I understand that there are many reasons why it’s hard to get anywhere close to the amount of intervening we should be doing to push back on carbon emissions. We heavily discount future risks, deep pocketed interests fill their deep pockets with profits maintained by the status quo, they buy politicians who help them wit that, the challenge of international coordination, and at least given current technology, the fact that the science gets harder the longer we wait.
But the figure below reveals another reason it’s so hard to fight human-generated pollution. The damn price of gas is the same this week as it was 10 years ago! The Sunoco station I jogged by this AM had unleaded at $2.09 a gallon–northern VA tends to clock in at around the national average. Well, according to data from Gas Buddy, that’s the same national average for the retail price of a gallon of regular a decade ago. Same with a barrel of oil by the way. And these are nominal prices. The overall consumer price index is up 20% since then.
I’m sure that there are many who, not unreasonably, look at that figure, look at their stagnant paycheck, and say, “Um…that’s good news, dude!” Restrained energy prices means you don’t go broke filling up the tank and thus have more disposable income to meet other needs and wants.
As someone who’s documented real wage stagnation for decades, I feel you. But as someone who has a habit of breathing that I just can’t shake, and has children who’ve also developed that habit, not to mention all the other scary side effects from human impact on the environment, I think this figure shows how seriously under-priced energy has become once we consider its negative externalities.
The other thing I see in that picture is an untapped elasticity: higher after-tax prices would dampen demand. And don’t forget that while Congress is puttering about trying to patch together some funding for the nearly depleted Highway Trust Fund, the federal tax on retail gasoline has been stuck at 18.4/gallon cents since 1993. Given the fact that gas prices are where they were a decade ago, can’t we at least bring a higher federal tax to the table? I know how cramped our tax debate has become, but I know lots of partisans–OK, I know a few–who share my view that if you bring the facts to them, their might be enough grownups who get that transportation infrastructure actually costs something.
Like I said, I’m well aware of all the reasons why we won’t put a higher price on carbon, and more than most economists, I’m highly sensitized to the need for more disposable income among many working families that have been hit hard by wage and income stagnation. But from the perspective of a healthy society, the price of gas is too damn low.