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The Real Reason Gas Is So Cheap Is Americans Don't Pay The True Cost Of Driving


Stashed in: Economics!, Energy!, Economics

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YIKES.

So what would gas taxes look like if they reflected the true social cost of driving? It's no easy question to answer, but for some sense of one we turn to economist Stefan Tscharaktschiew of the Dresden University of Technology, who recently tried to calculate the "optimal" fuel tax for Germany. His goal was to find a number that not only reflected all the social impacts of driving, but also one that accounted for changes in behavior that would result from more expensive gasoline.

After crunching the numbers, Tscharaktschiew reached an optimal gas tax of .96 euros per liter—a figure that amounts to more than $4.36 a gallon in American money. Mind you, that doesn't include the actual market cost of gasoline. In other words, the optimal German gas tax, by itself, roughly doubles what average Americans are right now paying total at the pump.

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