Shari Shapiro of Green Building Law Blog and I had an interesting discussion on Twitter last evening regarding her post entitled “Tax Gas Now.” Without oversimplifying a cogent position presented by Mrs. Shapiro (a blogger I consider a friend), the basic premise is to assure a minimum price for crude oil through taxation.
Let me start with a disclaimer that I am not an economist, and am just voicing an opinion based on my view of the situation with the construction industry.
While the concept is interesting, I am not sure if the economy, and especially my clients in the construction industry, would survive such a hit (at least at present). I fully understand the need for reduced dependency on oil (for environmental and other reasons). However, the long term benefits may not ever accrue because of the short term hit that we would take.
The simple reality is that we are a seriously oil based economy, from heating oil, industrial use and, yes, cars. Too many people depend on oil for basic necessities at present and too many suffering companies (construction and otherwise) are dependent on gas to run their businesses.
At least in construction, gas and oil are major parts of the overhead of these companies, many of which are smaller and running on extremely tight margins. To suddenly have to pay a premium for gas (a premium artificially increased by governmental fiat), would be catastrophic.
In short, and in my opinion, the economy could not take such a hit and survive. We already have the government overly entwined with many banks and financial institutions because of the mortgage issues, etc. We don’t need more now.
I fully agree that green building is here to stay and should be pursued. However, a sudden artificial floor on oil prices in the US is not the way to go.
As always, your comments, suggestions and opinions are welcome and encouraged (especially Shari’s) 🙂
Update: The Oil Drum had a partial answer: Tax Credits, see what you think.
Mmm…Could the economy take such a hit? I don’t know…but I do know that we are going to be paying trillions of dollars for a green bail out. What if instead we were to increase oil price and apply those funds? We are going to pay one way or another.
but can we pay that now? do we need a government that caused much of the problem regulating the issue? is there the will to do such a thing? All questions to which I have few, if any answers.
Great discussion. I’m in California which is a heavily taxed and regulated state for fuel and industry. The heavy equipment industries in this state (be it construction, trucking, agriculture etc) are struggling with environmental taxation during today’s economy.
It’s appears that most heavy equipment and trucking industry spokespeople do not disagree with the need for change nor do they take opposition to many of the options currently up for consideration, many which have been issued by the California Air Resource Board (CARB). They do have a problem with timing. Construction has been hit very hard by our economic downturn and by implemented changes which impose costs to either update or purchase new equipment.
Further, this past week Governor Schwarzenegger issued a heads up regarding the impending cutbacks it appears California is going to make to construction projects already in the shoot. These are the projects that don’t usually stop. I’m concerned that right now a gas tax could only create further devastation to an industry on the edge.
I’m a green advocate and want the needed changes required to better the environment. I fully support the CARB for goals targeting that end. I just think we need to move in ways that don’t further undermine industry at this moment. My contribution to this discussion would have been very different even a year ago.
Thanks for the post Shari! I appreciate the input.