Gas prices seem to be a big issue in the USofA these days. Of course, gas prices in Europe and elsewhere have been far higher than in the US for decades — and they only get a litre! In spite of this, many pundits are speculating that the price we pay for gas will be a big political issue come November. The whole issue seems to me like a good example of how our political system breaks down and produces poor/inefficient results because of an irrational public. Indeed, gas prices should be much higher.
One of the reasons why increasing gas prices are viewed with such disdain, and rightfully so, is that they amount to a lowering of wages across the board, harming workers who already have the lowest incomes. Yesterday, a friend of mine, only half-jokingly, said that if Palestinians had to drive to their jobs it wouldn’t be worth working. I’m not denying the effect on people with the lowest incomes, but I think that it would be best to offset those losses elsewhere (for instance eliminating sales tax on food and necessities in states that have them) and raise taxes on gas to European-levels.
Americans’ use of gasoline has massive external costs, both to other Americans and to the rest of the world. All of the usual suspects are byproducts of our obsession: our tolerance of unsavory rulers in the Middle East and South America, the perverse incentive to wage costly resource wars, serious degradation of the environment, ridiculous traffic etc. These costs, to a large extent, are not factored in to the everyday price of gasoline. In fact, the costs to society from our reliance on oil and gas is exponentially greater than the out-of-pocket costs to consumers of those resources – driving is far too cheap. We, as a society, simply pay those costs elsewhere. So, like any good economist would say (I’m not including myself in that group), we should be focused on achieving efficiency in a market that isn’t functioning correctly – the price of gas should reflect the costs that are currently externalized, reducing demand to an efficient rate and providing accurate market signals to companies to develop alternatives. Instead, political pressure causes short-term “solutions” in the form of artificially increased supply to termporarily bring down prices.
Ironically (or maybe not at all), this is not clearly a Republican or Democrat issue, despite the dis-honest political bickering. Of course, Republican’s professed (but rarely actualized) disdain for taxes makes it hard to imagine them leading the charge on such an issue, but their overall praise for efficient markets (again unactualized) and decreased reliance on “foreign oil” (ditto) fits nicely with the proposal. Democrats have an easy sell to their Hummer-hating, BigOil-conspiracy-theory-developing constituency, and they don’t seem to shy away from taxation. Still, while it is counter-intuitive to most Americans, and largely above their head, it could be explained in a way that the average voter could understand. Unfortunately, political debate has become absurdly simplified wheras real-life solutions to real-life problems are rarely simple.
The other day Sparsh asked me how high I thought the price of gas had to rise until people stop driving and start taking public transportation. I told him about a segment I heard on KPBS that same day – an interview with a local pawn shop owner who said people were filing into his shop to pawn off their goods in order to fill their tanks to get to work until their next paycheck.
I think that Sparsh’s is the million dollar question of the next couple decades. ‘Cause transportation – public or otherwise – is no longer an individual’s choice. We can’t afford it to be. When a life necessity becomes a rare commodity, market forces just don’t work anymore.
Beyond just raising the price of gas – the government needs to learn how to sell amazing public transportation projects to the public. As soon as the public hears the word tax, their gut reaction is that the gov’t should get their filthy hands off their paychecks. But if you sell them on some state-of-the-art bullet train that delivers them directly to their airport terminal with integrated check-in, wi-fi access, etc. then all of a sudden they are proud of their city and are fine with it being “publicly funded” by a gas tax. At least that’s what I saw in Kuala Lumpur and I don’t think Americans are any different – they like their special effects and they like their toys. That’s one of the main reasons that people tell me they still drive – because their cars are comfortable … and public transportation still isn’t. That needs to change.
But my real question is this: you’ve had an entire semester of doing just about nothing to write something on here and you choose to do it the week before finals? Talk about an irrational public.
You just now realized the inverse relationship between the # of days before an exam and the % liklihood that I will write a post? I thought this was axiomatic around these parts.
I agree about selling the public on alternatives, but people respond to incentives, particularly monetary incentives, and they will become much more amiable to a fancy public transportation system (in fact they will demand it) when gas is no longer cheaper than milk.
I guess that was my point with the pawn shop owner. You’d think that holding on to their jewelry and whatever else would be a big enough incentive to ride the bus, but apparently not.
In other news, Aceyalone’s new album is terrible.
“Instead, political pressure causes short-term “solutions” in the form of artificially increased supply to termporarily bring down prices” – That’s just what I’ve been thinking lately.
We all know that besides NYC, public transport in the US stinks. But both the NYC subway system and BART (Bay Area Rapid Transit) are unionized entities which aren’t as efficient and cheap as they could be. Should they have been privatized projects? BART for one is expensive. Two, it is not expansive enough for most people to get to their destination.
