OT: Cars, fuel economy, and such

[flydhest]

the VW thread has been interesting and informative. We bought ours because (in part) it got good mileage. We internalized some of the externality (we also don't drive much -- 3500 miles a year).

A recent post noted the likely demise of CAFE standards. Without getting into the partisan politics of it, what are people's views? I am an economist by training, profession, and psychological pathology. I find CAFE standards to be far inferior to a carbon tax if the goal is to improve mileage. Not completely ineffective, mind you, but less effective than a carbon tax alone or the two together. You would shift some demand toward cars with better mileage. CAFE standards, by averaging, distort incentives for producers.

What are the views of this august group?

[zap]

If the goal is to reduce the size of vehicles on us roads, higher fuel taxes can be effective if revenue goes to improving highways, bridges, etc. Germany was disciplined in allocating funds and the roads superb. Not sure if that (fiscal discipline) is still the case.

The USA and state governments.......

[dougdye]

I don't understand why we don't raise the fuel tax. It would encourage drivers to buy more fuel efficient vehicles as well as raise needed funds to improve/maintain our infrastructure.

[shovelhd]

If the fuel taxes went directly into improving infrastructure, I'd be all for raising them. But they don't. They go into the black hole, and I'm dead set against feeding the government machine.

BTW this is a political topic, there's no way around it. Let's see if the forum members have enough discipline to keep it civil.

[fa63]

CAFE standards are there because the "t word" is a non starter in this country.

Which is funny, but regulations like CAFE are essentially the same as a tax, but they are not called one so people are more likely to give it a pass...

[93legendti]

An economist who is for a carbon tax???


Uh, ok.

After an 8 yr period of "tax them all", it's time for a different philosophy. Thank G-d. We aren't Europe and that's the point.


"How Would a Carbon Tax Directly Affect the Economy?

By raising the cost of using fossil fuels, a carbon tax would tend to increase the cost of producing goods and services—especially things, such as electricity or transportation, that involve relatively large amounts of CO2 emissions. Those cost increases would provide an incentive for companies to manufacture their products in ways that resulted in fewer CO2 emissions. Higher production costs would also lead to higher prices for emission-intensive goods and services, which would encourage households to use less of them and more of other goods and services.
Without accounting for how the revenues from a carbon tax would be used, such a tax would have a negative effect on the economy. The higher prices it caused would diminish the purchasing power of people’s earnings, effectively reducing their real (inflation-adjusted) wages. Lower real wages would have the net effect of reducing the amount that people worked, thus decreasing the overall supply of labor. Investment would also decline, further reducing the economy’s total output."


"The costs of a carbon tax would not be evenly distributed among U.S. households. For example, the additional costs from higher prices would consume a greater share of income for low-income households than for higher-income households, because low-income households generally spend a larger percentage of their income on emission-intensive goods. Similarly, workers and investors in emission-intensive industries, who would see the largest decrease in demand for their products, would be likely to bear relatively large burdens as the economy adjusted to the tax. Finally, areas of the country where electricity is produced from coal—the most emission-intensive fossil fuel per unit of energy generated—would tend to experience larger increases in electricity prices than other areas would."


India. China. Next?


"A carbon tax’s effect on the economy depends on how lawmakers would use revenues generated by the tax. The tax would help reduce U.S. emissions but would have only a modest effect on the Earth’s climate without a worldwide effort."

https://www.cbo.gov/publication/44223


Good thing the carbon tax argument lost in 2010, 2012, 2014 and 16.

Remember "it's the economy, stupid"?

[zap]

edit

Originally Posted by dougdye

I don't understand why we don't raise the fuel tax.

oh, it's happening.

http://www.nj.com/politics/index.ssf...ding_plan.html

More states will follow.

[fa63]

Carbon tax would be a short-term economic burden of course, but people adjust. While adjusting, it is possible to provide credits to help those who would be affected the most.

Personally, I am OK with a carbon tax on moral grounds. I want to leave the world the same or better than I found it, and I am willing to pay for that. A Piguvian tax (like carbon tax) is the most certain way to address an externality like emissions. But all of this means nothing if one is to believe that the atmosphere is an infinite sink...

[ultraman6970]

The problem goes both ways, the buyers and the american manufacturers aswell. Have european friends that love american cars because are just BIG, know american friends that are like 300 pounds wearing a jetta.

We could get better fuel economy if we had the same rules than europe, cars IMO have way too much weight here in america but people wants their stuff in the cars plus add gvmt safety and epa norms and there you have it, crappppy fuel economy.

Thinking seriously into getting a 3 wheels car for 7000 bucks now just to commute. Dont need enything else anyways.

Originally Posted by dougdye

I don't understand why we don't raise the fuel tax. It would encourage drivers to buy more fuel efficient vehicles as well as raise needed funds to improve/maintain our infrastructure.

[flydhest]

The CAFE standards are more distortion than tax.

93LegendTi. I don't think I disagree with what you quoted. There is a regressivity to carbon taxes that is not great. The imposition of the tax itself would have some adverse economic harm.

What is missing, or wrong with what is quoted, is the false premise that not imposing the tax means not imposing a cost on society. The question should be, could a carbon tax, warts and all, lead to a net improvement.

I will also stress that I framed this as a comparison to CAFE standards, but the question of good or bad is clearly legit.

And yes, this topic is political, but I think it can be non-partisan. Maybe not, but maybe. There are Dems and Reps who both support and oppose carbon taxes.

[Tickdoc]

Fuel tax increases are long overdue and seem to be the only realistic solution to improving our crumbling infrastructure. I live in what has to be the worst road condition place in the us. What scares me is the incompetence displayed in road maintenance and repair. There are only about three construction firms in our illustrious state that win the bids for these big contracts, and none of them know how to properly build or repair a road, imo.

Watching them work is a comedy of errors, and the finished product is hardly a thing of pride.

My whole life I've always marveled at how nice the roads are in other areas.

[flydhest]

I will also add that the vast, vast majority of economists, if asked "what would be the best way to reduce the burning of fossil fuels to reduce the carbon footprint" would say "carbon tax." That statement is far from saying that the vast majority of economists would support a carbon tax. You have to buy into the goal etc. I would personally not be opposed to using the proceeds to raise the exemption level for income taxes to offset the regresivity for example and to provide some near-term offset to the economic drag. But of course, money is fungible, so this question of "what do you use the proceeds for" is inherently a bit of a silly one.

[54ny77]

People buy tiny cars in Europe because gas and diesel is double and triple the cost vs the US. And their roads still suck. They're also a heck of a lot narrower in metro areas.

[fa63]

Originally Posted by flydhest

What is missing, or wrong with what is quoted, is the false premise that not imposing the tax means not imposing a cost on society. The question should be, could a carbon tax, warts and all, lead to a net improvement.

Good point.

[jlyon]

The US currently gets about 40% of electricity from coal and les than 20% from Nuclear.

If the carbon/gas tax would be used to swap those % then maybe. But the current politics have prevented new Power plant construction so I don't hold my breath.

What if we could give away electricity for almost free? Electric cars and bikes would take over. The question becomes how to we pay for it and will big Oil/coal have too much power to allow it.