No more gasoline tax hikes!

If gasoline in California at $4.25 per gallon today makes a person angry, how would that person feel if the price went to $6.16 per gallon?

Valerie Karplus, a former Orinda resident, argued in a recent Op-Ed in The New York Times (Feb. 22), that a tax of roughly 45 cents per dollar of gasoline would reduce gasoline consumption.

At today’s gasoline prices of $4.25 per gallon, Ms. Karplus’ proposal would lead to a gasoline price of $6.16 per gallon.

A consequence of Ms. Karplus’s proposed tax could be huge drop in gasoline demand (and, hence, gasoline prices). In fact, the proposed tax could produce an economic recession, lowering gasoline demand even more.

According to the price of regular gasoline reached $4.12 on June 17, 2008. Seven months later (on January 4, 2009), in the wake of an economic crisis and recession, the gasoline price dropped to $1.61 per gallon. In that seven month interval, gasoline prices went down by $2.51 per gallon — a 61 percent drop.

Thus, a possible consequence of Ms. Karplus’s proposed gasoline tax could be much cheaper gasoline and, ultimately, higher gasoline consumption.