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For a long time I have felt the price of gasoline in the United States was way too low. Pretty much all economists believe this. Greg Mankiw blogged back in October about the many reasons why we should raise gas taxes.
The reason we need high gas taxes is that there are all sorts of costs associated with my driving that I don't pay — someone else pays them. This is what economists call a "negative externality." Because I don't pay the full costs of my driving, I drive too much. Ideally, the government could correct this problem through a gas tax that aligns my own private incentive to drive with the social costs of driving.
Hurray For High Gas Prices!
Seeded on Mon Jun 18, 2007 10:43 AM EDT
Article Source: freakonomics.com- Enjoy this article? Help vote it up the 'Vine.
- Public Discussion (1)
Agreed. I tell people that I hope the gas prices stay high, and they look at me in horror. Even at $3.50/gallon, people _still— drive big SUVs. I cringe every time I see one person driving an SUV with no passengers (point being that it is inefficient).
Clearly, we still have not reached a point where the gas prices would socially limit people's driving activities. I bet that point will not be reached until the $4/gallon mark.
One could further argue that the low prices for gas fuels car usage to the point that it discourages better implementations of public transportation and city planning. Sprawl happens because of our reliance on cars and our willingness to drive everywhere. I mean, if everyone is driving, what is the point of spending hundreds of millions of dollars to implement light rail or metro systems in congested areas?
- 1 vote
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