[Peakoil] Why petrol is not charged the carbon price

[Paul Pollard]

There are two main reasons, apart from the political, which could justify not 
putting an additional tax, the carbon price, on petrol:

in contrast to other fossil fuels like coal and gas, oil is already taxed. For 
ordinary motorists, it's 38 cents a litre, or a tax of about 33%. This quite 
high level of taxation was imposed essentially as a fuel efficiency and 
conservation measure in the early 80s, following the oil shocks. High oil tax  
has proved one of the best forms of tax ever imposed, here and in Europe, but 
significantly was never imposed in the US. It has also been justified 
politically in the past as a way of paying for roads, and preventing air 
pollution and other external costs of motor vehicles; and

a carbon price of $23 a tonne would lead to a price rise of about 5 cents a 
litre. This is not enough to alter consumer behaviour much in the short run, 
being within the weekly range of prices. In other words, coal used by 
electricity generators and gas used by industry are far more price sensitive, 
and will be changed much more by a $23 price, than petrol used by motorists.