Consider Baker Institute's 50-Cent per Gallon Gasoline Tax, Houston Chronicle Says

In an editorial today the Houston Chronicle says a 50-cent per gallon gasoline tax proposed January 18th by two energy experts at Rice University's Baker Institute has several merits and "deserves careful review" by the Obama administration. It is heartening that the necessity for such a tax is grasped by independent analysts in a city often touted as "the energy capitol of the world." The editorial follows, including a link I inserted to the original op-ed piece.

It was mere moments into his inaugural address before President Barack Obama warmed to the energy subject: “Each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet,” Obama said.

And so they do. Gasoline prices may have backed off last summer’s $4-per-gallon highs, but there is widespread concern about a return to those price levels. Obama has spoken boldly about a new direction for the country in energy — including an ambitious green jobs program and eventual energy independence.

But the new administration has moved more gingerly on the question of a gasoline tax to slow demand and fund noncarbon alternatives. Steven Chu, Obama’s nominee as energy secretary, says such a tax is off the table for now, given the nation’s economic straits.

We understand sensitivities about adding to individual Americans’ tax burden while jobs are disappearing and household budgets are shrinking. But the interim before discussion of a gasoline tax returns to the national agenda, as it most certainly will, could be fruitfully spent with a thorough briefing on the subject. We would respectfully steer the new administration’s attention to the thorough scholarship on the subject done by energy fellows at Rice University’s Baker Institute.

In their recent Outlook piece (“ENERGY / Higher gas tax could help solve U.S. economic woes / Raise rates to wean country from oil imports,” Sunday, Jan. 18), Baker’s Amy Myers Jaffe and Kenneth Medlock laid out the benefits of gradual implementation of a 50-cent gasoline tax with a rebate for low-income consumers.

When combined with an increase in average fuel economy (CAFE) standards to 50 miles per gallon, the two estimate that a 50-cent tax could cut U.S. reliance on foreign oil by more than 50 percent over the next 20 years. Such a strategy also would lower greenhouse emissions in a meaningful way. Lastly, a gas tax would make it less likely that American drivers would face spikes to $4 gas by moderating consumption levels.

Meanwhile, the revenues accruing from such a tax would be significant — $75 billion annually at 2007 consumption levels. Used wisely, these dollars could build a bridge from the carbon era to greater reliance on renewable energy sources.

The Baker Institute scholarship on the impact of a gasoline tax deserves careful review by the new administration.