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Friday, December 01, 2006

Another reason a gas tax is ideal

San Francisco Chronicle, Gas prices hardly effect demand.
Record high gasoline prices haven't made a serious dent in America's demand for fuel, a new UC Davis study suggests.

Severin Borenstein, director of the University of California Energy Institute, noted that the UC Davis study measures short-term changes in gasoline use based on short-term price increases.

Long-term changes in driving and buying habits are harder to track but matter far more, Borenstein said. And taxes, which stick around year after year, can prompt drivers to make long-term changes, such as buying more efficient cars or living closer to work.

"That's what actually changes auto fleets, housing decisions, political support for mass transit," said Borenstein, whose institute organized today's research conference. "They're right that this is a little piece of that puzzle, but the jump they make on gas taxes is a stretch."

This however is totally untrue:

Research showing that use doesn't decline much as prices rise undercuts arguments for higher gas taxes.

Rather, it means there is huge latitude for higher gas taxes. And Kitchen Linker says shoot for the moon, cause enacting a high tax that can replace, say the payroll or other harmful tax as Al Gore and others have proposed, is no harder than enacting a small increase. Also from the Chronicle article:

"I would advocate for a tax, but I'm also a realist, and I know it would never work," said Christopher Knittel, a Davis economist and one of the report's co-authors. "It's hard to get a 10-cent gasoline tax passed, much less one over a dollar."

Knittel is wrong to be pessimistic. Join the Pigou Club and make it happen!

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