Against Gas Station Subsidies


Sometimes you hear about a policy idea so bafflingly dumb that you barely know how to respond to it. That’s how I feel about DC City Councilman Harry Thomas’ proposal to offer special tax subsidies to gas stations.

One can imagine engaging in a dispute about whether or not, in some abstract sense, it’s desirable for a walkable, transit-served city a majority of whose residents do not drive to work to have more or fewer gas stations. But the issue on the table here is concretely should we subsidize gas stations as opposed to some other kind of small-scale retail? But of course we shouldn’t! Gas stations aren’t some kind of unique social good. If anything, they’re in a business that has a lot of underpriced negative externalities associated with it. If DC residents want to buy gas that is, of course, their right. And the market should provide a number of gas stations, and a level of gasoline pricing, that’s commensurate with the demand for gas relative to other goods and services. But why a subsidy?

One thing to say is that as DC develops, there’s an upward trend in retail rents. That leads to the displacement of certain forms of businesses. But we could respond to the rising demand for retail space by zoning more areas for retail uses.