For most of Obama’s years as president, he has opposed raising the gas tax. Now, in his last, lame-duck year, he is proposing a $10 per barrel tax on oil. Since a 42-gallon barrel of oil produces about 45 gallons of gasoline, Diesel, jet fuel, and other products, this is roughly equal to a 22 cent per gallon gas tax, well above the current 18.4 cent tax.
The distinction between Obama’s oil tax and a gas tax is that the oil tax wouldn’t go into the Highway Trust Fund, where up to 80 percent goes for roads and 20 percent goes for transit. Instead, he proposes to spend $20 billion per year on alternatives to autos, including urban transit, high-speed rail, and mag-lev. Another $10 billion per year would be given to the states for programs that would supposedly reduce carbon emissions such as “better land-use planning, clean fuel infrastructure, and public transportation.” Finally, $3 billion would go for self-driving vehicle infrastructure that is both unnecessary and intrusive.
Obama proposes that the oil tax be phased in over five years, so that $33 billion is the average of the first five years; when fully phased in, the tax would bring in nearly $60 billion a year. This would be a huge slush fund for all kinds of social engineering programs.
The Republicans who run Congress plan to ignore Obama’s proposal. The president’s “proposals are not serious, and this is another one which is dead on arrival,” says Senate Environment & Public Works Committee Chair James Inhofe (R-OK). Still, it’s worth looking at the plan as a preview of what might be proposed by the next president if that president happens to be a Democrat.
The first thing to note is that the White House no longer makes any pretense that taxes should be raised to fix supposedly crumbling highway infrastructure. As the Antiplanner has noted before, the claim that highways are falling apart is just a fiction used to generate support for more funding for rail lines and other boondoggles. None of the money raised under Obama’s new proposal would be used to repair or maintain roads, and–since maintenance doesn’t reduce greenhouse gas emissions–probably none would be used to repair or maintain rail transit lines that, unlike roads, truly are crumbling.
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Second, anyone who agrees with Obama’s claim that there is no “greater threat to future generations than climate change” should wonder why his plan proposes no tests to insure that funds would cost-effectively reduce greenhouse gas emissions. Urban transit uses as much energy and emits as many grams of carbon per passenger mile as driving. High-speed rail could actually be worse than driving, especially when the energy costs of building the infrastructure are counted. It would be more cost-effective to spend that $33 billion per year buying 1.4 million Priuses and trading them to owners of existing gas guzzlers.
Third, the land-use planning that Obama proposes to fund would no doubt follow the example of California’s SB 375, which aims to coerce more people into living in apartments rather than single-family homes on the pretext that higher densities will lead people to drive less. This claim has been disproven by research and the experience of the San Francisco Bay Area, whose two-thirds increase in population density since 1980 was accompanied by a one-third reduction in per capita transit trips and an increase in per capita driving.
Fourth, Obama’s plan would significantly increase the cost of living. On one hand, Obama’s political calculus is that raising taxes is easier when oil prices are low. On the other hand, at today’s prices, a $10 per barrel tax increases fuel costs by nearly a third. Though the administration claims that the $10 tax would be “paid by oil companies,” those companies would, of course, pass the cost to consumers. As Americans consume about 2.5 gallons of oil per person per day, the tax would impose costs of about $200 per person per year.
The White House argues that its plan “builds on the success the country has seen as a result of the American Recovery and Re-investment Act of 2009.” What success? The transportation share of that trillion-dollar boondoggle built a few streetcar lines (one of the least energy-efficient forms of urban travel), increased speeds on a few intercity rail lines by a few miles per hour, and otherwise disappeared into a black hole of pork-barrel spending. Did it reduce greenhouse gas emissions or create any jobs that wouldn’t have been created without it? Probably not.
In short, as one budget analyst confided to me, Obama’s plan is “Premeditated coercion and higher costs of living masquerading as environmentally friendly, job-creating transportation ‘investments.'” Republicans will be right to reject it, but they will be wrong to dismiss it as a similar plan is likely to appear next year if a Democrat wins the White House.
