Obama Energy Pick Backs Higher Gas Tax
EmailABC News’ Teddy Davis Reports: Barack Obama’s pick for Department of Energy secretary backs higher gasoline taxes, a position which puts him at odds with the president-elect.
"Somehow we have to figure out how to boost the price of gasoline to the levels in Europe," Steven Chu, the director of the Lawrence Berkeley National Laboratory, told the Wall Street Journal in September.
Chu said he favors gradually ramping up gasoline taxes over 15 years to nudge consumers into buying cars that are more fuel efficient and homes which are closer to work. Chu spoke with The Wall Street Journal in September but the newspaper did not publish the gas tax comments until last seek, shortly after the Nobel-prize winning physicist had been identified as Obama’s nominee for Energy secretary.
Chu is not alone among energy experts in thinking that higher gasoline taxes could tamp down demand and spur development in alternative energies.
Raising the federal gasoline tax, however, has been dismissed by Obama.
The president-elect acknowledges that gas prices have come down since the summer when they reached $4 per gallon. He worries, however, that the overall economic downturn makes American families ill-equipped to shoulder higher prices.
“Putting additional burdens on American families right now, I think, is a mistake,” Obama told NBC’s “Meet the Press” in an interview which aired on Dec. 7.
Lee Schipper, a project scientist with the Global Metropolitan Studies program at U.C. Berkeley, hailed Obama’s nomination of Chu as Energy Secretary and praised his colleague’s support for higher gasoline taxes.
“I can imagine in the hearings Chu facing problems because he dares say, ‘higher prices,’” said Schipper. “But I think there is no solution that does not involve higher prices.”
Schipper, who shared a lab at Berkeley with Chu from 1972-74, estimates that the average cost of gasoline in Europe at present is somewhere between $7-9 per gallon.
Schipper thinks Obama’s concerns about not placing additional burdens on America’s families can be addressed by agreeing to rebate all — or close to all — of the money raised by higher fuel taxes.
“The answer is: raise the price of gasoline and give all the money back,” said Schipper.
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How stuip is that comment
“The answer is: raise the price of gasoline and give all the money back,”
If you are going to give it back than dont raise it to begin with! Funny they say they would give it back in rebates, but it will come down to them keeping 90% of what they take!
Just Higher taxes coming our way!
Posted by: chuck | December 15, 2008, 5:03 pm 5:03 pm
This is a policy that Carter proposed, but was rejected. It is actually a good policy. When a price changes, there are two effects: because the price increases relative to other goods, people will substitute away from gasoline and things that consume gasoline; also, because the price increases, purchasing power falls, so it’s as if income falls just a little bit. By returning the tax revenue in the form of lump-sum rebates, it reduces or eliminates the income effect while leaving the substitution effect intact, which is exactly what the intention of the policy is. So, it isn’t stupid at all, it’s good policy (if the objective is to get people to shift away from gasoline and things that consume it).
Posted by: Mike | December 15, 2008, 5:25 pm 5:25 pm
Higher taxes are necessary to fund the development of alternative fuels and put in place the infrastructure to deliver the new fuels. To increase gasoline prices to the levels in Europe would cripple our economy, especially in the rural areas. To raise a tax and then rebate it is just plain stupid.
Posted by: jim 234 | December 15, 2008, 5:28 pm 5:28 pm
Certainly tax revenues could be used for the purpose of developing alternative fuels. Currently in the US, most of the taxes on gasoline are used to finance road improvements, which seems like a reasonable thing, at least in principle. However, a tax on gasoline is regressive; that is, poor people pay a greater proportion of their incomes in gasoline taxes than do wealthy people. By returning the tax receipts in the form of rebates we avoid taxing the poor more than we do the wealthy.
Posted by: Mike | December 15, 2008, 5:30 pm 5:30 pm
This is government at its worst. They will try to force their “values” on the country by injecting themselves into the free market (ie., forcing gas prices up to increase interest in alternative fuels). This will have the same negative impact on the economy as they did when they tried peddle their values on “universal” homeownership. And, raising gas prices just to give the money back will serve another purpose on their agenda…increasing public dependance on the government for their personal and financial well-being. In the end, it’s really not about “values”…it’s about “control.”
Posted by: bkm | December 15, 2008, 5:44 pm 5:44 pm
If it is true that we will eventually run out of oil with which to make gasoline, then it seems likely that alternative energies will be necessary. If it looks like our current path leads us to a place where we run out of oil before the alternative energies arrive, then we probably want to change our path. So, I’m not sure it is simply one group trying to impose values on everyone. I don’t know enough of the details to make that determination. If, however, this is true, then this tax and rebate policy is a good one.
