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What Californians Should Do About the High Price of Gas

Originally published 10/25/05. An article that proposes a solution in the context of what is politically possible in the state of California. To view this article in the original context in which it was published click here.

The Gasoline CrisisNow that the price of gasoline has ascended $3.00 per gallon, a situation which was easily predictable several months ago, the stress of having to invest an ever increasing share of one‘s earnings to provide basic mobility for oneself has caused waves of frustration and panic through the American populace, as evidenced by bitter accusations of price gauging aimed at oil companies and gasoline stations. The situation has even prompted lawmakers, mostly Republican, in several states to call for the temporary suspension of their state‘s gasoline tax in order to provide relief.

However, a rational view of the situation will reveal that as long as our lifestyle and economy are based on the gratuitous consumption of gasoline, there will be no relief. The primary reason cited for escalating oil prices is rising global demand. The following statistics from the BP Statistical Review of World Energy will illuminate the situation.

The U.S., which contains a little more than 4% of the world‘s population, consumed 24.9% of the world‘s oil in 2004. China and India, which each have populations exceeding 1 billion people, consumed 8.4% and 3.2% of the world‘s oil respectively. China‘s consumption rose 15.8% over the previous year, and its share of total world oil consumption rose 0.8% over the previous year. The U.S.‘s consumption rose 2.8% over the previous year, but its share of total world oil consumption diminished 0.2% over the previous year.

Given that a little more than 4% of the world‘s population is consuming roughly 25% of the world‘s oil, and roughly 40% of the world‘s population in rapidly industrializing regions is consuming 11.6% of the world‘s oil, the statistics indicate a logically predictable escalation in demand, and subsequently price, for this valuable and finite resource. Goldman Sachs, the largest trader of energy derivatives in the world, has predicted that the price of oil will rise above $100 per barrel. Given the circumstances, the only logical response is conservation.

It is not ridiculous that gasoline sells for $3.00 a gallon, and sooner than the time it took for gasoline to go from $2.00 a gallon to $3.00 a gallon, gasoline will sell for $4.00 a gallon. What is ridiculous is that the car is the primary mode of transportation. What is ridiculous is that the average citizen must invest thousands of dollars in a vehicle that will pollute the air he breathes just to achieve basic mobility, and that communities spend billions of dollars annually on gasoline, most of which leaves local economies as opposed to being recirculated within local economies if mass transit were the primary mode of transportation.

What is ridiculous is the constant swallowing up of open space, including farmland, in order to build huge box stores, gasoline stations, and strip malls with huge parking lots, all of which create an ugly landscape. Apart from producing an assault on the senses, the car model contributes to the housing shortage which we have in California. We dedicate ridiculous amounts of space to cars, a large portion of which could be dedicated to housing.

While I advocate that the federal government dramatically increase funding for mass transit, increase fuel efficiency standards, and work towards developing alternative fuels, Californians should be proactive and use our own resources to address the looming economic recession if not outright economic collapse which the current gasoline crisis has the potential to cause.

As an example, here in Los Angeles, the Metropolitan Transit Authority which is the agency which operates most of the transit system in L.A. county and disburses money to other smaller agencies, has a budget of $2.863 billion, and receives 44.6% of its funding from 2 different propositions which make up 1% of the local county sales tax. A 0.5% increase in the local county sales tax for the purpose of funding mass transit would result in an increase of the MTA budget of roughly $600 million dollars, a 22% increase, which would undoubtedly make a significant difference in the service the MTA could deliver.

California should increase its gasoline tax for the purpose of funding mass transit. At current consumption levels, a mere 10 cent increase in the gasoline tax would result in $1.6 billion of revenue annually. A 20 cent increase in the gasoline tax would result in $3.2 billion of revenue. To place these quantities in perspective, consider that the federal government recently budgeted almost $23 billion for California over the next five years, nearly $4.6 billion annually, in its latest highway bill; the vast majority of which will go to build and maintain roads and highways.

In the current climate of roller coaster, yet inevitably escalating gas prices, a mere 10 cent increase in the gasoline tax would hardly be felt by Californians. While a 20 cent increase in the gasoline tax represents a greater burden, the potential outcomes that such an investment could make are invaluable. Increased use of mass transit would result in a reduction of gratuitous consumption, which could moderate prices, as well as relieve traffic, reduce pollution, and improve the economy. It is a logical solution if our stated aim is to reduce demand for gasoline, while improving mobility.

The gasoline crisis is occurring now, and only promises to worsen, which demands immediate action. It is foolish for Californians to wait upon the federal government to take action because it may never do so. Nor do we have control over it. We control 2% of the Senate, 12.2% of the House of Representatives, and theoretically have a 10.2% say over who may be elected President. Yet we do have control over the resources of the fifth largest economy on the planet. What we need is the will and the vision to build an ecologically and economically sustainable transportation model.

One should be selective about which tax increases to support and for what reason, but having the position of being against any and all tax increases, such as Gov. Schwarzenegger, is both irrational and impractical, and will leave Californians impotent in facing the gasoline crisis.