Sunday, June 1, 2008

A dedicated gas tax would effectively fund clean energy

There are few good options for raising the enormous amounts of money needed in order to transform into a clean-energy economy. I think a 5% gas tax is a very attractive option if the funds are dedicated solely to the development of renewable energies like wind, solar, algae, etc. The tax could be implemented at the beginning of the year when gas prices are lower. This approach would actually provide an incentive for oil-producers to keep prices down: the higher the price of gas went, the more money would be put into developing alternative products.

The idea is not as unpopular as one might suppose:


The US consumes about 12 billion gallons of gas a month. At $4 a gallon, that’s 48 billion dollars, so a 5% tax could bring in $2.4 billion monthly or $28.8 billion annually. Scientific American calculated the cost of converting the US to solar power at $420 billion over forty years. A 5% gas tax would take about fifteen years to raise that amount if gas use remained stable and the pre-tax price averaged $4.00 per gallon. However, I expect that after 2015 the number of vehicles using gas will start to decrease rapidly. If the dedicated gas tax failed to influence oil poducers to keep prices low, it would at least encourage the purchase of alternative vehicles.

I think a 10% dedicated tax would be even better! Whatever the percentage, the tax would terminate when use of gasoline in vehicles ended.

Graph found at the Breakthrough Institute blog.

(This post is an alternative to a previous post suggesting a monthly use tax on vehicles, which I deleted)

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