“Third, the land-use planning that Obama proposes to fund would no doubt follow the example of California’s SB 375, which aims to coerce more people into living in apartments rather than single-family homes on the pretext that higher densities will lead people to drive less. This claim has been disproven by research and the experience of the San Francisco Bay Area, whose two-thirds increase in population density since 1980 was accompanied by a one-third reduction in per capita transit trips and an increase in per capita driving.”
I don’t know what counts as ‘research’ at this point, but clearly the possible passenger base depends on who can comfortably reach the stop on the transit service. In continental Europe, it is customary to cycle to bus and light rail stops, where secure bicycle parking is provided.
“In continental Europe, it is customary to cycle to bus and light rail stops”
The Netherlands (and much of the continent’s population center) is flat and easy to bicycle. San Francisco is not.
Much of Europe cities were developed around transit, walking, cycling because they were built when car ownership was low, prior to 1960. Those areas developed later are built much more around the car. Even areas built prior to this are adapting to increased car use. Google “british front gardens adapted for parking” or go to “http://www.theguardian.com/environment/2012/jul/18/front-gardens-paved-parking-spaces” for examples. These policies have resulted in European housing being much smaller than in the US. Some of this small size results from Europe having less space in general than N. America, but is still disproportionately small housing size. This is particularly for lower income people. Europe also taxes cars and gasoline heavily to keep lower income people off the road. This also has the effect of limiting their employment possibilities. “Smart Growth” advocates do not usually mention these disadvantages.
FrancisKing:
If you want to read the research, click on the link. If you are too busy to read it, it says that the effect of density and urban form on driving is “too small to be useful” in saving energy or reducing greenhouse gas emissions.
I’m a big believer in that how a process is designed lends itself to a certain result. How buildings and neighborhoods are designed strikes me as the same different thing. There are a lot of variables that could be in play beside density.
For example, the share of the population in the Bay are that is in top 25% percentile of US incomes has increased a lot over the last generation. How does increased income affect transit use?
What about the location of the jobs? How many of these high paying jobs are well served by transit ( e.g. downtown San Francisco / Financial District )? No matter how dense residential housing is and how bad traffic gets, if it takes you 75- 90 minutes to get to work weather you drive or take transit, from my experience driving’s going to win.
We need to get the Republican party to stop denying climate change and instead propose sensible solutions such as a revenue neutral carbon tax that rebates to everyone. Only that way will we get an end to ridiculous claims that these carbon taxes spent into public transit and housing restrictions are cost effective ways of reducing green house gas production.
It also says this:
The Antiplanner says Obama’s plan, “is roughly equal to a 22 cent per gallon gas tax, well above the current 18.4 cent tax.” So wouldn’t that alone reduce vehicle emissions?
Why are the per capita GHG emissions of Europe so much lower than the US?
”
Why are the per capita GHG emissions of Europe so much lower than the US?
”
Because while they use less energy, they do a lot, lot less. Relative to $ GDP their energy use is just as high as the US. The key in the per capita useage is they’ve shipped all of their energy – and hence “GHG emissions” outside of their borders. All the manufacturing that’s being done for them is done outside their borders.
Despite all the talk of the decline of manufacturing in the US, it still accounts for @35% of US GDP. Manufacturing’s share of GDP in the EU has – IIRC – fallen below 15%. Industrial plants are ginormous consumers of energy. Close enough of those down and you’re energy use drops a lot. Of course, it also means you’re being a lot less productive. And that shows in the much more meaningful GHG emissions / $ GDP figures.
“Why are the per capita GHG emissions of Europe so much lower than the US?”
Perhaps because Europe is 40% the size of the continental US, and goods do not need to be shipped as far in Europe as they do in the US?
Perhaps because the US burns more (and a higher percentage of) fossil fuels to generate electricity than Europe?
Peraphs because the GDP of the US is higher than the GDP of Europe, and higher GDP = higher consumption of energy and goods? That is certainly born out by Luxembourg, which has the third highest GDP of any nation and the highest GHG emissions per country in Europe, far surpassing America’s.
FrancisKing:
If you want to read the research, click on the link. If you are too busy to read it
We already know that planners, always keen to maintain their ideological purity, are ever too busy to read anything that contradicts their preconceived notions and conceits.
