Monday, January 5, 2015

The Real Reason U.S. Gas Is So Cheap

American fuel prices are kept down artificially by low gas taxes that fail to address the true social cost of driving. This national refusal to increase gas taxes—which have gone unchanged at the federal level since 1993. Most first-world countries paid at least double what America did then, just as they do today.

This “budget gap” has two enormous impacts on everyday life. The first is that drivers no longer cover the cost of road and bridge maintenance, as the gas tax originally intended.

The far bigger problem is that America's gas taxes are too low to offset what economists call the "externalities" of driving these are the negative social impacts that aren't being compensated for: personal time and work productivity lost to traffic congestion, lives lost to car crashes, health risks created by air pollution, etc.

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