While most are lamenting the cost of fuel, a renowned energy professor at Carnegie Mellon University’s Tepper School of Business is saying that gas costs should be higher to more accurately reflect the real cost of a barrel of oil.
Professor Lester Lave said the real cost of a barrel of oil is more than $200, a price tag that would be more truly reflected in the market if higher gasoline taxes raised the cost to $7 a gallon.
The increase would help curb demand and stimulate the economy, as well as temper America’s addiction to oil, Lave said.
"When you consider all the factors, the price of gasoline in the United States is far too low at even $4 a gallon," Lave said. "If Americans had to pay $7 a gallon, which better reflects the real costs of a barrel of oil, we would finally see the shift in consumption behavior that would break our dependence on foreign oil, which is costing us dearly in terms of national security."
Lave said a higher tax would bring fuel prices on par with those in Europe and Japan, even if it was unpopular among consumers and elected officials. He estimated the tax would add nearly $500 billion to federal coffers.
However, The American Trucking Associations on Thursday urged the Bush Administration to act quickly to enact strategies that would generate an affordable supply of oil for the 3.5 million truck drivers and consumers in the U.S.
With diesel floating at the $4 per gallon in recent weeks, the trucking industry has been experiencing the highest prolonged fuel prices in history.
The ATA is urging the feds to help reduce fuel costs by releasing oil from the strategic petroleum reserve, as well as allowing environmentally responsible exploration of oil-rich areas in the U.S. that are currently off-limits.
Some of the other measures the ATA called for included working with the 50 state Attorneys General to fight fuel gouging; requiring speed limiters to be set at 68 mph or lower on all new trucks; setting a national maximum speed limit of 65 mph; suspend the collection of the 12% federal excise tax on motor carriers’ purchase of auxiliary power units (which cuts consumption of fuels in idling truck engines); as well as various other measures involving the EPA and other agencies.
"The signs are troubling,” said ATA President and CEO Bill Graves. “We are concerned about fuel’s direct impact on our industry and also its effects on the nation’s economy. The industry is doing its part to conserve fuel, but we need help."
The trucking industry is on pace to spend an unprecedented $135 billion on diesel fuel this year, $22 billion more than a year earlier.