate top of the country, perhaps half a tank of gas in our subcompact.

Long, anxious, gas-station-less hours later, we cruised into our destination of Ullapool after even the late-setting Scottish sun had said good night, seemingly running on fumes -- and exceeding grateful for the miraculous little gas miser we had rented.

Of course, as anyone who occasionally drives in Europe can attest, gas prices there make you consider fuel efficiency even when renting in a way consumers here simply haven't had to when buying.

As a sprawling nation more dependent on our vehicles than Europeans are, we wouldn't want permanent prices anywhere near as high as theirs. (Even before the summer, gas, in translated prices, was at $5.54 a gallon in France, $5.96 a gallon in Italy, and $5.79 in the UK.)

Yet those driving gas guzzlers probably wish they had had some inkling of the summer prices gas would reach when they bought their last vehicle. Who, knowing he or she would face weeks of prices well over $3 a gallon, would eagerly opt for a gas hog?

Certainly large conservation gains would come if American motorists made fuel efficiency a much higher priority when buying their next car. Yet if, after the summer shock, prices slide back under $2 a gallon, as some are predicting, any long-term prod toward conservation will be lost.

''The short-term volatility of gas prices does not send a sufficient signal," notes Jeff Faux, a distinguished fellow at the Economic Policy Institute. ''People do not make long-term decisions on the basis of short-term fluctuations."

That's why we need a gas tax designed to keep gas prices at a level that encourages fuel efficiency, while moderating the kind of dramatic increases we saw this summer. Such a tax would be adjusted periodically, falling when gas prices rise, but rising when gas prices fall.

According to the American Automobile Association, the average price for a gallon of regular was under $2 a gallon from November through February and under $2.50 from February through August. Since then, however, that price has been above $2.75.

Let's say the government's target range for regular was $2.50 to $2.60 a gallon. With prices currently well above that, we'd see a substantial decline in federal and state gas levies. (The federal government currently taxes gasoline 18.4 cents per gallons; most states add at least another 20 cents.)

But when the price dropped below the target range, federal and state taxes would increase to push it back up.

Such a policy of periodic gas tax adjustments would take careful design and coordination.

The result, however, would be a more predictable price for gasoline, without the economy-jarring spikes.

Knowing that gas was not going to return to bargain levels, consumers would soon start making better mileage a major consideration in their purchasing decisions. Myopic Detroit would then head in the direction that foreign automakers have: Toward a broader commitment to fuel efficiency.

And make no mistake, the technology has been there for significant gains. But as writer Gregg Easterbrook has noted, during the era of cheap gas, automakers essentially transferred efficiency gains into increased power, rather than better mileage.

Perhaps that choice made market sense in an era of plentiful petroleum. It makes no sense if we are finally approaching the era of limits we've been warned about for several decades.

But even if those warnings are wrong, it's time to put in place real incentives for conservation.

An adjustable gas tax would do just that, even while easing our periodic pain at the pump.

Scot Lehigh's e-mail address is lehigh@globe.com.

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