We need a carbon tax on gasoline

Andrew Samwick

TEXT OF COMMENTARY

Bob Moon: Can you put a price on pollution? That's the question Congress takes up this week as they begin debate on the Climate Security Act of 2008. The legislation would enact a cap-and-trade system, whereby large polluters would buy and sell emission permits.

Commentator and economist Andrew Samwick has taken a look at his carbon output and his family's. He says if we're serious about cleaning up our act, we should consider a straight tax on carbon.


Andrew Samwick: I learned something about global warming on a family trip to Hawaii. We flew from Boston to Honolulu by way of San Francisco. I calculated the amount of jet fuel it took for the four of us to make the trip. The answer was 850 gallons of jet fuel. Is that a lot or a little?

Well, if you drive your car 12,000 miles a year and get 20 miles per gallon, you use about 600 gallons of gasoline. So one glorious trip to Hawaii used more fuel than we use to power our cars... with corresponding amounts of carbon dioxide emitted.

This comparison shows us why our efforts to reduce greenhouse gas emissions should focus on a carbon tax. A tax on emissions provides an incentive to reduce them everywhere -- in the sky as well as on the road, at the thermostat as well as the gas pump. The more we can reduce emissions from jet fuel and home heating oil, the less we need to reduce them from automobiles.

But a carbon tax is also the best way to reduce emissions from motor vehicles. Instead, Congress uses CAFE standards for new cars to discourage fossil fuel consumption. CAFE standards are like a tax on fuel inefficient vehicles at the point of sale -- they encourage people to buy more fuel efficient cars, but here's what they don't do: they do nothing about fuel consumption by old cars. They may get you to buy a Prius, but they don't encourage you to drive it less or use it for a carpool and they don't encourage you to maintain your vehicle or adjust your driving behavior to get better mileage.

But if we taxed gasoline directly, we could overcome these weaknesses in the CAFE standards. The reason the tax works is that it encourages us to conserve in every way we possibly can. Nobody likes to pay higher taxes, but if we are serious about reducing emissions, a carbon tax is the most fair and comprehensive way to get the job done.


Moon: Andrew Samwick is a professor of economics at Dartmouth College and a former chief economist for the president's Council of Economic Advisors.

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