Last week, I bought gasoline for less than $2/gallon for the first time in probably more than a decade. A tankful for my ’08 Civic (stick) cost me sixteen whole dollars and fifty-three cents.
Now two leading thinkers, one from each party, have called for taking the opportunity of low gas prices to slap a tax on petroleum—or on carbon.
The impetus for such a tax is what economists dryly call “internalizing externalities.” Our appetite for petroleum causes harm through global warming, chronic health conditions, and large payments to countries that do not have our best interests at heart. All this harm is a bundle of externalities that goes unaccounted for in the price of fuel.
Last Friday, Charles Krauthammer, a conservative Washington Post columnist, wrote that he’s been pushing for a “major tax on petroleum” for the last 32 years, and he advocated raising the price of gasoline by a dollar. The revenue, $12 per week per average American, Krauthammer calculated, “should be used to reduce the Social Security tax.”
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