CITYSCAPE

  • Switch to Small Text Size
  • Switch to Medium Text Size
  • Switch to Large Text Size
Recommend to a friend Print Submit a Comment

    Cheap gas is a relief – but a terrible trend if it lures us back to old habits


    I paid under $2 a gallon this week at my neighborhood gas station, a welcome relief from the $4 price of a few months past. Cheap gasoline is back. But is that truly a good thing?

    The answer is yes and no.

    Only the most callous tree-hugger would belittle the benefit of half-price gas to families struggling against a dismal economy. Spending less at the pump will leave more money for food and rent, and it might even buy a little social stability during tough times ahead. That's the short-term answer and the politically expedient one.

     

     

    But viewed over the longer span and through a wider lens, the return of cheap gasoline is a terrible trend if it allows us to blindly resume our petro-dependent lifestyles as if nothing has happened. That has been our pattern in the past. When price spikes leveled off after the 1970s, our appetite for driving bigger vehicles farther and more often returned. Indeed, our carbon frenzy intensified.

    This time things have to be different. Our political leaders will be tempted to see cheap gas as a silver lining to the darkening clouds when, if fact, it is the opposite. Celebrating cheap gasoline at this juncture is like inviting a man making good progress on his diet to lunch at the Old Country Buffet. A relapse is likely.

    New policies could advance long-term interest
    President-elect Barack Obama's chief of staff, Rahm Emanuel, said last week that a recession is a terrible thing to waste, and he's right. There's now an opportunity for government to invest in policies that truly advance the nation's long-term interests. Both presidential candidates favored energy independence during the campaign. The huge downside to our oil addition – both from an environmental and a foreign-policy standpoint – is clearer now than it was in the 1980s. But cutting the cord will take enormous political courage.

    Obama said exactly the right thing in his "60 Minutes" interview. Asked if cheaper oil makes change on energy policy less important, the president-elect insisted that past patterns must be broken.

    "We go from shock to trance," he said. "You know, oil prices go up, gas prices at the pump go up, everybody goes into a flurry of activity. And then the prices go back down and suddenly we act like it's not important, and we start, you know, filling up our SUVs again. And, as a consequence, we never make any progress. It's part of the addiction, all right. That has to be broken. Now is the time to break it."

    But he didn't say how, and that's the hard part.

    A possible price floor and taxing mechanism
    Minneapolis Mayor R.T. Rybak, who's close to Obama on matters of urban policy, said Tuesday that, while he doesn't speak for the president-elect, he would personally favor a $3-per-gallon floor on retail gasoline prices. Any amount below $3 and above the retail price would go as tax revenue to help the transition toward energy independence and a sustainable economy.

    "We have a desperate need to retool this economy," Rybak said. "The current pricing arrangement leads to billions of dollars being transferred from this country to places in the world that are hostile to us and our interests. [Putting that kind of tax on gasoline] would mean less spending on gas over the long-term and building a better economy."

    Presumably, some of the revenue could go to the Big Three automakers on condition that they produce cleaner, more efficient cars. Some could go to other transportation options or to fix infrastructure or to retrofit cities and suburbs for more efficient kinds of development. The beauty of the idea is that, with $3 gasoline, drivers would have an incentive to economize while government would get money to stimulate the economy in productive ways.

    In a forthcoming book, "Two Billion Cars: Driving Toward Sustainability," Daniel Sperling and Deborah Gordon propose $3.50 as a price floor. Under that arrangement, the variable tax on gasoline selling at an average of $2.50 per gallon over the next year would raise $140 billion for economic transition. Consumers would, thus, have an incentive to actually buy the cars that the companies would be compelled to produce.

    Would Congress actually support it?
    The problem, of course, comes when the public discovers that this is little more than a massive gas-tax increase, a confiscation of money that's rightfully theirs, a socialist maneuver to force a change in the American lifestyle. How many members of Congress, even if they pay lip service to energy independence, even if they want a greener economy, could actually vote for such an idea? My guess is not many. Americans are as addicted to short-term thinking as they are to gasoline.

    Even so, I was surprised this week to hear conservatives argue that, at the macro level, higher gasoline prices would be a good thing. Mitch Pearlstein, president of the Center of the American Experiment, told me that it's terrific now, in the midst of hard times, that consumers can spend less for gas and home heating. But on the broader policy front there's a remarkable consensus on the need for energy independence. Further, there's consensus that to achieve that goal, all options must be considered, he said. Presumably all options include some kind of higher tax that would place downward pressure on carbon fuel consumption.

    "The train has left the station," he said on the desire for a greener and more efficient economy. "The turn might happen more quickly if gas cost $4 rather than $2. But even at 39 cents a gallon the reality is clear to most people," he said, "that high gas prices will return once the economy revives." The situation is fundamentally different, he said, from that of the early 1980s when America went back to its old ways.

    A concern about picking winners and losers
    David Strom, president of the Minnesota Free Market Institute, said he'd favor a government-induced boost in gasoline prices as long as the tax was offset somewhere else – a cut in the payroll tax, perhaps. But he warned about the dangers of dedicating tax proceeds to hasten economic transition. For government to pick particular winners and losers would be detrimental to recovery, he said. He offered the example of ethanol, an investment that benefits special constituents more than it does the economy as a whole.

    Any new carbon tax employed to shift the economy toward energy independence should be gradual, Strom advised.

    In the final analysis, reducing reliance on foreign oil and achieving a green economy will require significant lifestyle shifts for many, if not most Americans. Along with cleaner fuels and more efficient cars will come the need to drive less. That means living in closer proximity to daily destinations. And it means shifting to alternative modes of travel when possible.

    Montana Gov. Brian Schweitzer perhaps said it best at the Democratic Convention: "The most important barrel of oil is the one you don't use."

    The benefit of changing habits and living patterns
    Higher gasoline prices have already demonstrated their power to influence habits, said Jim Erkel, transportation director for the Minnesota Center for Environmental Advocacy. Americans drove an astounding 253.7 billion fewer miles in August 2008 when gas prices were high than they did in August 2007 when prices were lower, a decline of 5.6 percent. "Just by changing habits and patterns of living you can get to a much better place than 'drill, baby drill,' "  Erkel said.

    Just the small percentage drop in driving last August saved the burning of 1.1 million barrels of oil, Erkel calculated. Assuming that 60 percent of that oil came from foreign sources, the savings amounted to $38 million a day "that would have gone to people who don't like us," he said.

    So that's the tradeoff. Charging more for gasoline now changes habits in ways that helps everyone in the future. Ultimately it's about Americans' transition to life on a more modest footprint – a difficult but necessary pill to swallow.

    Steve Berg
    Illustration by Hugh Bennewitz


    minnpost.com/steveberg



    Steve Berg writes Cityscape for MinnPost.com. He sharpened his interest in urban design and metropolitan affairs as an editorial writer for the Star Tribune. His 31 years at the paper also included more than a decade covering politics from its Washington Bureau and five years as the newspaper's National Correspondent. Altogether, Berg has covered a wide-range of stories in 43 states. He and his wife live in downtown Minneapolis. He's at sberg [at] minnpost [dot] com. 

    Recent Posts by Steve Berg

    More Cityscape Posts