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Gavan Foote Is Funding Renewable Energy by Taxing Gas a Good Plan? Paper

Words: 1748, Paragraphs: 10, Pages: 6

Paper type: Essay , Subject: Business

Gavan Foote

Is Funding Renewable Energy by Taxing Gas a Good Plan?

There is no question that a gas tax would have a large effect on our nation’s economy. Whether this is a good impact is up for debate. I believe that this tax will ultimately end up having a negative economic impact on the nation in the long run. Due to the fact that it will target the low to middle income families, and likely encourage more non related spending. Many people do not realize that an increase in the gas tax will actually end up hurting the consumers and slowing the economy. “Macroeconomic analysis performed by the Center for Data Analysis at the Heritage Foundation, shows that increasing the gas tax would depress economic activity and the incomes of millions of Americans.” (The Heritage Foundation)

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There are many reasons that the federal gas tax simply won’t work. For example, a study done by the CDA in 2004 shows that Personal savings would average $8 billion less per year from 2005 to 2014. This is due to the fact that people are paying a lot more for gas (which is a necessity in our modern society), which in turn cost them to add a lot less into a savings account. This is just one way that it will hurt the average consumer. Also, this is not to mention all of the jobs that will be lost due to the increase in fuel prices. Many families will be left jobless and broke once these taxes come into effect. The same study revealed that “There would be, on average, 37,000 fewer job opportunities each year. That works out to one lost job for every $351,000 in new taxes, which is equal to 11 years of work at average yearly wages.” (The Heritage Foundation)

The argument that says it will create energy security asserts that the ticket to achieving greater security and affordability is to invest in renewable energy that can be produced at home and doesn’t rely on the need for fossil fuel markets abroad. But in general for energy production in the US, domestic fossil fuels are much more effective than renewables in terms of cost-effectiveness. Domestic coal is extremely abundant and cheap, also noting that the availability of natural gas has risen immensely in recent years. Then driving down prices that are likely to render this option affordable in the medium term. It may be a true statement that renewable technologies have increased in cost effectiveness over time, nonetheless there has been equal improvements in fossil fuel technologies making it harder for the economics of renewables to excel by themselves.

A longer-term view of investment in renewables is that it has the potential to position the US competitively in future clean-energy technology markets and industry. But the evidence is unclear around this strategy. When another dominant country being Germany made significant investments in solar photovoltaic technologies their production of these systems acceled, but once China entered the market of solar technologies German companies’ share of the global photovoltaic market reduced from 69% in 2004 to 21% in 2010. If the U.S also invests in this strategy the have a good chance of losing their investment fast with China’s involvement. China is a dominant economy due to their government political beliefs, and there extremely large population of workers.

There are also many environmental effects of abusing renewable energy, just as there are for fracking and the use of gasoline powered vehicles. One being Hydropower, the use of hydropower does not cause any air quality impact directly unlike gasoline. However it does affect the environment by the tedious and massive process of building and operating a hydroelectric reservoirs. Some effects include altering ecosystems by changing the flow of rivers. Many believe that solar power has few to none negative side effects but that is not entirely true. The sun is a very consistent and reliable source of renewable energy. Nevertheless, there are effects of how the process of creating solar fields takes place. It must contain an excessive amount of land use. In the end this affects the home of wildlife around the 13.6 million acres devoted to solar farms. The use of many acres of land can result in clearing and grading of land, which can cause soil compaction, erosion, and alteration of drainage channels. Therefore, solar energy systems will impact the land in the process of materials extraction, exploration, manufacturing, and disposal. For the U.S to be mostly powered by solar farms we would need to give up over 13.6 million acres of land given the U.S. consumes about 4 petawatts of electricity per year. This takes away land from open space, state parks, and the natural beauty of the united states.

While there are many economic theories that apply to this tax, one prominent one is the fact that this provides incentive to not purchase as much gas. This is due to the fact that the large increase on tax will in turn cause people to fill up less, especially families that are on a tight budget. This incentive will cause people “lacking the funds” to find a new means of transportation. For example, people will begin to choose other more cost effective means of transportation. These may include the bus, light rail, biking, skating, or even electric cars. This is not to mention the effect the tax will have on the supply and demand of fuel. The tax will ultimately end up causing the demand of the gas to sink in turn causing the demand to sky rocket. This will throw our economy all out of whack, for the oil and gas industry play a huge role in the United States economy. This is not to mention the effect that this tax will have on trade. According to the U.S. Energy Information Administration “In 2017, the United States imported approximately 10.14 million barrels per day of petroleum from about 84 countries.”

The problem is that there is already a tax on gas to fund the HTF( Highway Trust Fund) is spending more money than they are bringing in. Currently the gas tax brings in around $34 billion annually, yet the federal government is spending roughly $50 billion each year. They have been known to use the funds for less necessary things such as squirrel sanctuaries, trails, trolley rides, and more. While at the same time they left the funds that went to the highways unprioritized. A study done by tax advocates claim raising the tax would close the deficit and cover future debt. On the other hand that cannot happen if the government is already exceeding their limit given by the revenue of gas taxes by 24 billion. The government must work on regulating where the funds go and they must stick to their word. The Highway Trust Fund was created to rebuild roads and bridges, not to build unnecessary wants of our society. My worry is that raising the tax on gas for renewable energy research will encourage the government to spend more money on unrelated “necessities” as they have in the past with the HTF.

While many people see this policy as selfish or not environmentally friendly, I believe that not increasing the tax on gas is the best option for the U.S. economy and the low income families at the moment. This is due to the fact that raising the tax on gas will definitely cause the economy all out of whack. Many people will lose jobs due to the tax, and many are not able to afford to switch to electric cars. It will cause companies already on thin ice such as GM to tank. We already saw what happened last time that happened. That is not to say that I don’t believe in funding renewable energy. I just believe that putting a large tax on gas is not the way to do it. There are many other ways we can fund this research. For example, we spend almost 600 billion on the nations military. If we cut this by just 2% it will give us 12 billion to spend on research. This will do a lot more that a gas tax could ever do, and it also will not hurt the economy while doing so. This is not to mention that this is infusing government spending with an are that is mainly dominated by investment decisions. This tax will cause the consumer to lose a lot of money as well as cause the national average GDP to go down 6.5 billion per year. Americans depend too much on their cars. Increasing the gas tax would depress economic activity and the incomes of millions of Americans. We as Americans are never going to stop driving. So why impose a tax that will just end up hurting the american people, when instead we can just cut spending by a miniscule amount. That is why I believe that the U.S. simply can’t afford to tax gas.

I believe that the environment and the all around health of the earth is very important to the resilience of mankind. Funding renewable energy would help clean the air and reduce global warming. It is a reliable source of energy that can be used as long as the sun shines. In no way am I against renewable energy, but I believe that putting even more of a tax on gasoline is not the route to solving this crisis. It will affect those who have little to no leniency when it comes to money. Renewable energy is extremely expensive as it is, and at most 30% of the country could even afford luxuries such as electric cars and solar panels. This tax will affect the whole country and take money out of the pockets of families who need it most. It makes transportation more expensive and will thencaus the price of food to go up as well, this is due to the fact that semi trucks that deliver our products are in no way gas efficient. This would cost companies more for shipping and effectively will force them to up their prices. There are other routes to take to fund renewable energy, and increasing gas prices even more for every citizen in america is not going to solve any problems. In fact it would make matters worse involving our nation’s debt. Increasing the gas tax will result in an increase of prices for consumer goods, and will then lessen the amount of money being pumped into our economy.

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