Arguing the Upside of High Gas Prices

One writer believes gas prices actually should be high. Steve Inskeep talks with James Surowiecki, a financial columnist for The New Yorker who says a 50-cent gas tax would make drivers pay for the real cost of cars on the road and make business cater to the fuel-conscious.

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STEVE INSKEEP, host:

You might think that energy prices are painfully high right now, but some think they should go higher. A long-standing demand for more expensive gas has been taken up by James Surowiecki. He's a financial columnist for The New Yorker magazine and he's in our studios. Good morning.

Mr. JAMES SUROWIECKI (Financial Columnist, The New Yorker): Good morning.

INSKEEP: OK, you're telling people that they should pay what for gas? Four dollars a gallon? Five dollars a gallon?

Mr. SUROWIECKI: Well, I think the key is that the inflation we've seen over the last few weeks is essentially artificial, and it's going to go down after this wave of Katrina-induced prices falls; that we should really think seriously about increasing the federal gas tax by another 50 cents or so.

INSKEEP: Why in the world would I be happy about maybe spending a hundred bucks to fill up the tank?

Mr. SUROWIECKI: I don't think it's necessarily going to make you happy, but I think the argument is twofold. It's pretty clear that the American demand for gasoline outpaces our ability to supply it. And as a result, that's why every time something goes wrong the price of gasoline skyrockets. And that kind of volatility's bad. The other thing is just that using gasoline has all these costs that are not incorporated in the gas price, and one of the things a gas tax does is try to get you to pay for those costs.

INSKEEP: What costs are you talking about there?

Mr. SUROWIECKI: Well, I mean, there are a whole series of them. And the obvious ones would be pollution, congestion, the possible effects of global warming. And then I think what we've seen recently are the costs of both the military involvement abroad and the cost of sending huge amounts of money to autocratic regimes, you know, who are basically, you know, our chief suppliers of oil.

INSKEEP: Environmentalists have been calling for years for higher gas prices, basically, as a way to force people to change their entire lives; to live closer to where they work, for example.

Mr. SUROWIECKI: Yeah, the goal is not necessarily to restructure the entire society. It's really just to try to get the price of gasoline more in line with the actual cost of gasoline. And the way we try to do it now is by fuel economy standards. So we tell the automakers, your fleet has to have an average mile per gallon. The problem is that's actually really inefficient and it also creates all these opportunities for automakers to game the system. So they try to classify a station wagon as a light truck, or they give a lot of money to lobbyists to have them rejigger the rules.

INSKEEP: If consumers are motivated by higher gas prices to change their behavior, are corporations really going to provide them with the products to do that? Will there be enough hybrid cars and other alternative means of transportation for example?

Mr. SUROWIECKI: My answer is yes. One of the big problems we've had is that, if you want to go out today and buy a station wagon that gets 30 miles to the gallon and can carry your kids, I don't think that car actually exists.

INSKEEP: It's technically possible.

Mr. SUROWIECKI: It's certainly technically possible. It simply does not exist in the United States. The problem is until you have a sustained period of relatively high gas prices, auto companies are not adjusting to that demand. And the problem is that you're really going to have to wait to see the real effects of this stuff, because it takes auto companies two or three years. And again, the 1970s is the time to see it. You know, if you think about cars like the Honda Civic or the little Toyotas, the market for those cars exploded in the 1970s. And when that happened, Detroit had to shift away from the gas guzzlers and try to build more efficient cars. There's no question the companies will respond. The question is how fast they'll do so.

INSKEEP: We've been talking to James Surowiecki who's with The New Yorker magazine and author of the book, "The Wisdom of Crowds." Thanks.

Mr. SUROWIECKI: Thanks for having me on.

INSKEEP: This is MORNING EDITION from NPR News coming to you at the same low price. I'm Steve Inskeep.

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