Carbon Prices and Driving

Mark Thoma directs us to the CBO blog, which notes that most of the emission reductions from a carbon tax would not come from changes in driving behavior. This, I think, is uncontroversial and is a point I made in the Bloggingheads chat with Jim Manzi. It’s convenient to illustrate the costs of a carbon tax by noting the change it would have on price at the pump, but this leads people to ask how such a small increase in gas prices could reduce emissions. It won’t! Just because it’s convenient to use gas prices to show the magnitude of cost increases doesn’t mean that that’s where the reductions will come.

Two other things, though. It’s not the case that emissions are simply unresponsive to high gas prices, as we saw over the summer. Just because a carbon tax won’t reduce emissions from vehicles doesn’t mean that we shouldn’t expect reductions in vehicle emissions.

The CBO blog post concludes:

Finally, cultural, historic, and geographic considerations drive the extent to which Americans have become dependent on automobile travel, and their choices tend towards larger and more powerful (and less fuel efficient) automobiles. While dramatic increases in gasoline prices (or shifts in cultural norms) might eventually influence these considerations, the magnitude of gas price increases under most legislation under consideration would likely have little effect.

This is a very weird paragraph. For one thing, it’s allowing tastes, rather than economic variables, to do a lot of work–in an unjustified manner, if you ask me. Surely the CBO doesn’t think that Americans buy bigger cars than Europeans simply because we like bigger cars? More to the point, was the CBO not paying attention this summer? Or has it not read its own work on the value of congestion charges?

The influence of economic variables on American driving behavior (of which there are many) is massive, and policies designed to improve driving conditions would act to make driving more expensive and reduce it. This has nothing in the least to do with cultural or geographic factors, and it’s weird that the CBO would wave its hands around like that rather than address the issue. I understand them making the point that a carbon tax wouldn’t cut driving. Fine. Why pretend that driving is nonetheless destined to continue on as usual, given the changes produced by increases in the market price of fuel, and the growing consensus that congestion pricing on a wide scale is an appropriate means to reduce traffic and fund road maintenance?