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The Energy-Policy Efficiency Gap: Was There Ever Support for Gasoline Taxes?

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  • Christopher R. Knittel

Abstract

From 1864 to 1972, the real price of oil fell by, on average, over one percent per year. This trend dramatically broke when prices for crude increased by over 650 percent from 1972 to 1980. Policy makers adopted several policies designed to keep oil prices in check and reduce consumption. Missing from these policies were taxes on either oil or gasoline, prompting a long economics literature documenting the inefficiencies of these alternative policies. In this paper, I review the policy discussion related to the transportation sector that occurred during the time through the lens of the printed press. In doing so, I pay particular attention to whether gasoline taxes were "on the table," as well as how consumers viewed the inefficient set of policies that were ultimately adopted. The discussions at the time suggest that meaningful changes in gasoline taxes were on the table; the public discussion seemed to be much greater than it is today. Some in Congress and many presidential advisors in the Nixon, Ford, and, Carter administrations supported and proposed gasoline taxes. The main roadblocks for taxes were Congress and the American people. Polling evidence at the time suggests that consumers preferred price controls and rationing and vehicle taxes over higher gasoline taxes or letting gasoline prices clear the market. Given the saliency of rationing and vehicle taxes, it seems difficult to argue that these alternative polices were adopted because they hide their true costs.

Suggested Citation

  • Christopher R. Knittel, 2013. "The Energy-Policy Efficiency Gap: Was There Ever Support for Gasoline Taxes?," NBER Working Papers 18685, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18685 Note: EEE IO POL
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    References listed on IDEAS

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    1. Christopher R. Knittel, 2012. "Reducing Petroleum Consumption from Transportation," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 93-118, Winter.
    2. Smith, Rodney T, 1982. "An Economic Analysis of Income Growth by U.S. Oil Firms: The Roles of U.S. Oil Regulation and OPEC," The Journal of Business, University of Chicago Press, vol. 55(4), pages 427-478, October.
    3. Deacon, Robert T & Sonstelie, Jon, 1985. "Rationing by Waiting and the Value of Time: Results from a Natural Experiment," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 627-647, August.
    4. Alan A. Tait & David R. Morgan, 1980. "Gasoline Taxation in Selected OECD Countries, 1970-79 (Taxation de l'essence dans certains pays de l'OCDE, 1970-79) (Los impuestos a la gasolina en un grupo de países miembros de la OCDE, 1970-79)," IMF Staff Papers, Palgrave Macmillan, vol. 27(2), pages 349-379, June.
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    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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