Talking about Gas Prices the Wrong Way

Average temps in Oregon from 1895 - 2018 (L to R)
(Show Your Stripes)

One of the things that is a little strange about our conversation on carbon reduction is how persistent is a "punitive" framing on pricing. Yesterday's piece in the Oregonian went in on this:

For drivers, that means higher gas and diesel prices -- significantly higher as time goes on.

This is the no-pain-no-gain reality at the heart of the “market-based” cap and trade policy. If businesses and consumers don’t feel it in their wallets, they won’t change their behavior and reduce emissions.

It's all about pain, feeling it in the wallet, stickin' it to 'em.

Front page yesterday in the Oregonian

It's not about pain; it's about market failure in multiple dimensions

But it's not really about pain. An important foundational frame is about pricing signals, information, and rational choice. The basic Econ 101 framework of markets is missing in the article. There are alternatives to gas and driving, and people will make choices about travel.

There is also the frame of opportunity cost. The price advance in gasoline is paltry compared to the costs of doing nothing, costs to the planet and to civilization our current trend is certain to impose.

Gas is also cheap right now. Any "pain" is a relative thing!

And there is also the frame of idealized markets from Econ 101 and the ways actual, broken markets come up short. The current price of gas and gas powered travel occurs in a market that is missing key information, is badly distorted, and is a failed market in important ways; the article's frame doesn't situate the price of gas in the context of a failed market. Our travel and petroleum markets have incomplete information and incomplete costing priced into them, and the "invisible hand" goes off in unwanted, non-optimal directions.

The choice isn't just about batteries

The article alludes to costs and choices in travel a little, but limits the choice to electric cars.

Oregonians can avoid the added cost with an electric vehicle – that’s the entire goal of the policy. To reach the state’s emission goals, all passenger vehicles would need to go electric by 2050.

Both carbon and safety program

If the climate goal only is fleet conversion to batteries, it will practically fail.

The climate goal must also include reductions in the total miles traveled, and this means more walking, biking, and busing.

These are travel choices also. Because of our compulsory autoism, we have subsidized driving with things like free parking, parking mandates in code, road funding that is no longer self-funded with road use fees like a gas tax, employee commuter benefits, the ID function of drivers licenses, and such. Conversely, we have made the non-auto choices inconvenient and costly: Slow, exposed to the elements, with workplaces and culture intolerant of mussed hair or rain gear. Walking, biking, and busing have meaningful non-financial costs in our system of compulsory autoism.

Free parking is a big subsidy
and key in our autoism
(City of Salem)

An increasing cost to carbon also operates as a Pigovian tax to capture some of the externalities. This will help to make some of these trade-offs more tolerable again. And of course with increased use, bus scheduling can be arranged so that it is less slow and competitive with car travel. For short trips, bike travel can also be competitive with car travel.

Altogether, increasing the cost of carbon is a necessary adjustment to a market that operates with too much subsidy and therefore has fallen out of whack. Carbon pricing is correction, not punishment. Carbon pricing will make the "invisible hand" of the market work better.

Loggers protested at the Capitol yesterday, and if they think doing nothing is going to keep them in business, that a restoration to earlier 20th century practice is possible, that's a tragic misapprehension.

Front page today

There are other strands of history from which we could draw inspiration and nourishment. They might not map directly onto today's debates, and indeed they represent compromise. But we could imagine a modern Loyal Legion of Loggers and Lumbermen as an establishment and conservative counterweight to more radical efforts, yet unified around the great patriotic project of curbing carbon and creating a greener economy.

via OSU Library

The frame of cheap gas and pain at the gas pump represents the same kind of nostalgia for earlier 20th century autoism. That nostalgia should be critiqued because we aren't going back to it.