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Gas Pricing Needs to be set at $7 a Gallon? Possibly…

03 Mar

SINDYA N. BHANOO of the New York Times blog, DotEarth, writes in Fuel Taxes Must Rise, Harvard Researchers Say, that in order to meet the Obama administration’s targets for cutting greenhouse gas emissions, the cost of driving must increase.

This, writes Bhanoo, is according to a forthcoming report by researchers at Harvard’s Belfer Center for Science and International Affairs: "Analysis of Policies to Reduce Oil Consumption and Greenhouse-Gas Emissions from the US Transportation Sector."

To reduce carbon dioxide emissions in the transportation sector 14 percent from 2005 levels by 2020, Americans may have to experience a sobering reality: gas at $7 a gallon. And that increase in price will come in the form of a tax.

In the modeling, it turned out that issuing tax credits could backfire, while taxes on fuel proved beneficial.

“Tax credits don’t address how much people use their cars,” said Ross Morrow, one of the report’s authors. “In reverse, they can make people drive more.”

Researchers said that vehicle miles traveled will increase by more than 30 percent between 2010 and 2030 unless policymakers increase fuel taxes.

Abstract: "Analysis of Policies to Reduce Oil Consumption and Greenhouse-Gas Emissions from the US Transportation Sector."

Even as the US debates an economy-wide CO2 cap-and-trade policy the transportation sector remains a significant oil security and climate change concern. Transportation alone consumes the majority of the US’s imported oil and produces a third of total US Greenhouse-Gas (GHG) emissions. This study examines different sector-specific policy scenarios for reducing GHG emissions and oil consumption in the US transportation sector under economy-wide CO2 prices. The 2009 version of the Energy Information Administration’s (EIA) National Energy Modeling System (NEMS), a general equilibrium model of US energy markets, enables quantitative estimates of the impact of economy-wide CO2 prices and various transportation-specific policy options. We analyze fuel taxes, continued increases in fuel economy standards, and purchase tax credits for new vehicle purchases, as well as the impacts of combining these policies. All policy scenarios modeled fail to meet the Obama administration’s goal of reducing GHG emissions 14% below 2005 levels by 2020. Purchase tax credits are expensive and ineffective at reducing emissions, while the largest reductions in GHG emissions result from increasing the cost of driving, thereby damping growth in vehicle miles traveled.

Source:

Morrow, W. Ross, Kelly Sims Gallagher, Gustavo Collantes, and Henry Lee. "Analysis of Policies to Reduce Oil Consumption and Greenhouse-Gas Emissions from the US Transportation Sector." Energy Policy 38, no. 3 (March 2010): 1305-1320.

SINDYA N. BHANOO, New York Times, DotEarth, Fuel Taxes Must Rise, Harvard Researchers Say

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