Could America Tax Gasoline More (And Fund Clean Tech)?

Last month Thomas L. Friedman wrote in the New York Times an interesting op ed on why America should tax more gasoline. This occurs as the United States is the least forceful OECD country regarding gas tax. US drivers pay on average less than ten euro cents of tax per litre when their German, British, Italian, Turkish or French counterparts pay as much as 60 to 70 cents per litre. Even Australia does better with more than 20 cents per litre.

The situation varies from State to State with Alaska only taxing 26.4 cents per gallon of gasoline while California taxing up to 63.9 cents per gallon. Federal authorities already tax 18.4 cents per gallon for gasoline and 24.4 cents for diesel.

Since the United States’ addiction to oil is widely documented and recognized as a threat by both sides of the political spectrum, why shouldn’t it tax oil more to curb the consumption?

This could effectively stimulate efficiency, decrease the amount of oil the country consumes each day and also help to curb greenhouse gas emissions. One dollar per gallon would bring $140 billion to the Federal government each year. One dollar per gallon would amount to 39 euro cents per litre. Even with such a tax, the United States would keep on taxing less heavily gas than most OECD countries.

As Friedman notes in his article :

Such a tax would make our economy healthier by reducing the deficit, by stimulating the renewable energy industry, by strengthening the dollar through shrinking oil imports and by helping to shift the burden of health care away from business to government so our companies can compete better globally.

Such a tax would make our population healthier by expanding health care and reducing emissions. Such a tax would make our national-security healthier by shrinking our dependence on oil from countries that have drawn a bull’s-eye on our backs and by increasing our leverage over petro-dictators, like those in Iran, Russia and Venezuela, through shrinking their oil incomes.

Instead of spending the money on national debt or healthcare, my belief is that the US should spend it on advancing and advocating cleantech, cutting its fossil fuels consumption and stopping to rely so massively on oil imports. It would also prepare itself for higher oil prices and peak oil.

Here are some projects that could benefit from such a tax and decrease oil consumption and exports:

• electric cars research, promotion and incentivesenergy efficiency and smart grid

• road infrastructure

• renewables (research, promotion and incentives)

• nuclear

• high speed rail and mass transit

• any project unrelated to energy

With 15 cents per gallon  each project would bring around $9 billion per year. No doubt that with all this money many things could be achieved.

To exemplify, here are some calculations using the figures given in Sustainable energy – without the hot air:

With $90 billion collected during a decade America could build approximately 45 GW of nuclear capacity or 70 GW of offshore wind.

As for high speed rail, this sum would multiply by ten the amount already allocated by President Obama. With all this money the country could get its ten high speed rail corridors and could even go way beyond.

Of course, if one dollar per gallon was too much, America could enact a fifty cents tax. The duration of the projects would however double.

China recently unveiled massive projects for high speed rail, nuclear power and hydroelectricity. Even if the Chinese government is not all too ready to cut its emissions, it is fully aware how relying on dirty coal and foreign oil could slow down the country’s rapid economic growth. Could the US just do the same ?

[photo credit: Flickr]