Posted by: Mike | December 15, 2008, 5:47 pm 5:47 pm
You would think that Obama would want to treat his secret service with more respect than that. What does he think raising taxes on gas will do? Make people want to throw roses at his feet? Not. He’d be lucky if it is only shoes thrown at him too. BHO has to be the dumbest person to have ever drawn breath if he thinks that we will take his gas tax lightly. Real great for the economy you f’n dolt.
Posted by: Trap | December 15, 2008, 5:49 pm 5:49 pm
By the way, I generally do not favor direct government involvement in markets. However, when the market fails to provide desirable outcomes – as is almost certainly the case with respect to energy – it becomes necessary for the government to intervene.
Posted by: Mike | December 15, 2008, 5:49 pm 5:49 pm
The paper work is too complicated. We do not want an accounting industry built up here. Reduce the rate of the payroll tax by the amount of the gas tax collected and rebate it to the workers and companies that way. If they are frugal, they will get a net savings.
Posted by: Ann | December 15, 2008, 5:58 pm 5:58 pm
I have no problem with researching and pursuing a transition to alternative fuels to eliminate our dependance on oil from other nations who may not be friendly to us. But, it is best done by the free market which has individual people’s investments and livelihoods at stake. I believe innovation should be driven by private businesses rather than government.
Posted by: bkm | December 15, 2008, 6:02 pm 6:02 pm
Thanks Mike. Government doesn’t have to tell us what to do, but it should tax the externalities that we agree we shouldn’t do. Taxing gives us the maximum flexibility, whether to drive less, get a smaller car, walk, take the bus, or stay home. One reason we have government is to be able to have collective values enforced in the market place. We also have anti pollution rules for the same reason.
TO clarify, the refund can be per capita, or one can lower payroll taxes, social security, anything. Just so that the net effect is to raise the relative price of oil.
As to those who want no intervention, neither energy security nor CO2 are in the market. Energy gets in there now and then when we have an interruption, but in the roller coaster world of energy prices, we do not invest away. Funny, the right winger and energy lobbies are all for “incentives” to drill drill drill but not for a market that sends signals about oil and climate problems!
You choose – a roller coaster world with increasing oil vulnerability and CO2 emissions, as the Bush Market has given us, or a cleaner, leaner, smarter world where a real market signal for oil and climate security faces every consumer?
Lee Schipper
UC Berkeley and Stanford University
Posted by: lee schipper | December 15, 2008, 6:11 pm 6:11 pm
I have one more clarification to add. Taxing the externality will strengthen market incentives for innovating, providing greater PRIVATE incentive to find alternative energies, etc. This does not shun the market, but rather leverages it to our greater advantage.
Posted by: Mike | December 15, 2008, 6:32 pm 6:32 pm
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Posted by: RMBarley | December 16, 2008, 1:16 am 1:16 am
We can’t get any closer to our work. We live equi-distant BETWEEN our two places of employment, in a school district that we want our children to attend. So, what are we supposed to do?
Posted by: ellsbells930 | December 16, 2008, 10:00 am 10:00 am
jim 234 said” Higher taxes are necessary to fund the development of alternative fuels and put in place the infrastructure to deliver the new fuels.” No. That is what free enterprise should do. It isn’t up to the goverment to develop alternative fuels, it is up to innovative individuals.
Posted by: ellsbells930 | December 16, 2008, 10:03 am 10:03 am
Mike said “However, when the market fails to provide desirable outcomes – ” Desirable to whom? And who decides what is desirable?
Posted by: ellsbells930 | December 16, 2008, 10:04 am 10:04 am
Will the last Democrat with ANY integrity, please turn off the lights on their way out?
Oh, thats right.. there arent any.
Obama, by his profound lack of integrity, his profound lack of honesty and his profound lack of HONOR will most certainly create a Constitutional crisis. Obama is no different than the Kennedy’s, Blagojevich, Spitzer, Clinton and George Bush.
And our country circles the toilet while our Constitution finds itself being flushed into the sewer.
Posted by: abc_has_no_journalistic_integrity | December 16, 2008, 10:44 am 10:44 am
Dare I ask ellesbells what kind of car you drive, how large your home is (and how much you deduct from your income taxes as home mortgage)?
The choices you make are certainly good ones (for schools, halfway to work), but the government doesn’t help if it subsidizes energy costs and subsidizes our home purchases and ownership. To those of you above eulogizing the market, are you prepared to pay real market prices, including the costs of oil security (the $1/gallon) and the cost of CO2, surrender your mortgage interest deduction, and THEN make informed choice in a market?
Lee
Posted by: lee schipper | December 16, 2008, 1:14 pm 1:14 pm