Carbon Taxes

Carbon Taxes

Alex Tabarrok is associate professor of economics at George Mason University and director of research for the Independent Institute. He writes regularly at the economics blog, Marginal Revolution.

President Obama lost his cool last week when — sounding like the old president — he said he was looking for some “ass to kick.” He didn’t regain any lost cool in Tuesday’s oil speech, which also made him sound like his predecessor: “Make no mistake: we will fight this spill with everything we’ve got for as long it takes,” he said, emphasizing “We will make BP pay….” Call it President’s

Turning to energy, the president called for innovation and hard choices but offered little new or courageous thinking of his own. Instead, he went back to the same well he has drawn from repeatedly; blame the previous administration and their “failed philosophy.”

Whether justified or not, this refrain is getting old. Even the president’s appeals to America’s greatness sounded old. Can his speechwriters really do no better than remember when we won World War II and put a man on the moon?

Most important, nowhere did the president mention two hard ideas that the public must accept if we are to move to a cleaner energy future: nuclear power and carbon taxes. Nuclear power is among the cleanest sources of energy, power plants can be built when and where needed and the combination of nuclear-generated electricity and hydrogen can serve virtually all of our energy needs. Is nuclear power safe? Oil spills and coal-mine disasters should remind us that safety is always relative.

The oil spill isn’t really a new event. It’s simply another reminder that not all of the costs of oil are reflected in the price; whether it’s climate change, environmental disaster or the financing of anti-American governments, cheap oil is a lot more expensive than it appears at the pump. A tax on oil — and carbon more generally — would make the price of oil better reflect its true costs thus making our choices more realistic and rational. Moreover, a carbon tax would do more than any other policy to spur energy conservation and innovation.

No one likes taxes but Al Gore was right when he said we should tax burning not earning. A tax shift — not a tax increase — away from labor and toward carbon would increase the incentive to create jobs and to use less carbon. Both changes would be welcome at the present time.

We needed bold but unfortunately the president mostly gave us old.