Quebecers often complain that gas prices at the pump are too high but, of course, it is they themselves who decide how much they will spend when they chose their make and size of car and how fast to drive it. Above and beyond purchasing decisions, it is government that determines the actual pump price when determining the level of tax to be levied but you, the consumer, get to decide how much gas you will actually be purchasing. In setting the tax rate, government is not concerned about reducing consumption to 'protect the environment' but is rather simply seeking to raise taxes in an easy and effective way. If government were to raise taxes on gas, while reducing taxes elsewhere to keep the overall load constant, there would be a very fast and significant economic boom in Canada.
In recent years, Quebecorers, like tens of millions of drivers all over North America have become enamoured with big gas guzzling SUVs and other oversized vans cars and military assault type vehicles. This is because a lot of people have a lot of disposable income and since gas prices are low, everyday consumers can afford the cost of 'filling up' oversized vehicles. Even if they complain constantly while doing so. And, as more and more people buy oversized vehicles, even the sensible consumers find themselves pushed into buying absurdly big craft - if only in order to protect themselves in the event of potetntial collision. A sort of automobile arms race.
In Europe, by contrast, where gas prices are often twice as high as here monster cars are a rarity in most countries and most people drive small or medium sized cars. In London England, for example there are many expensive cars on the road but the only really big ones that are commonly seen are Range Rovers for the rich and Rolls Royce's for the very rich (the incredibly rich drive anonymous cars because they don't want you to know). Hummers and other silly giant cars are fairground rarities.
Why does it matter what size cars people drive. It matters because big cars are bad for the economy. In Europe, the effect of higher gas prices is more than offset by smaller, lower cost, cars that drink less gas and cost much less to buy and maintain. Smaller cars cost less to purchase and require much less gas to run so that the average motorist more than makes up for higher gas prices by saving on the cost of buying the car. Naturally, higher taxes on gas are shared by everyone (drivers and consumers both) and are thus fairer than most taxes meaning that the middle and lower income groups have more money to spend... thus boosting activity within their economies.
With higher gas prices, Europeans in comparable income categories generally have more disposable income than us because they expend smaller proportions of their income than we do on car ownership, maintenance and daily use. Obviously, you would have a better cash flow if you were to be encouraged to buy a twenty or twenty-five thousand dollar car instead of a thirty or forty-plus model. The extra disposable income that higher gas prices bring for Europeans is spent on other items such as housing, food and clothing and helps to create and maintain local economies instead of pouring unnecessry money into excessive car prices for products that are mostly produced in other countries. Consequently, the Europeans tend to have stronger, more durable, economies than here in Quebec where our only new industries seem to be a proliferation of coffee shops and the endless promises of new, never-to-be-built, new tramlines here there and ev erywhere..
If Canadian gas prices were to double the cost of running small and medium sized cars would increase but the SUV, big van and Hummer type vehicles would be hit so hard as to be simply priced out of the market since they would no longer command a mass market. The rich would still drive big cars but they would be reduced to a limited selection while the rest of us would go back to driving sensible sized cars and, in the process, save ourselves lots and lots of money.
With higher gas prices, the rest of us would naturally have to cut back on our gas guzzling habits while many city dwellers would do the math and decide that they do not need cars at all. For most city dwellers, the regular use of taxis, public transit, rental cars and foot power adds up to costing less than the many thousands of dollars required each year to own, operate and maintain a private car.
In general, a significant rise in gas prices at the pump would benefit the Quebec economy by convincing people to buy smaller cars, thus leaving them more money to be spent elsewhere and to be invested more productively. This newly directed spending would also generate investments in research and development to serve new and changing spending habits including the development of more energy efficient car engines. With higher gas prices, suburbanites would clamour for much more public transit so that they could leave their cars home and better afford their commute.
As for direct environmental benefits, higher gas prices at the pump would result in reduced consumption as well as encouraging the more widespread use of public transit. A tendency which would itself lead to greater investments in transit infrastructure and additional envrionmental benefits. The trend towards the production of small and medium sized cars would also reduce unnecessary raw material exploitation and transformation and cut down on the green house gas emissions involved in car production and use.
Asking people to be nice to the envionment is not enough and major changes in our habits are only likely to come about in the short term if they are motivated by people's perception of their own direct financial interests. Significant price hikes at the pumps would bring immediate and beneficial results both for the environment and for the economy since consumers would immediately look to their pocket books and change their habits for the better overnight.
What do you think... low gas prices or better economy.
JEREMY SEARLE
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