NCPA - National Center for Policy Analysis


March 5, 2010

To meet the Obama Administration's targets for cutting greenhouse gas emissions, Americans may have to experience a sobering reality: gas at $7 a gallon, according to researchers. 

To reduce carbon dioxide emissions in the transportation sector 14 percent from 2005 levels by 2020 -- the target set in the Environmental Protection Agency's (EPA) budget for fiscal 2010 -- the cost of driving would simply have to increase, according to a report released by researchers at Harvard University's Belfer Center for Science and International Affairs.  The research also appears in the March edition of the journal Energy Policy. 

In their study, the researchers devised several combinations of steps that policymakers might take in trying to address the heat-trapping emissions by the nation's transportation sector, which consumes 70 percent of the oil used in the United States: 

  • Most of their models assumed an economy-wide carbon dioxide tax starting at $30 a ton in 2010 and escalating to $60 a ton in 2030.
  • In some cases researchers also factored in tax credits for electric and hybrid vehicles, taxes on fuel or both.
  • In the modeling, it turned out that issuing tax credits could backfire, while taxes on fuel proved beneficial. 

"Tax credits don't address how much people use their cars," says Ross Morrow, a professor of mechanical engineering and economics at Iowa State University, and one of the report's authors.  "In reverse, they can make people drive more." 

Vehicle miles traveled will increase by more than 30 percent between 2010 and 2030 unless policymakers increase fuel taxes, say researchers. 

Source: Sindya N. Bhanoo, "Fuel Taxes Must Rise, Harvard Researchers Say," New York Times/Dot Earth Blog, March 2, 2010. 

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