Gas is Still Too Cheap

Yesterday, for the first time, I spent more than $50 to fill my tank of gas. I do not have a particularly big car (it’s a Subaru Legacy), but a combination of a very empty tank and more expensive gas than usual (was $0.13 cheaper this morning, burn!) caused my to set the record.

The president and Detroit recently agreed to raise the fuel economy standards. Eduardo Porter has a great piece in the New York Times demonstrating why this is a poor strategy. If we want less of something (gas usage) we need to make that more expensive (tax it).

in Britain, where gas and diesel are taxed at $3.95 a gallon, the American automaker Ford sells a compact Fiesta model that will go nearly 72 miles on a gallon. In the United States, where gas taxes average 49 cents, Ford’s Fiestas will carry you only 33 miles on a gallon of gas.

 


3 thoughts on “Gas is Still Too Cheap

  1. Dennis Tai Reply

    A lot of factors here at play: 1, British gallon is 1.2x that of US gallon; 2, Taking the quoted Ford example, if you look at the 60~70 mpg models of the fiesta in UK they are all diesel models, and we all know they got crazy mpg (look at VW TDIs) and the comparable 1.6L (no turbo) got roughly the same milage; 3, diff. emission standards, rumor has it that in europe enforcement of emission regulation is not as strict as in US; 4, taste. We americans simply want bigger power cars…

    1. Dennis Tai Reply

      and Tax will probably change factor 4 above.

  2. Sid Reply

    Dude…you and Dennis both need to email me thoughtful and credible research papers on all things economics. Dan…Glad we met in the Applied Econometrics class. Hope God is blessing you a bunch. Email me what all the cool kids are reading. You have my email don’t you? I just entered it to subscribe to your blog.

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