Lower fuel prices benefit all of us

Published 7:56 pm Monday, January 26, 2015

Calls for raising the gas tax are turning into a clamor. The New York Times’ Gail Collins has now joined the chorus, and her reasons are just as flawed as others who say lower gas prices are the perfect excuse for a hike.

“Let’s raise the gas tax,” Collins writes. “The gas tax raises much-needed money for roads and mass transit … Even more important, it encourages Americans to use fuel-efficient cars. While we’re all happy as clams about falling gas prices, every gallon produces more than 19 pounds of planet-warming emissions. We just had the hottest year on record. The ice floes are melting. Walruses keep piling up along the Alaskan shore, where the babies can get squashed. “

That’s right — your relief at the pump results in squashed baby walruses.

She explains that “The federal gas tax, currently 18.4 cents a gallon, is not indexed for inflation, and it has not gone up since 1993. The Highway Trust Fund, which pays for the federal highway construction program, keeps falling deeper into the red. It’s currently scheduled to implode sometime this spring.”

Let’s look at why raising the gas tax would be a disaster.

First, the economy is rolling along and consumers are spending again —mostly because of those lower gas prices. Americans feel better with an extra $20 a week in their pockets. And when it comes to the economy, feelings matter. See, the economy is quite literally a confidence game. Consumer spending is the driver of the economy, and when Americans are more confident that things are looking up, they spend more — making it something of a self-fulfilling prophecy.

Raising the gas tax now would bring that revved up consumer confidence to a screeching halt.

Second, Collins says the Highway Trust Fund needs more money. Maybe, but mostly what it needs is reform.

“The transportation funding system has a bias toward underfunding infrastructure and letting maintenance lag,” writes Adrian Moore for the Reason Foundation. “A temporary infusion of cash … is just a feel-good measure.If we want to avoid future disasters and the other risks associated with poor infrastructure we need to change the incentives in the system. Our system of funding infrastructure rewards deferred maintenance, not proactive management.”

Finally, we know that fuel prices will inevitably go up. Collins and others argue we should raise taxes now because the current low prices will cushion the blow. But we’ll feel it when prices rise again.

Even President Obama knows this.

“The American people should not believe that … demand for oil by China and India and all these emerging countries is going to stay flat,” he said recently. “Just demographics tell us demand is going to continue to grow, that over the long term it will grow faster than supply and we have to be smart about our energy policy.”

Lower gas prices are a windfall, but a temporary one. Let’s not squander the economic advantages of low prices by raising the gas tax.