Blog Post 9

CityLab Myths

9. There’s no downside to cheap gas

It was hardly a painful year for Americans at the pump. Gas prices started 2015 incredibly low and they ended it even lower, with average fuel costs in the U.S. dipping below $2 this month. That’s great for middle-class bank accounts, but it’s bad for all the hidden social costs of driving, which have been estimated at some $3.3 trillion (with a “T”) a year. Of that total, at least $1 trillion represents time lost to congestion both at home and at work.

With lower costs of gasoline of comes increase willingness to consume. When I am home in Los Angeles and have access to a car,  I am always more willing to drive places and farther distances when gas is cheaper. I am deterred from such activities when price is higher. For example, when I first learned to drive in 2011 gas was close to $5 a gallon which would require me to strategically plan out routes and carpools to split costs. Despite being an environmentalist and being aware of social costs of driving, I am always first inclined by costs. Therefore, I think if gas were appropriately priced, it would better reflect the economic impact it has in other facets.

This can be remedied through increasing the cost of gas through a gas tax. This relates to Karen Frick’s 4/6 lecture in which we discussed the different transportation funds. Considering the federal gas tax hasn’t been raised since 1993, we must heavily rely on alternative modes of funding like sales taxes and non-user fees to fund transportation. In addition to social costs, there are several negative environmental externalities with cheap gas. This contributes to things like climate change, public health, pollution, etc. Gas can be appropriately priced through raising the gas tax on the federal and state level to support public transit funds and discourage excessive use.
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