The assumption I am stating (not necesarily believing) is this: BART is a government own/ unionized, therefore costly (even janitors make 100k) and inefficient entity.
Would the privitization of public transportation be the answer?
Are you seriously saying the poor should keep their jewelry and get on the bus?
What bizarro blog have I happened on to?
Is there any real compassion to those less fortunate who do have to make these tough decisions? We cannot throw the poor under the bus in this situation. Not every one considers gas an incidental, carefree purchase. Some families budget for it (more and more families, these days, likely).
And even if gas is the root of all evil (I wouldn’t necessarily argue that point with you, Abo, too much; I live and breathe), why even countenance a solution to reverse its evil by supporting higher gas prices — clearly a brutal regressive tax, in a sense. Aren’t there any other, fairer options?
Edited…will respond in a sec.
While I think we do need better public transportation systems across the country (even the places with extensive networks are seeing a drop in ridership and worse service – probably related), there are some places where it is nearly non-existant.
Perhaps tying the tax on gas to the fuel efficiency of the vehicle may help push us towards a wiser use of resources. Cars increasingly have “black boxes” installed in them, you could plug in your car, the pump would record the efficiency and then set the price.
By the way, I proposed a class in a job application that focuses on the NY subway.
Derek – glad to have you join us on bizarro blog. I’ll try to respond to what you said if I understand you correctly.
I thought I made myself clear by saying this (Oso, to your comment as well):
Another way to do this would be to increase the earned income tax credit for low-income workers who must drive to work and to the grocery store. This is another solution, along with the one I already listed and many others, to the problems that you both addressed.
On another level Derek, if I remember your general beliefs from previous interactions (and please correct me if I’m wrong) you are a proponent of efficient markets. Do you think current gas markets are efficient, and if so, how are cost externalities currently factored in to the price-at-the-pump of gas? or are there none? And if there are externalities, and they are being paid for by the society elsewhere, does the government not have an obligation to attempt to mimic accurate market signals through incentives? And if they don’t, then how should those costs be factored in to the efficient supply/demand for gas?
I’m not being rhetorical, my understanding of economics is purely conceptual and thin at that, so there may be an obvious (or complicated) answer that I am missing. I’ve looked around the web for some counter-evidence, but haven’t seen a good argument to the contrary other than “it hurts the poor,” which I feel I have addressed.
This is a really interesting discussion. As someone who chooses to go carless in Los Angeles, I could say that I am laughing right now, but that would not be fair. Not having a car is inconvenient in most places, including this famously car-centric city, although public transit here is better than most people give it credit for.
I do have a few points of contention with some of what has been said. Although I agree with the obvious point that higher gas prices do lead more people to take transit, I am also not surprised that people are willing to make great sacrifices to keep their vehicles fueled. Honestly, I do not think that the solution is to build upscale public transit to get the middle and professional classes out of their cars. It sounds nice, but it is not worth the investment. There are more effective ways that government could encourage transit use while also upgrading service for the transit-dependent, a preponderance of whom are low-income.
Gas is only one of many costs that go into keeping a car on the road. When you consider the additional burden of car payments, insurance, and maintainance, along with parking and tickets, gas becomes less of a deal breaker. People have already put a lot of money into their cars before they even start to drive, so they are not so likely to let them lay fallow in the garage. In my opinion, the greatest factor that encourages driving in a city like Los Angeles is the oversupply of parking. The zoning laws call for two off-street spaces per unit in most areas, unless the development falls within special transit-adjacent zones, in which the requirement drops to one space per unit. To me this encourages people to drive much more than cheap gas. Once parking becomes incredibly inconvenient and/or expensive, people become more willing to look for alternatives.
Traffic in Los Angeles has become more and more horrendous, but people still drive. Gas prices are going through the roof, but people still drive. And yet, all these new condo developments come with abundant parking, even in downtown LA, where there is good public transit. So all the new tenants drive everywhere. Why not? Try parking in Manhattan for close to as cheap and you will start to understand why most people use the subway, buses, and cabs over there.
Gas prices do have a disproportionately adverse impact on the poor. I am not clamoring for government to jack up supply to control prices, but I am also not looking for new gas taxes. Start by denying people their sacred parking spaces, and make transit faster, more reliable, and more flexible, but not more luxurious. I think you will soon see some of those latte-sipping car commuters suffering with the unwashed masses on the “people’s limousine.”
Whats up cats…just thought I’d chime in quickly…I’m diggin on the discussion.
