For most of Obama’s years as president, he has opposed raising the gas tax. Now, in his last, lame-duck year, he is proposing a $10 per barrel tax on oil. Since a 42-gallon barrel of oil produces about 45 gallons of gasoline, Diesel, jet fuel, and other products, this is roughly equal to a 22 cent per gallon gas tax, well above the current 18.4 cent tax.
The distinction between Obama’s oil tax and a gas tax is that the oil tax wouldn’t go into the Highway Trust Fund, where up to 80 percent goes for roads and 20 percent goes for transit. Instead, he proposes to spend $20 billion per year on alternatives to autos, including urban transit, high-speed rail, and mag-lev. Another $10 billion per year would be given to the states for programs that would supposedly reduce carbon emissions such as “better land-use planning, clean fuel infrastructure, and public transportation.” Finally, $3 billion would go for self-driving vehicle infrastructure that is both unnecessary and intrusive.
Obama proposes that the oil tax be phased in over five years, so that $33 billion is the average of the first five years; when fully phased in, the tax would bring in nearly $60 billion a year. This would be a huge slush fund for all kinds of social engineering programs.
The Republicans who run Congress plan to ignore Obama’s plan. The president’s “proposals are not serious, and this is another one which is dead on arrival,” says Senate Environment & Public Works Committee Chair James Inhofe (R-OK). Still, it’s worth looking at the plan as a preview of what might be proposed by the next president if that president happens to be a Democrat.
The first thing to note is that the White House no longer makes any pretense that taxes should be raised to fix supposedly crumbling highway infrastructure. As I’ve noted before, the claim that highways are falling apart is just a fiction used to generate support for more funding for rail lines and other boondoggles. None of the money raised under Obama’s new proposal would be used to repair or maintain roads, and–since maintenance doesn’t reduce greenhouse gas emissions–probably none would be used to repair or maintain rail transit lines that, unlike roads, truly are crumbling.
Second, anyone who agrees with Obama’s claim that there is no “greater threat to future generations than climate change” should wonder why his plan proposes no tests to insure that funds would cost-effectively reduce greenhouse gas emissions. Urban transit uses as much energy and emits as many grams of carbon per passenger mile as driving. High-speed rail could actually be worse than driving, especially when the energy costs of building the infrastructure are counted. It would be more cost-effective to spend that $33 billion per year buying 1.4 million Priuses and trading them to owners of existing gas guzzlers.
Third, the land-use planning that Obama proposes to fund would no doubt follow the example of California’s SB 375, which aims to coerce more people into living in apartments rather than single-family homes on the pretext that higher densities lead people to drive less. This claim has been disproven by research and the experience of the San Francisco Bay Area, whose two-thirds increase in population density since 1980 was accompanied by a one-third reduction in per capita transit trips and an increase in per capita driving.
Fourth, Obama’s plan would significantly increase the cost of living. On one hand, Obama’s political calculus is that raising taxes is easier when oil prices are low. On the other hand, at today’s prices, a $10 per barrel tax increases fuel costs by nearly a third. Though the administration claims that the $10 tax would be “paid by oil companies,” those companies would, of course, pass the cost to consumers. As Americans consume about 2.5 gallons of oil per person per day, the tax would impose costs of about $200 per person per year.
The White House argues that its plan “builds on the success the country has seen as a result of the American Recovery and Re-investment Act of 2009.” What success? The transportation share of that trillion-dollar boondoggle built a few streetcar lines (one of the least energy-efficient forms of urban travel), increased speeds on a few intercity rail lines by a few miles per hour, and otherwise disappeared into a black hole of pork-barrel spending. Did it reduce greenhouse gas emissions or create any jobs that wouldn’t have been created without it? Probably not.
In short, as one budget analyst confided to me, Obama’s plan is “Premeditated coercion and higher costs of living masquerading as environmentally friendly, job-creating transportation ‘investments.’” Republicans will be right to reject it, but they will be wrong to dismiss it as a similar plan is likely to appear next year if a Democrat wins the White House.