Appropriate response to rising fuel prices: citizens should demand, "Raise my prices now!"
This paper evaluates public policy options for responding to rising fuel prices. There is popular support for policies to minimize fuel prices by subsidies or reduced taxes. But price-minimization policies are likely to harm consumers and the economy overall by increasing total fuel consumption and vehicle travel, and associated costs such as traffic and parking congestion, infrastructure costs, traffic crashes, import costs and pollution emissions. Fuel price reductions are an inappropriate way to provide more affordable mobility for low-income households, other strategies can help them more while also increasing transport system efficiency. Because many transport decisions are durable, low fuel price policies increase future fuel consumption, harming the future economy. This report identifies responses that maximize total benefits, including gradual and predictable fuel tax increases, mobility management strategies that increase transport system efficiency, incentives to choose fuel efficient vehicles, and development of alternative fuels. With these policies fuel prices could more than double without harming consumers or the economy, and other transportation problems would be reduced.
- Record URL:
Victoria Transport Policy InstituteVictoria, British Columbia Canada
- Litman, T
- Publication Date: 2008-1
- Pagination: 24p
- TRT Terms: Benefit cost analysis; Economics; Fuel consumption; Fuel taxes; Policy; Travel behavior
- Uncontrolled Terms: Planning and Environment
- ATRI Terms: Cost benefit analysis; Fuel consumption; Fuel costs; Fuel tax; Policy; Transport economics; Travel behaviour
- Subject Areas: Economics; Policy;
- Accession Number: 01384998
- Record Type: Publication
- Source Agency: ARRB
- Files: ATRI
- Created Date: Aug 22 2012 6:28PM