Jun
15
By Paolo von Schirach
June 15, 2012
WASHINGTON – At a recent Senate Finance Committee hearing on energy and tax policy issues, Harvard Professor Dale Jorgenson recommended an additional 39 cents gasoline tax as a way to incentivize Americans to choose more energy efficient vehicles, so that we could diminish our oil consumption. (Even though our total oil imports have been curtailed, thanks to increased domestic production, they are still close to 50%). Asked whether this tax should be phased in in stages or applied in one lump, Jorgenson replied that it is so little that it could be applied immediately, in its totality.
A higher gasoline tax?
But then someone asked, jokingly, which Senator would introduce the tax increase legislation. Everybody laughed. Someone suggested that, may be, if this could be done at all, it better be after the November elections. Translated into simple language: sponsoring a fuel tax increase is political suicide.
This vignette is illustrative of the inability to have a serious public policy debate on substantive energy issues in America. Let’s take this proposed tax increase in context. Compared to any other major industrial country, the American Federal Government taxes fuels minimally. The Federal gasoline tax, currently at 18.4 cents per gallon, has not been increased since 1993. Even if we include taxes imposed by the states, US gasoline taxes are extremely low. It is obvious that relatively cheap gas is a disincentive to choose more fuel efficient cars, causing more consumption, and more costly imports to satisfy demand.
Minimal fuel taxation in the USA
Given no tax increases for almost 20 years, a 39 cents additional levy is really not that much. But in America this would cause something close to a national uprising. And this is largely because the public is unaware of the cost to the nation of imported oil, an ongoing series of transactions defined by some as “the largest wealth transfer in the history of the world”. That’s right, think of what it takes to buy, every day, about 9 million barrels of oil, at a price ranging from $ 80 to $ 100 per barrel. Again, that is every day!
And this staggering oil bill does not include the indirect costs related to protecting its safe delivery to our shores through deployed US naval forces. The US 5th Fleet anchored in Bahrain, in the Persian Gulf, is there essentially on “permanent oil protection duty” of all the OPEC crude sailing through the Strait of Hormuz. The US tax payers foot the bill for this service.
America does not have an energy policy. The inability to even discuss a modest increase to a federal levy not touched for years is evidence to this.
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