Gas prices have risen dramatically, and Sen. Hillary Clinton (D-NY) and Sen. John McCain (R-AZ) have proposed suspending the 18.4-cent-per-gallon federal gas tax over the summer, a proposal criticized as “stupid,” “pandering,” and “destructive nuttiness.”
But the problems with the proposal run deeper than the economic reality that the plan would add up to a “huge windfall for refiners” that also increases “our transfer of wealth to Saudi Arabia.” It is also the type of thinking that could lead to an utter breakdown of our national imperative to deal with global warming. Fuel taxes are the fundamental governmental mechanism for limiting the consumption of gasoline and making users pay for the costs of pollution — just as cigarette taxes capture the “negative externalities” of the societal health costs associated with smoking.
As Sir Nicholas Stern described in his report on the economic costs of global warming, “Climate change is a result of the greatest market failure that the world has seen.” Because polluters have never paid a price for the emission of greenhouse gases into the atmosphere, no steps were taken to avoid fossil fuel consumption. Read more