Gas Fees versus Gas Taxes

Gas Fees versus Gas Taxes: "

Enviromental Economics Blog —
I had the following conversation at the local Blockbuster recently:
Employee: This is due back on Friday, but you know we don't have late fees anymore.
Me: So what happens if I bring it back after Friday?
Employee: You will be assessed a restocking fee of $1.25.
Me: So if I bring it back late, I am charged a fee.
Employee: Yes.
Me: Wouldn't that be a late fee?
Employee: [blank stare]
I was reminded of that conversation when I read this...
Gov. Arnold Schwarzenegger's administration is expected this month to release a plan to combat global warming that recommends raising petroleum prices and requiring industries to report, for the first time, their greenhouse gas emissions.
[...]
Sources at the state Environmental Protection Agency -- which is charged with writing the recommendations to achieve Schwarzenegger's goals -- say the proposal will call for a new charge on petroleum equal to less than a penny per gallon of gasoline. Conservative activists have begun to complain about the idea, branding it a gas tax.
Charge? Tax? Tomato? Of real interest here is the magnitude of the fee: Less than $.01 per gallon!
The added charge on gasoline would pay for research into alternative fuels and other ways to make cars more fuel-efficient.
Advocates for the idea and the report's authors note that a similar public goods charge is included in every Californians' energy bill and that money has gone to funding renewable energy and energy efficiency programs that have lessened pollution and saved consumers money.
"It's very appropriate to have a small charge on petroleum to mitigate its impacts,'' said Bill Magavern, a Sierra Club lobbyist.
Business groups say further driving up the price of fuel will hurt the economy.
Let's be generous and say that the price elasticity of demand--the percentage change in quantity of gas consumed due to a percent change in the price of gas--is .5. That's on the high side of most estimates I've seen. What effect will that have on gas consumption? At $2.00/gallon, the $.01 price increase represents a .5% increase in the price of gas. Quantity consumed will fall by a whopping .25%. If the average driver drives 1,000 miles per month and averages 20 miles per gallon, the $.01 increase will cost $.50 per month and the average driver will drive 2.5 fewer miles.
How much will the $.01 public goods charge...err gas tax...err carbon consumption fee raise? There are currently about 22,000,000 drivers in California. If each has to pay $.50 per month that's $11,000,000 per month to invest in alternative fuels research.
Gee, why can't we get a $2.00/gallon gas tax passed? Maybe it's because $.01/gallon will hurt the economy (sarc).

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