The IMF Wants Your Gas to Be More Expensive

Fuel prices don’t accurately reflect their environmental impact, the international body says in a new report.

SAN FRANCISCO, CA - JULY 22: Gas pumps are seen at a Chevron gas station on July 22, 2013 in San Francisco, California. According to AAA, the national average price for a gallon of regular gasoline rose to $3.67 as prices have surged 12 cents in the past week due in part to the unrest in Egypt and production disruptions at US refineries. (Photo by Justin Sullivan/Getty Images)
National Journal
Jason Plautz
Add to Briefcase
Jason Plautz
July 31, 2014, 10:21 a.m.

Rising gas prices may be the bane of most drivers, but the In­ter­na­tion­al Mon­et­ary Fund says those costs aren’t nearly high enough.

In a book re­leased today, the IMF states simply, “Many en­ergy prices in many coun­tries are wrong.” The in­ter­na­tion­al bank backs tax re­form that would peg fuel, coal, nat­ur­al gas, and dies­el prices to the cost of glob­al warm­ing, air pol­lu­tion, and the im­pacts of mo­tor-vehicle use.

For the U.S., for ex­ample, that could mean a $1.60 per gal­lon cor­rect­ive tax on gas­ol­ine to cov­er health im­pacts from car ex­haust pol­lu­tion, traffic ac­ci­dents, and wear and tear on high­ways, plus taxes on coal and nat­ur­al gas to ac­count for the en­ergy sec­tor.

But the be­ne­fits, the re­port says, would be felt across the spec­trum. In­centiv­iz­ing people to use less-dirty fuel would lower world­wide deaths from air pol­lu­tion linked to fossil fuels by 63 per­cent (the bulk linked to coal) and slash car­bon di­ox­ide emis­sions by 23 per­cent. The gains could even be felt in gross do­mest­ic product, with an av­er­age 2.6 per­cent boost.

IMF Man­aging Dir­ect­or Christine Lagarde ad­mit­ted that im­pos­ing a fuel tax hasn’t got­ten a gen­er­ous re­cep­tion in the U.S. or in some oth­er coun­tries. And she also noted that tax re­form doesn’t ne­ces­sar­ily mean a tax in­crease (“smarter taxes” was the buzzword for the po­ten­tial to off­set taxes else­where).

“I know it’s not a par­tic­u­larly pop­u­lar sug­ges­tion, but it is our sug­ges­tion,” Lagarde said today at an event hos­ted by the Cen­ter for Glob­al De­vel­op­ment.

“In all of this, fisc­al policy must take cen­ter stage, and our mes­sage is clear: To get it right, price it right,” she ad­ded.

Echo­ing the sen­ti­ments of oth­er car­bon-tax pro­ponents, Lagarde also poin­ted out that high­er en­ergy prices wouldn’t just dir­ect more money to cli­mate-change ef­forts, but could also dir­ect people to use clean­er fuels, re­duce their en­ergy use, or shift to a fuel-ef­fi­cient car. The rev­en­ue raised could also be used to off­set taxes on in­come, pay down pub­lic debt, or ad­dress in­come in­equal­ity, she said.

The re­port meas­ures the im­pact of tax re­form on 156 coun­tries, not­ing that the en­ergy tax re­form would al­low some coun­tries to move in­de­pend­ently on cli­mate change rather than wait­ing for in­ter­na­tion­al ac­tion. In the U.S., for ex­ample, the re­port of­fers a pro­pos­al for a tax of more than $8 per giga­joule on coal, while nat­ur­al gas would see a cor­rect­ive tax of just over $3 per giga­joule.

Of course, rais­ing en­ergy prices is a huge ask. The Aus­trali­an gov­ern­ment this month nixed that coun­try’s car­bon tax. And even while Con­gress sweats through an­oth­er short-term fix to keep the High­way Trust Fund afloat this week, there’s little mo­mentum to rais­ing the coun­try’s 18.4-cents-per-gal­lon gas­ol­ine tax to cov­er the up­keep of trans­port­a­tion in­fra­struc­ture.

Lagarde—who has over­seen a shift at the IMF to tackle cli­mate change—said the eco­nom­ic ap­proach to en­vir­on­ment­al im­pact was one that made sense to the mon­et­ary body, es­pe­cially as na­tions pre­pare for cli­mate change talks in Par­is next year.

“It’s bad for an eco­nomy to be down­graded, but it’s even worse for an eco­nomy to be de­graded,” Lagarde said. “A de­graded en­vir­on­ment leads to a de­graded eco­nomy.”

What We're Following See More »
WITH LIVE BLOGGING
Trump Deposition Video Is Online
8 hours ago
STAFF PICKS

The video of Donald Trump's deposition in his case against restaurateur Jeffrey Zakarian is now live. Slate's Jim Newell and Josh Voorhees are live-blogging it while they watch.

Source:
SOUND LEVEL AFFECTED
Debate Commission Admits Issues with Trump’s Mic
9 hours ago
THE LATEST

The Commission on Presidential Debates put out a statement today that gives credence to Donald Trump's claims that he had a bad microphone on Monday night. "Regarding the first debate, there were issues regarding Donald Trump's audio that affected the sound level in the debate hall," read the statement in its entirety.

Source:
TRUMP VS. CHEFS
Trump Deposition Video to Be Released
9 hours ago
THE LATEST

"A video of Donald Trump testifying under oath about his provocative rhetoric about Mexicans and other Latinos is set to go public" as soon as today. "Trump gave the testimony in June at a law office in Washington in connection with one of two lawsuits he filed last year after prominent chefs reacted to the controversy over his remarks by pulling out of plans to open restaurants at his new D.C. hotel. D.C. Superior Court Judge Brian Holeman said in an order issued Thursday evening that fears the testimony might show up in campaign commercials were no basis to keep the public from seeing the video."

Source:
A CANDIDATE TO BE ‘PROUD’ OF
Chicago Tribune Endorses Gary Johnson
12 hours ago
THE LATEST

No matter that his recall of foreign leaders leaves something to be desired, Gary Johnson is the choice of the Chicago Tribune's editorial board. The editors argue that Donald Trump couldn't do the job of president, while hitting Hillary Clinton for "her intent to greatly increase federal spending and taxation, and serious questions about honesty and trust." Which leaves them with Johnson. "Every American who casts a vote for him is standing for principles," they write, "and can be proud of that vote. Yes, proud of a candidate in 2016."

NEVER TRUMP
USA Today Weighs in on Presidential Race for First Time Ever
1 days ago
THE DETAILS

"By all means vote, just not for Donald Trump." That's the message from USA Today editors, who are making the first recommendation on a presidential race in the paper's 34-year history. It's not exactly an endorsement; they make clear that the editorial board "does not have a consensus for a Clinton endorsement." But they state flatly that Donald Trump is, by "unanimous consensus of the editorial board, unfit for the presidency."

Source:
×