Do gas prices affect carbon emissions? Enough?
I have a feeling there are 20 things I ought to read before weighing in on this topic, but here's some interesting data from the American EIA via Andrew Sullivan:
U.S. carbon dioxide emissions from burning fossil fuels increased by 0.1 percent in 2005, from 5,903 million metric tons of carbon dioxide (MMTCO 2) in 2004 to 5,909 MMTCO 2 in 2005, according to preliminary estimates released today by the Energy Information Administration (EIA). The 2005 emissions increase was the third smallest during the 1990 to 2005 period, exceeding only the emissions declines recorded in [recessionary] 1991 and 2001.
Sullivan chalks the decreased consumption up to "gas prices, dummy", and advocates increasing the gasoline tax by $1. Is he right? From the EIA breakdown:
At the energy-sector level, preliminary data indicate that:
- Carbon dioxide emissions in the residential sector increased by 3.2 percent in 2005, mainly from increases in the residential demand for electricity.
- Emissions from the commercial sector increased by 1.9 percent in 2005, also due mainly to increased electricity demand.
- Industrial emissions fell by 3.3 percent in 2005 as the U.S. economy continued to move away from heavy manufacturing and as petroleum and natural gas prices rose.
- Transportation-related carbon dioxide emissions, which account for about a third of total carbon dioxide emissions, increased by 0.2 percent in 2005. Emissions related to gasoline demand decreased by 0.4 percent, emissions related to diesel fuel grew by 1.0 percent and jet fuel emissions decreased by 0.5 percent.
I don't meant to poo-poo the gas tax idea, particularly since the US has a deficiency of tax revenue and ridiculously low fuel taxes by international standards to begin with. (**Scroll down to see LWC simultaneously reinforce the point and enter the 21st Century with nifty StatCan graphics!!!**) But don't these data suggest that the real reason for the US's improvement in energy performance, not just recently but over the past couple of decades, is basically the continuing shift out of traditional carbon-intensive manufacturing industries toward electricity-intensive service industries? Presumably, I guess, an industrial carbon tax implemented 20 or 30 years ago might have induced traditional industries to adopt cleaner technology for evenutual export to the developing world. But as domestic manufacturing declines, such a tax must become decreasingly effective. At some point the tax will come too late to have much of a global effect as U.S. companies take more and more of their older, dirtier technologies to the cheap labour of the developing world.
A related, similarly unsubstantiated thought: we see the use of electricity in the home outstripping U.S. population growth (just under 1% annually) by a factor of almost three and a half while gasoline use falls relative to population growth by a factor of about -0.5. Possibly high gas prices encourage people to take their cars out less and to spend more time at home, and thereby use more energy at home. On the other hand, direct supply side contraints -- like increasing CAFE standards and using various tax incentives to substitute toward clean vehicles and beefing up the usability of public transport -- would have less of this energy use substitution effect. People would go out the same amount they used to but would do so in more energy efficient ways.
This is a lot of handwaving and a lot of policy to deduce from one U.S. government statistical release, particularly given how much thought other, more informed people have put into this. But even ignoring the welfare costs to rural and poorer citizens of a hefty gas tax, I'm not sure such a tax, or the natural equivalent of high oil prices, is really the best, or a sufficient, policy to combat emissions.
U.S. carbon dioxide emissions from burning fossil fuels increased by 0.1 percent in 2005, from 5,903 million metric tons of carbon dioxide (MMTCO 2) in 2004 to 5,909 MMTCO 2 in 2005, according to preliminary estimates released today by the Energy Information Administration (EIA). The 2005 emissions increase was the third smallest during the 1990 to 2005 period, exceeding only the emissions declines recorded in [recessionary] 1991 and 2001.
Sullivan chalks the decreased consumption up to "gas prices, dummy", and advocates increasing the gasoline tax by $1. Is he right? From the EIA breakdown:
At the energy-sector level, preliminary data indicate that:
- Carbon dioxide emissions in the residential sector increased by 3.2 percent in 2005, mainly from increases in the residential demand for electricity.
- Emissions from the commercial sector increased by 1.9 percent in 2005, also due mainly to increased electricity demand.
- Industrial emissions fell by 3.3 percent in 2005 as the U.S. economy continued to move away from heavy manufacturing and as petroleum and natural gas prices rose.
- Transportation-related carbon dioxide emissions, which account for about a third of total carbon dioxide emissions, increased by 0.2 percent in 2005. Emissions related to gasoline demand decreased by 0.4 percent, emissions related to diesel fuel grew by 1.0 percent and jet fuel emissions decreased by 0.5 percent.
I don't meant to poo-poo the gas tax idea, particularly since the US has a deficiency of tax revenue and ridiculously low fuel taxes by international standards to begin with. (**Scroll down to see LWC simultaneously reinforce the point and enter the 21st Century with nifty StatCan graphics!!!**) But don't these data suggest that the real reason for the US's improvement in energy performance, not just recently but over the past couple of decades, is basically the continuing shift out of traditional carbon-intensive manufacturing industries toward electricity-intensive service industries? Presumably, I guess, an industrial carbon tax implemented 20 or 30 years ago might have induced traditional industries to adopt cleaner technology for evenutual export to the developing world. But as domestic manufacturing declines, such a tax must become decreasingly effective. At some point the tax will come too late to have much of a global effect as U.S. companies take more and more of their older, dirtier technologies to the cheap labour of the developing world.
A related, similarly unsubstantiated thought: we see the use of electricity in the home outstripping U.S. population growth (just under 1% annually) by a factor of almost three and a half while gasoline use falls relative to population growth by a factor of about -0.5. Possibly high gas prices encourage people to take their cars out less and to spend more time at home, and thereby use more energy at home. On the other hand, direct supply side contraints -- like increasing CAFE standards and using various tax incentives to substitute toward clean vehicles and beefing up the usability of public transport -- would have less of this energy use substitution effect. People would go out the same amount they used to but would do so in more energy efficient ways.
This is a lot of handwaving and a lot of policy to deduce from one U.S. government statistical release, particularly given how much thought other, more informed people have put into this. But even ignoring the welfare costs to rural and poorer citizens of a hefty gas tax, I'm not sure such a tax, or the natural equivalent of high oil prices, is really the best, or a sufficient, policy to combat emissions.
2 Comments:
necessary, though certainly not sufficient.
Al Gore 3.0: "Right now we are borrowing huge amounts of money from China to buy huge amounts of oil from the most unstable region of the world, and to bring it here and burn it in ways that destroy the habitability of the planet. That is nuts! We have to change every aspect of that."
One way to see the difference between Red State America and Blue State America is that Blue State America, optimistic about technological progress, sees a way forward, and Red State America is scared to death that the party is over.
Raising gas prices a dollar or two per gallon would have a huge impact within a few years on the kinds of vehicles people drive and the distances that they drive. The adjustments in rural areas and suburban areas will be huge, but we could should be poring money into infrastructure, which permits a less gas-intensive style of life over a wider area of the country.
bruce, you might like this David Ignatius op-ed about Philip Verleger and his gas-tax ideas from a couple of years ago I read while "researching" this post.
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