11 May 2007

Gouged at the pumps: good or bad?

The Canadian Centre for Policy Alternatives has issued a report claiming oil companies are overcharging us to fill up our gas tanks. Even if they are right, I admit to ambivalence.

Of course I don't want to see consumers ripped off. Nor do I believe corporations should profit through oligopoly rather than through honest competition. But I also recognize the higher gas prices go, the less gas people will use, and isn't reducing consumption the best way to reduce greenhouse gas production?

I also recognize the price of gas deceives us about the real cost of driving a car. If we had to pay directly for all the associated costs, including tax subsidies to the oil industry, the full cost of transportation infrastructure, the cost of policing roads, and the vast range of environmental, health and social costs created by environmental degradation and urban sprawl, the price of a litre of gas would be many times the current pump price.

So if the price of gas is artificially high because of the oil oligopoly, drivers are still getting a free lunch, and a hearty one at that. If environmental damage and urban sprawl are mitigated even a little, the higher price certainly isn't all bad. Making progress requires picking the right battles. I'm not sure the
Canadian Centre for Policy Alternatives chose well in this case.

1 comment:

  1. push/pull: you need to push people out of cars, but at the same time pull them towards alternative modes of transportation. The poor shouldn't suffer the most in all of this.

    If we increase taxation on gas and put that money directly into improving public transit, for example, I'm all for high gas prices! I don't like seeing the fat cats get fatter, though.