Two summers ago, I made a step toward the dark side by trading in my bicycle for a shiny new SUV. I couldn’t have timed the switch more poorly. This was the first summer of record setting gas prices, when the pump price first climbed over $3.00 a gallon. Fair weather activists went to work that summer, sending out chain letters over email and myspace demanding a boycott of gasoline. Let’s boycott all gas stations for a day! Or better yet, let’s just boycott Exxon! That’ll show ’em!

After reading these, I (and anyone who had taken Econ 101) immediately were hit with terrible headaches. Why? These consumer gas schemes pandered more toward emotions than to any rational economics theory.

Now two years later, a similar situation is occurring. However, this headache isn’t being spread by zealous internet users. This fire is being fanned by two of our own presidential candidates. Their idea is not a boycott, but rather a “gas holiday” where the federal gas tax is erased for the summer driving months.

But wouldn’t lowering the gas price increase demand? And when demand increases, won’t the prices go back up? The short answer is Yes. Peter Schwartz of Global Business Network describes this as the true American energy policy: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Under such a scheme, consumers would see little change in gas prices this summer. Without taxes of course, our own Federal government’s revenue would shrink. And the real winners in the game would be….you guessed it….the big oil companies.

According to this article by Thomas Friedman of the NYT, “This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.”

Paul Krugman, another NYT columnist points out in a post that any attempt to quell gas prices for the summer driving season is too little, too late. The petro we’ll use this summer has already been extracted and refined. No matter what politicians will promise for the summer, there’s simply not much to be done.

Photo found at Huffington Post

My car gets 14 mpg on a good day and public transit isn’t an option for my commute. I’m sitting front and center in the cross hairs of high gas prices, and I would be ecstatic if there were a plan that could help me out. Unfortunately, there doesn’t seem to be much of a rationale consensus from our leaders. Of the three candidates, only Obama has voiced his disapproval of a gas holiday. Both McCain and Clinton have publicly favored this gas-tax holiday.

It’s time for our politicians to take a proactive and logical approach to our energy policy. All the research, rationale, and logic point to the same conclusion. It’s been close to 30 years since President Jimmy Carter proclaimed we would stop being dependent on foreign oil and that we would develop oil alternatives. Perhaps its time we began working toward this long-time goal.

It looks like British Columbia is a few steps ahead of Washington State’s push toward a carbon tax.  BC’s Finance Minister, Carole Taylor, introduced an escalating carbon-tax just a few days ago.  Starting on July 1st, the tax will add an extra 2.4 cents for every purchased liter of gasoline (that’s about 9 cents a gallon).  The tax rate will escalate annual until 2012, when the tax will stop at 7.2 cents / liter (about 28 cents a gallon). 

Compared to the carbon-tax proposed in Washington State, the rates are relatively the same.  So what makes this tax so much better?  

First off, BC’s carbon tax bill isn’t all bite, and isn’t completely insensitive toward consumers.  “We want to bring in the benefits first,” said Taylor. “We made a policy decision that it was an important part of this carbon tax that individuals were protected as we start out on this journey.”  The benefits will be coming by way of a one time $100 check in the mail.  The cash will (hopefully) help individuals adjust to a lower carbon producing lifestyle.   

Secondly, the tax has managed to by step an important criticism.  A gas tax is often seen as regressive, by placing an ever-growing burden on the lower and middle class.  The BC carbon-tax is different.  The money made from the tax will be funneled right back to consumers by means of lower income taxes.  Some qualifying families will also receive $100 annual offsets throughout the program.  This system makes the tax “revenue-neutral”, so even the government isn’t profiting. 

Despite all this, BC’s carbon-tax bill misses an important objective.  It’s great to see that the government wants “to bring in the benefits first”.  But a one time check isn’t the type of benefits that will advance an environmentally-friendly lifestyle.  Wouldn’t it be better to send out “convert your car to bio-fuel” coupons instead of $100?  Or use the money to build decent commuter bike lanes?

Even more importantly, the bill doesn’t really stimulate a change in behaviors.  At the end of the year, the costs for BC consumers balance out.  Without added costs and without any extra incentive to change, why would anyone change their habits at all?   

Regardless of its downfalls, this bill is a huge political success.  Historically, many politicians are hesitant to support a carbon-tax for fear it may be career damaging.  BC’s new tax is proof otherwise.  United States – it’s time to catch up!

Dear Washington State Congress,

I am a progressive democrat, and one of your biggest fans. I vote in every election. I even read my voter’s pamphlet cover to cover. On top of all that, I’m also an enthusiastic environmentalist. I think about my carbon footprint, and I’ve made big changes in my daily habits to cut down on my own pollution.

When I first heard that a carbon tax bill was introduced in the House, I was ecstatic. I think the idea of a carbon tax is great! Pollution hurts our environment and our society, and it’s about time that those costs were taken into account. I especially like the idea of using that money to undo the harm carbon-output has had on our planet. But after thoroughly reading through HR 2420, my excitement has dissolved into worry.

You see, I enjoy all the diverse outdoor activities for which our northwest is famous. Snowboarding Mt. Baker, rock climbing in North Bend, and camping in the Olympics are just a few of the activities I enjoy on the weekends. My mid-sized SUV allows me to safely drive through snowy mountain passes, carry my whitewater raft to a boat launch, or haul my camping gear into the backcountry for some time away from the city. When I bought my car, I chose an SUV because it allowed me to pursue my passions.

For me, this carbon tax is an ultimatum. “If you want to enjoy your active lifestyle, you’re going to have to pay a lot for it!” When did my love for rock climbing and snowboarding the northwest become part of the problem?

I want to drive a car with efficient gas mileage. But today, an SUV that gets 30mpg can cost two to three times as much as a standard gas powered model. I simply can’t afford one. Trading in for a smaller car isn’t a good answer either. My passions would have to be sacrificed for a Honda Civic that cannot handle icy conditions or rough terrain.

Before our state institutes a heavy-handed cost, consumers need to have a chance to reasonably change their habits. Give us an opportunity to buy an efficient car and we will! Give us public transit that works efficiently, and we’ll use it! Help us be able to afford to live environmentally-friendly, and we’ll do it! Energy habits will happily be changed in our state if there is a positive incentive to do so. 

A carbon-tax is the right step, but it shouldn’t be the first step.  There are many middle-class environmentalists (like me!) that want to help our planet. But backing your supporters into a corner without a lifeline isn’t the answer. Don’t pass a carbon tax until we’ve had a chance to truly afford an alternative.