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Gasoline

Gasoline and Other Fossil Fuel Taxes: Why Are They Not Used?

Jon Strand's picture

When I moved from Norway to Washington with my family almost seven years ago, I went from paying more than $8 per gallon for gasoline in Oslo, to around $3 per gallon in the U.S. Our house is close to a bus stop for getting to the Metro, but the bus service is unreliable.  Here is a first-hand illustration of how the price of gasoline affects people’s behavior.  It is inexpensive to drive, so relatively few people are strongly dependent on bus service; with limited ridership there is less call for more reliable bus service and less money available to provide it.  Where it is more expensive to drive, there is greater demand for higher-quality service and lower demand for more fuel-intensive cars.  And fewer people want to live far away from their jobs or schools, or in very large dwellings that are costly to heat and cool.  Our work in energy and environmental economics confirms how economically sound energy pricing is crucial for inducing more efficient behavior.