Gas pricing, Big Oil, and carbon pricing
Apropos of British Columbia’s big announcement, I have some ranting to get off my chest. One of the most frustrating things about U.S. climate policy is the reflexive fear that if we ever raise the price of gas — or of driving generally — people will riot in the streets or something. This makes it exceedingly difficult to rearrange the economy away from oil and its carbon contents.
But, of course, the price of gas keeps rising anyway. In fact, crude oil prices have more than tripled over the last half-dozen years, with futures closing above $100 recently.
To be sure, there’s a silver lining to higher prices: they really do dampen demand, despite what you hear all the time. But it’s a silver lining to a dark and ugly cloud: high energy prices mean that consumers are taking it on the chin — and especially low-income consumers. And worse, all the revenue from the high prices goes to the energy companies. If prices had risen because of taxes or carbon fees, then the public could be reaping the windfall that big oil is raking in now.
For a decade, lawmakers have balked at the prospect of $20-per-ton carbon taxes (a figure that is sometimes kicked around as a price that would get us on the right track). Eighty dollars per ton sets off screaming and wailing. But those figures translate into an additional 20 to 78 cents, respectively, per gallon at the pump. In the time that we’ve all been afraid of those comparatively modest figures, the price at the pump has jumped $2 or more.
We could have been intentional about getting ourselves off oil, and about protecting consumers from price spikes. But instead, we’ve opted for the expensive and volatile route: we’ll do nothing and hope for the best.
Now let’s just hope we can figure out a cap-and-trade program that doesn’t send any price signal to drivers.