Sky F
  • Sky F
  • Salt Lake City, UT
  • United States

Westminster College

This conversation is closed.

Gas Should Be Raised to Flat $5 Dollars A Gallon

Gas is thought to be an inelastic good, an increase in price would not cause people to change their habits and they would simply pay more of their money rather than using less gas.

In 2008, I believe, when gas prices were very high, at around the $4.50 mark, that is when gas became elastic and people would lower their spending.

On top of that, there was a serious need for fuel efficient cars. Once the prices lowered again during the recession, the demand for fuel efficient cars wasn't so prevalent.

I propose to increase the gas price to $5 dollars a gallon, with the difference between the $5 price and the actual price ($3.59 ish where I live) going to pay taxes. These taxes would pay for alternative transportation.

The result would be a demand for fuel efficient cars and a rise in alternative transportation. The end result of this would be less reliance on foreign oil by simply using far less of it. It also would drive prices up on inefficiently transported goods and would increase local economies by giving local producers an edge in price. The benefits are huge.

This requires a lot of cooperative effort from... everyone.

Sure, it would be a nuisance for many and there is a lot of cons. But this drives our demand for innovation in entirely the correct direction.

  • thumb
    Apr 22 2011: Hi Sky!

    Like your idea (you could even be more extreme with the price), just one comment, gas is not only used for transporting people, is embeded in all the value chain, from the shipment of goods oversees to harvesting, etc, that means two things:

    first you would be probably creating inflation.
    second your country could have a harder time competing with other economies where the cost os gas is lower.

    Actually US gas price is low if you compare to other countries, is that done on pourpose as a competitive advantage?

    here is one of many links with a country vs country cost comparison.


  • Apr 23 2011: No.

    One of my primary reasons for opposition to this is the idea of higher taxes. The tax code is beyond screwed up as it is, and the government needs to make cuts rather than increase revenues. An example of just how bad the tax code gets: my step dad sold some land he bought years ago at very close to cost (and put it straight into the mortgage so we won't be homeless should he lose his job). Even though we live in a single story house and I work to pay for school- that would have offset our "income" so much that my mom getting a second job would have resulted in her getting 20 cents on the dollar after taxes.

    That said- massive economic decisions like this end BADLY. Take President Jackson for example- when he killed the Federal Bank on constitutional grounds, and issued the Specie Circular that ended wild land speculation- he inadvertently caused this little thing called "The Panic of 1837"- the biggest economic collapse in our nations history up to that time.

    A massive economic and transportation paradigm shift needs to be prepared in advance- years in advance. If we passed a bill that froze gas at $4.00 now, and increased the price of gas to $5.00 (in 2011 dollars) permanently in 2014- then you might avoid a total economic collapse.

    But then again- these things are cultural shifts. Start small, in your community, then the country will be more receptive.
    • thumb

      Sky F

      • 0
      Apr 23 2011: So are you agreeing that doing it over time and if done well it would be effective?

      I'm not disagreeing with anything you're saying...

      I don't know too much about the panic of 1837, but I'm sure your argument from analogy has way more differences between this proposition and 1837 that it doesn't make a completely solid argument. I'm not saying it's necessarily wrong, it just doesn't have a lot of strength.

      And yeah, new taxes over the head could really just screw things up.

      So, I agree, implement over time.
  • thumb
    Apr 22 2011: How about a flat tax, too?
  • thumb
    Apr 22 2011: No,
    American habits are slow to change; this would immediately cause more harm than good, and in the time it takes to realize the good traditional capitalism could have produced alternative fuel.

    Imagine the story of a young college grad living at home with his parents, he drives 40 minutes to work at a job earning a wage just capable of support his loan payments and gas prices. Maybe he can get a fuel efficient car (take out a loan and go further into debt), Maybe he can move into a nearby apartment (paying for his own housing and food), or maybe he can keep the status quo (it's not perfect but it beats his alternatives)
    • thumb

      Sky F

      • 0
      Apr 23 2011: The tax on the gas pays for the public transportation systems that get him to where he needs to go. Whether we like it or not, we're going to have to eventually adapt to the fact that these resources are not infinite. Our consumption rates can be mitigated.

      This would also solve the emissions crisis. This talk

      talks about how reducing emissions only starts to kick in to prevent global warming yeeeears down the line. The impression I got from this is that the sooner we stop producing consumption the better.

      I imagine changing our transportation habits would be a million times easier than changing from climate change. But hey, that's our grandchildrens problem right?

      "We could have saved the Earth but we were too damned cheap."

      Probably true^
  • thumb
    Apr 22 2011: but how will the share holders make money??