Reasons To Keep Oil Prices High, Ctd

Andrew Sullivan —  Jan 15 2015 @ 7:59am

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A reader addresses Chris Edwards via our post:

Yes, Mr. Edwards, the percentage increases in the gas tax between 1984 and 1992, seems rather large, but this a rather lazy argument and ignores almost all of the developed world. Take a look at this article in The Economist from 2011. My coworker – back when I used to work at the Energy Information Administration – used to have [the above] graph contained therein posted outside his door for a good reason. Developed countries’ gas taxes are almost all at least a $1 higher than ours!

Another also pounces on Edwards:

You know what else happened between 1982 and today? A wee bit of inflation. The 18.4¢ today is equal to just 7.5¢ when adjusted for inflation. That’s a slightly less meteoric rise. But what’s perhaps even more disingenuous – and this is from someone who apparently has a masters in economics – is where Edwards starts his chart and analysis.

There’s really no good reason for him to start that chart in 1982 that I can find. If you extend it backwards, the gas tax was unchanged at 4¢ from 1959 to 1982. The 4¢ gas tax in 1959, had it been adjusted for inflation, would stand at 32.5¢ today (about what the 18.4¢ 1993 figure would buy today if adjusted). In other words, thee gas tax that built the Interstate Highway system 50 years ago was nearly double what it is today. Of course, we now have to maintain that system, but no longer have the tax base to do so. The 1993 hike merely brought it up to where it had been originally, but it has slipped by nearly half that value in the past 20+ years.

Unlike most other taxes that are per dollar, gas taxes are per gallon (which makes some sense due to the volatility of gas prices), but unlike those taxes, they don’t rise with inflation. They should, but good luck getting that through Congress. So any time inflation ticks up, it’s a backdoor tax cut for drivers, with the only side effects being the condition of the roads they drive upon.