To me the debate over cars vs public transportation goes much further than a specifically scarce resource/environmental issue…there is another aspect that is the heart of defining our communities and cities. Mainly do we want them designed around human beings or cars. I see it to some extent at the heart of the future of human interaction within our communities.
When I was 15 I moved from rural Tennessee to live with my dad in Irvine. While I hated Irvine with a passion while I was there, in retrospect I am greatful for the lessons I learned there. For those of you who don’t know Irvine, it is a completely planned “community” (and believe me I use that term very loosely). The whole of Irvine is owned by the Irvine company which regulates growth etc…its planned down to the point where they know where every single tree is in Irvine (because they planted them all).
Not only is it planned, but it is planned around the car. They have all these “innovative” techniques to avoid traffic and whatnot and sidewalks seem to have been more of an afterthought. Seeing the differences in the way people interact in Irvine and the various other places I have lived that are much more centered around public transportation or the bike really made me recognize the evils (at least in my mind) of the car.
When I lived in Rio, or here in Ocean Beach, San Diego (where I live now) I knew/know all my neighbors. I see them on the street as I’m walking to work, I see them in the grocery store, the video store, restaurants, bars, and on the bus. Much of this is due to the fact that here people are much less dependant on their cars. They walk to the local market instead of driving to the one 30min away, they rent videos at the local video store, go to the local bars and thus build community in a way that Irvine is severly deficient.
The problem is in a place like Irvine, even if you want to talk somewhere, its built in such a way as to deter you. There isn’t anywhere to walk to close enough (followers of new urbanism, a school of urban development that seeks to make walkable communities, argue that the average person is willing to walk up to a quarter of a mile before they decide to use their car). Plus its just completely unpleasant to walk on empty sidewalks next to broad avenues without any trees and with lots of cars.
I think you have to have economic incentives to move people towards public transportation, and I like the parking debate (in Amsterdam is expensive as hell to park your car in the city, they have parking lots on the outside of the city for those commuting in where you can park and then take public transportation, and people use it, or they just bike), but I think it also needs to be coupled with some sort of hearts and minds campaign. The problem is, especially here in So Cal, the car is such a symbol of freedom and individuality, whereas public transportation has a very negative connotation. In that respect I agree with oso that there needs to be something to put some pzazz (I have no clue how to spell that) into the system to help lessen the stigma of public transportation.
I ride public transportation here in SD, but its so different from when I was in Rio. Here its something that inhibits me, stops me from exploring, and doing things I want to. There it was a symbol of freedom and part of my exploration. I loved being able to go out drinking and not worrying about designated drivers (not that people from Rio who do drive ever worry about that :P), getting on the bus with a group of friends and being silly and interacting in a way that is impossible when you’re cramped into a car each person stuck in his/her seat. I loved going out friday night and having the bus packed with other people excited about friday night, drinking beer on the bus, kids in the back of the bus singing songs, banging out rhythms on the seat backs…it was part of the fun. OK sorry bout that little nostalgic rant, I gotta get back to studying.
OH yea, David…I met a girl the other day who works for the world bank and has to keep tabs on whats going on in the world for internal reports for the bank…I plugged Global Voices to her…she sounded excited…you got hte man readin yo shit now 🙂 hehehe.
Catatau (aka Noah)
Oso-
Thanks for the kind word. I have been quietly reading your blog for a while now, and the feeling is mutual.
To add one more point about parking. Another reason to lower zoning requirements for parking is housing affordability. As someone who would like to be in the market to buy a place, I am annoyed that so much of the cost of a condo, for example, is based on the cost of the parking spaces that go with the unit. If I buy a small condo, why do I need two parking spaces and another guest space for every four units? I can’t give you numbers, but I know this increases the price by a lot. Plus, it discourages dense development, which is a key to avoiding the Irvine syndrome Catatau so deftly describes. Now we’re getting a suburban downtown, where people live in these urban loft spaces and then drive everywhere, which is silly.
Catatau – Your description of Irvine is pretty much right on the money. I lived there for many years and it would be quite easy to drive from work or school, open your garage, park your car, and never talk to or interact with anyone on the way. In fact, I’m moving back to Irvine for the summer and I’m wondering how I’m going to handle driving everywhere again. I love the fact that in DC I walk to the grocery store, bars and restaurants. Hop on the metro with thousands of other people, as opposed to the freeway, to get to school. Irvine has no corner grocery stores, a handful of scattered bars, a few independent restaurants (El Canejo) and no good record shops (anymore). It does however have the widest, cleanest, smoothest streets you’ve ever seen and three gas stations at every intersection.