Oil prices have hit their lowest levels since 2009, so liberals are once again hard at work pushing for a tax on carbon dioxide emissions.
With oil prices plummeting below $50 per barrel, and gasoline prices now below $2 per gallon at 40 percent of the country’s gas stations, politicians and activists are pushing to tax fuels for their greenhouse gas emissions– an environmentalist’s dream.
Former White House economic adviser Larry Summers has been a staunch advocate of using low oil prices as an opportunity to tax carbon dioxide emissions. Summer wrote in The Washington Post that “there should be no doubt that, given the current zero tax rate on carbon, increased taxation would be desirable.”
“The case for carbon taxes has long been compelling,” Summers wrote in the Post. “With the recent steep fall in oil prices and associated declines in other energy prices, it has become overwhelming.”
Summers pushes for a $25-per-ton carbon tax, saying a tax “that would raise far more than $1 trillion over the next decade would lift gasoline prices by only about 25 cents.” Summers cites Congressional Budget Office data to support his case and further argues that “a tax of $25 a ton would raise more than $100 billion each year” and could be used to fund other progressive policy goals.
Summers was joined by noted liberal economist Jeffrey Sachs, who now heads the Earth Institute at Columbia University. Sachs argues that because of low oil prices and more lucrative investment opportunities in green energy, now is the perfect time for a carbon tax.
“With international oil prices dropping — by a whopping 40 dollars per barrel since the summer — this is an ideal moment for governments to introduce carbon pricing,” Sachs writes. “Rather than let the consumer price of oil fall by that amount, governments should put a carbon tax in place.”
Sachs argues that a $40-per-ton carbon tax would only raise oil prices by $12 a barrel, and argues consumers “would still come out ahead.” Sachs also says governments could raise new revenues from taxing carbon dioxide, some of which could be used to finance international climate efforts.
In Washington, Democratic Gov. Jay Inslee has made a liberal academic’s dream a reality by imposing a cap-and-trade program that would force companies to pay a price for emitting carbon dioxide. He has also instituted a low-carbon fuel standard.
Inslee’s office says the climate programs would raise $1 billion in the first year and help fund other state programs, while only impacting a “relatively small number of businesses that generate 85 percent of Washington’s carbon emissions.”
“It’s the smart thing to do because we can make the air cleaner for our children, our businesses can lead the world in clean technology and doing so will bring good-paying jobs to Washington,” Inslee said in a statement. “And with so many of us committed to working together on this, I believe we can make real progress toward that future.”
But state estimates show that Inslee’s de facto carbon tax would raise gasoline prices. Inslee’s plan would cost about $130 to $131 to reduce one ton of carbon dioxide emissions, translating to a gasoline price increase of $1.17 per gallon.
Currently, Washington residents pay about $2.44 cents per gallon on average, but Inslee’s climate plan could raise gas prices to $3.61 per gallon– nearly eviscerating the benefits state residents receive from falling gasoline prices.
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