@prk166
No, that’s incorrect. Europe produces much less GHG emissions per dollar of GDP than the US.
Sure, but the US has also moved a lot of its consumptive emissions to places like China. USA’s trade deficit makes our consumption emissions (as opposed to territorial emissions) look even worse when compared with those of Europe, which enjoys a trade surplus.
Do you have a source for that? This indicates the US is around 12-13% while Europe is roughly the same if not higher. Germany, in particular, gets 23% of its GDP from manufacturing.
The downside of Obama being a lame-duck president is that you will see a lot more of these elaborate time-wasting and virtue-signalling kinds of proposals. The upside is that you will get a better picture of what he and his Administration would like to do if unconstrained by the actions of Congress.
For example, as this proposal makes fairly clear, the notion of “crumbling infrastructure” appears to have been a straw man constructed to attract support for fuel tax increases. The fact that the money raised by this tax increase would not be spent on this infrastructure tells us where the Administration’s priorities really lie. That’s problematic, especially for an Administration that professes the importance of evidence-based policy.
Moreover, we are once again treated to the sophistry that this tax increase would not cost us anything, that it would be paid for out of the profits of oil companies. This is just cheap political pandering. If any of the Administration’s staff of economists had been consulted then the proposers would have been given a crash course in tax incidence that explains why a “free lunch” is not possible in this case. A tax increase could reduce the consumption of gasoline, but the benefits of this reduction in emissions has to be weighed against the deadweight loss of the tax increase and the welfare losses associated with frittering away the revenues from the tax on socially undesirable/unproductive spending categories such as those outlined above.
The prospective candidates for president, especially on the Democratic side, should be paying attention to this proposal, as it seems to be intended as a trial balloon to gauge the response of the voting public to such a proposal. Obama, unconstrained by re-election considerations, does not have to worry about wasting political capital on such a proposal. However, the response to it, especially if strongly negative, could send a message to future candidates about the likelihood of its chances, and how to package such a tax increase.
Sure, but the US has also moved a lot of its consumptive emissions to places like China. USA’s trade deficit makes our consumption emissions (as opposed to territorial emissions) look even worse when compared with those of Europe, which enjoys a trade surplus.
Outsourcing of manufacturing activities would affect production, not consumption-based emissions. If products were produced elsewhere, then shipped to the U.S., they would not be reflected in U.S. emissions inventories. Also, a trade surplus for Europe would imply that they are exporting more than they are importing. But, like the U.S., most of those exports take the form of services (especially financial and technology-based services) and light goods, and so are not likely to have any substantial impact on emissions differentials.
Exactly. If you’re outsourcing manufacturing activities to some other country you don’t get to count them in your GDP so they have no effect on GHG/$GDP, which prk166 seemed to be implying. Maybe prk166 was hinting at a consumption-based accounting of emissions, which is the only measure that makes the EU look comparable to the US.
But really, people seem to be getting bogged down in picayune details. Could it be that Europe is more efficient in its emissions per capita and per $GDP because Europe taxes fossil fuels at a higher rate than the US?
But really, people seem to be getting bogged down in picayune details. Could it be that Europe is more efficient in its emissions per capita and per $GDP because Europe taxes fossil fuels at a higher rate than the US?
Yes, but it is only one of many reasons. Others include more widespread use of diesel vehicles, which tend to have higher average fuel economy, lower average incomes, milder climates (which require less heating and cooling) and use of low-carbon energy sources (e.g. France’s widespread use of nuclear power), and older cities.
The last of those is rather important, since it affects not only the supply of transportation infrastructure and average urban densities, but also the housing/building stock. Houses in older parts of the city tend to be smaller, reflecting the lower incomes that prevailed at the time they were built, and, related to another point above, many have not been retrofitted with central heating and air conditioning systems. This is partly why heat waves tend to take a greater toll when they hit cities like Paris.
Lastly, there is evidence that the fuel taxes levied in many European countries are set at higher-than-optimal levels to control pollution emissions. So they may be reducing emissions, but doing so at greater than socially desirable levels.