What causes more conservation: A 50 cent gas tax increase or a 50 cent price increase due to market forces?

Question

I say they work the same. So why did Gore supporters think a 50 cent tax increase was nifty but price increases are bad. Is it because the money went into the wrong pockets, i.e. productive people vs. government?

Answer 1

market forces would cause more conservation. people would rather put money into a fiscal budget than let a corporation pocket it.

Answer 2

please draw your supply and demand lines on paper ... they usually look like an 'X' although the slope of either line may vary.


when market forces act to move the price up 50 cents, that could be any of and increase in demand or a decrease in supply. [The entire line moves up and to either the right (demand) or left (supply).] In either case, the new higher price will encourage suppliers to search for and find more oil that they then bring to market.

when the tax is increased 50 cents, there is no incentive for suppliers to look for more oil and so they don't.

If follows that, in nearly all cases, actual volume will be lower in the long run if a tax is imposed than if market forces cause the same increase.


lower long term volume = less pollution .... or at least the Greenies think so.


what they haven't included is the effect the 50 cents of added tax will have on the government. Using GSA estimates, about 10 cents of it will be wasted in the Federal bureaucracy (more jobs for the intellectual elite). The other 40 cents will be spent on some program or other -- and you can almost guarantee that the programs chosen will be designed to collect votes for the people who passed the law.

Bigger government always creates more waste [government is almost always the lest efficient supplier of any good or service -- check the post office versus FedEX for an example]. Further, it always reduces economic activity and thus real people's jobs, profits, and thus taxes collected.


I suggest that it is potentially dangerous to meddle in the design of Planet Earth. We aren't the designer. We aren't in charge. It is entirely possible that we're supposed to search out and use resources ... if only because that will shorten the time period before we invent something better and for all we know that time period is critical for some reason we know zot all about.


does this help?

Answer 3

A 50 cent tax increase would theoretically cause demand to decrease. When demand decreases, the price of a barrel does as well.

A price increase due to market forces is due to other factors, such as refinery capacity and production levels at its source.

I'm not advocating an imposed tax, merely pointing out that they are two different things. Demand has a positive relationship to price per barrel, as driving habits adapt to compensate. Both would, theoretically, lead to conservation.

However, an imposed tax would induce long-term changes in consumer behavior. I.E. the popularity of fuel-efficient vehicles might increase.

Answer 4

I say gas would create more conversation. Every news channel already informs us of the exact second that gas prices rise or fall. We can actually try to boycott market forces and possibly succeed. But when it comes to driving, we aren't ready to walk everywhere. Basically gas tax increase is the harder to fix, so we'll be talking about it more.

Answer 5

You just scraped the surface. Get this: Democrats raise gas taxes to discourage consumption. But if their plan works, and people consume less, they lose the revenue. Where are they going to get it? Well, they'll just find something else to declare a "sin" and raise taxes on that.

What's really hilarious is that where I live, the state runs the liqour stores. All profits from liqour sales go to the state. But they raise the sales tax on alcohol to discourage people from drinking. So people drive to Canada or elsewhere to get their booze cheap. The state can't compete, so it offers promotional sales at discount prices to encourage people to buy the alcohol that they don't wan't people to buy so the liqour stores they don't want people to shop at will remain in business.

The Dems want to nationalize our oil industry and apply that very same policy to gas sales.

Answer 6

What about electric cars? PLease watch the movie "Who Killed the Electric Car?" on cable. BTW any increase means you pay MORE for anything shipped by truck!!!