Most car and truck drivers probably have a viscerally negative reaction to the idea of higher gas taxes. However, given the tightness of oil supplies and the massive budget deficit, this might be a tax that is appropriate. Reducing demand for oil would extend and conserve this resource for future use. As has been shown with tobacco taxes, behavior and consumption is influenced by price. Reduced demand for oil in the U.S. would make us less dependent on hostile foreign sources and reduce the number of dollars flowing out of this country. Further, increased oil drilling (drill baby drill) and reduced consumption are not incompatible. Both are required to eliminate the 9 million barrels of oil the U.S imports daily.
New technologies and newly discovered oil finds seem to have pushed back peak oil by a decade or so, but the world is running out of easy to find, easy to pump oil. The cost of oil seems likely to be on a slow upward spiral as demand from Asia increases and oil becomes increasingly expensive to find and pump. More leaks and spills seem likely as drilling takes place in hostile and fragile environments.
The challenge of closing the budget deficit is illustrated by how little support a gas tax would engender. U.S. voters may approve of imposing increased taxes on the rich, but are unwilling to increase taxes that impact themselves. Cuts in entitlements are equally unpopular. Thus, the U.S. will continue to run up huge deficits for the foreseeable future. A gas tax would offer a long term benefit by preserving scarce oil resources, as well as reducing the budget deficit. However it has no chance of gaining support as long as U.S voters remain complacent about the deficit and the diminishing supply of cheap oil. Time will tell if our profligate behavior comes back to haunt us in the future.
Will Oil And Gas Drilling Activity Determine Economic Growth Rates By State and Country?