Gas Consumption Down - Taxes Up

This hub will explain why those who believe in the theory of lowering gas consumption is good for the economy. While this is not part of my series “Economics Isn’t Rocket Science” it is written with the same principle in mind, that if we break any economic subject down to its lowest common denominator it really is very simple.  What this article won’t do, is get into the causes of the high gas prices and the energy crisis.  Whether it’s caused by greedy oil companies, bad government policy or a myriad of other factors is irrelevant to the point here. What I will show is how the left’s answer to the problem is consuming less gas, switching to “green” cars and investing in mass-transit isn’t the answer. Well it is the answer for the liberal progressives as it will raise taxes and  cause more people to be dependent on the Government.

What happens when we being to use less gas by having people change their driving habits etc.? In theory we make the world a better place. That is if you like to drive a little car which can only go about fifty miles before being recharged. And I guess if you like driving this same car on crumbling roads and falling down bridges, or not being able to live in the country, but instead have to live in the city where your job is. This is what will happen when we save the world by lowering gas consumption.

It all comes down to one thing, depending on your political persuasion, it can be either a good thing or a bad thing, and that is the gas tax. Every gallon of gas has about 48 cents of tax on it, this is the federal gas tax, this does not include state tax, local tax or any taxes which are placed on those evil oil companies. Remember, when any product is taxed, that cost is added on to the price of the product. If we sell 100 gallons of gas, the federal government makes $48.00. If we believe what we are told this money goes to fix roads and bridges, whether that is in fact true or not, we won’t argue here, to keep it simple, we will believe this money is used for what it is intended. Let’s assume this $48 will pave one foot of highway (I know this isn’t the case but we are keeping it simple). What happens if we cut gas consumption in half? Now, if we keep the gas tax the same, we are only making $24 enough to pay for only one half mile of paving. If the government has planned to pave one mile of road this year, they will now have to put off paving the second half mile until next year, or at least until they raise the “lost” $24.00. 

A counter argument can be made that if people are driving less than the roads won’t need as much maintenance, a good point except for the fact if one listens to all the politicians the infrastructure is falling apart now and can’t wait. So if the roads need to fixed the money will still need to be raised, and as we all know this is done be raising the tax even more. I suppose an alternative would also be to cut the costs of paving by using cheaper materials but then this will lead to having to repair the roads more often than currently, so there would be no savings.

There has been talk out there about charging a mileage tax either instead of or in addition to the gas tax. This also will lead to less revenue for the same reasons as lowering fuel consumption will. People will drive less, therefore lowering the revenues. This tax will have to be raised to make up for the loss. It will create a never ending cycle. Less miles will be driven, less tax revenue will be collected. Then there is also the effect it will have on employment and auto related businesses. Less miles means less need for new car purchases, less tires and possibly less repairs, affecting all these businesses. I can see the government having to further bail out the auto companies and the tire companies in the not so distant future.  More unemployment equals a worsening economy, a downward spiral for sure. 

Another government answer is to expand mass transit. Again, this will also cause a downward spiral. The most obvious problem is mass transit is not available where it needs to be. Most people no longer live in the cities, they have chosen a different lifestyle than what the progressives would like us to live. Of course the answer is either expand the system, or force people who still work to move to the cities. If you expand the system, yes, there will be a temporary increase in employment in the construction industry, but when these systems are built, they will more than likely not be self sufficient unless the ridership costs are so high that the average worker can’t afford them. This means they will have to be subsidized. Look at Amtrak for an example of how well government run transportation works. What does this mean? Correct, higher taxes and we still have the problems mentioned above. 

In order to understand why the Government is pushing for higher gas prices and “green” cars you have to understand the Progressive mindset. The progressives want everyone to live as they believe you should. They want all, except themselves, to be dependent on the government in some way or another. They want control of businesses, like the auto business and the oil business, so they can socialize it. They want to control energy prices, food prices, wages, etc. so they can create the progressive version of utopia. They believe everyone should be “equal” it just is they want everyone equal on a lower level then what we live at now. This will be accomplished when they tax us to death.

And of course, there will always be some who are more equal than others, those who believe they must lead us because they know better, and it those leaders who will not live as they expect us to. Look at the history of communism and its subsequent fall in Russia for a perfect example. I know, I will hear from those who will say I am calling our current leaders a communist and therefore I must be racist, go for it.