ALT-2 Are High Fuel Prices necessary – Yes
Early in the fall of last year, I asked my students to speculate about the changes in their lives if oil hit $100 a barrel. Little did I know that oil would actually rise to $150 a barrel and then drop again to its current level of just under a third of that, around $50 a barrel. After doing a little bit of reading, I learned that the huge jump in prices had almost nothing to do with supply and demand, predictions for both were within 2% throughout the race to high prices and the drop back to lower prices. It had everything to do with speculation and investors driving the price up and then running for the hills once it became clear that the game was up.
One very good thing did come out of the huge jump in prices, however, and that was the amazing effect of $4.00 a gallon gas on American consumer habits. The SUV has all but died as the pillar holding up the American auto industry, commuters took to mass transit in droves, and suddenly Americans were taking fewer trips, thinking seriously about how to conserve gas, and making all kinds of decisions based on the economics of gasoline in their budgets that had positive effects for the economics of the country (in the long term), the environment, and even the quality of life in our country. Sadly, the price has dropped and though some lingering effects remain (goodbye GM and Chrysler) most Americans have returned to their old habits, at least regarding driving.
Some of us have had the opportunity to live outside this country, and when I was very young I lived briefly in Germany. During that time and later on during some return trips to Germany and other parts of Europe, I fell in love with train travel. While I lived in Korea, I was astounded by the fact that I didn't need a car anywhere in the country. Public transit was so effective and affordable that a car was almost never necessary. Upon my return to the U.S., each time I was saddened by the fact that we choose, as a country, to live without those conveniences and instead live in a blight of strip malls and suburban and urban blight all made possible and necessary by our obsession with cars.
Instead of well-planned cities and small towns surrounded by pretty, unspoiled countryside, our cities are filled with unused or run down sections and surrounded by ever-expanding suburbs which are only accessible sensibly by huge interstates that are constantly in need of repair and upgrade to keep up. We supply all these places with fleets of huge trucks that further increase demand for road repair and capacity and we've allowed our rail infrastructure to disappear and we've done it all with cheap gasoline. Strangely enough, we've actually been paying for it with our tax dollars that subsidize the cost of gasoline and cars by building all the roads and infrastructure to support them and in the meantime we bemoan the subsidies for rail or other mass transit systems. If only they could be competitive with cars, then we could really get behind them...
The United States spends hundreds of billions of dollars a year on road construction and repair. It is estimated that Americans themselves spend over $60 billion dollars just to repair their cars due to problems caused by poorly maintained roads. The tax on gasoline, which hasn't changed since 1993, is meant to fund much of this work but it isn't enough and most states are running deficits and much of their roads and bridges are in a poor state of repair because of a lack of funds.
Raising the tax rate would raise the price of gas, but Americans must understand that they cannot have highways and interstates and all the other infrastructure to support our obsession with the freedom of automobiles without paying for it. If we raise the price of gas significantly, say to $4.00 a gallon, people's habits quickly change and we can use the increase to fund the massive improvements in public transit that would make up for people's perceived loss of freedom because of an inability to drive anywhere they wanted any time they wanted. If people had the choice to ride a bus or train to work instead of driving forty five minutes each way, there's a good chance they'll take it.
