I was chatting with a transportation expert over the weekend about carbon taxes and so forth. His view is that carbon taxes are, for cars, mostly window dressing. The price of oil varies by much more than any politically feasible carbon tax in America. Moreover, if global oil production has really peaked1, then supply constraints will become a dominant contributor to the price as well. America will move to smaller, denser housing, not because the government tells them to, but because they will no longer be able to afford the heating and transportation for large, dispersed homes.

Where carbon taxes may make a difference is in preventing coal-to-liquids from becoming a viable substitute for gasoline. CTL has a terrible carbon profile, and it isn't particularly good for other bits of the environment either. This sets up an interesting political problem for the future. The public debate over carbon has focused on driving, because right now it's mostly aimed at securing voluntary consumer cooperation, and consumers don't have much control over what sort of plants their power generator uses. But if oil truly becomes as expensive as the peak oil folks think, coal will suddenly become a major battleground, as producers promise consumers cheap(er) fuel--and Senator Byrd shifts his efforts from paving West Virginia into one shining sheet of asphalt, towards gaining massive CTL research subsidies. You may see the West Virginia delegation increasingly allied with Michigan.



1a notion of which I am somewhat skeptical, although Hugo Chavez is certainly doing his best to make sure that the-artist-formerly-known-as-Venezuela's-bitumen never makes it onto the world oil markets in any quantity

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