# How much would a \$100/ton carbon tax increase the price of gasoline (petrol)?

Similarly, what would be the “carbon-tax equivalent” of a \$1/gal gas tax, assuming it was applied proportionately to other fuels?

This question was motivated by Thomas Friedman’s proposal for a \$1/gallon tax on gasoline to fight terrorism. I understand that New Zealand is planning a \$12USD/ton carbon tax, and that that petrol prices in Europe are over \$2/gal higher than those in the US largely due to gasoline taxes. I was wondering how these sorts of energy taxes compare with one another.

I’m setting policy issues aside in this thread: I recognize that a carbon tax would be a more effective way of reducing carbon emissions and a gas tax would reduce gasoline consumption more efficiently. Whether one goal or another (or neither!) is of greater concern is grist for another forum.

For the \$100 per ton carbon tax, I make it out to be about \$0.38 per gallon, given 85.5% carbon by weight and a density of about .9 g/c[sup]3[/sup].

I got \$0.30 per gallon by different assumptions for density and carbon content, which is close enough to QED’s number to back his figure up. Figure somewhere between \$0.28 and \$0.40 per gallon depending on the assumptions…

I realize that more exact answers have already been posted, but it’s good to know how to do back-of-the-envelope calculations. So here’s how you can figure it.

First, most hydrocarbons have about two hydrogen atoms per carbon atom. Carbon weighs 12, and hydrogen weighs 1, so 12/14 (about 86%) of the weight of a hydrocarbon is carbon. If you can’t remember the mass or proportion of carbon, then just approximate it as all carbon.

Then, we need to convert gallons to mass units, which means we need the density of gasoline. We know that gasoline is a little lighter than water, so let’s approximate it as the same as water. A gallon of water weighs 8 pounds, so we’ll say that we have 8 pounds of gasoline.

Now, we have our tax rate of \$100/ton. A ton is 2000 pounds (a bit more than that, if it’s a metric ton, but 2000 pounds is still a good approximation), so that works out to a dollar per 20 pounds, or 40 cents per 8 pounds of carbon.

We already decided that a gallon of gasoline is about 8 pounds of carbon, so the tax on it would be about 40 cents. And because our estimates of the carbon content of gasoline and of the density were both high, we know that the real answer is somewhat less. So there’s our back-of-the-envelope figure: Somewhat less than 40 cents a gallon.

To turn it around, and find the equivalent carbon tax for \$1/gal, we note that “somewhat less than 40 cents” is about a third of a dollar, and that was from a \$100/ton carbon tax. So triple that amount is \$1/gal, or \$300/ton.

Great work, gang. Thanks.

For the sake of comparison, I thought I would compare our figures to a few proposals that have been kicked around the political biosphere:

Friedman’s \$1 a gallon gas tax = about a \$300 carbon tax.
Total revenue raised: about \$110 billion, according to Friedman.

1980 Presidential Candidate John Anderson’s 50 cent gas tax corresponds roughly to a \$150 carbon tax.

The same, stated in 2003 dollars:
\$1.08 per gallon, \$325 per ton.
Friends of the Earth, the Sierra Club and various green organizations seem to advocate a \$50 tax/ton carbon tax (at least at the state level) here, here, and here, which corresponds to a 14-20 cent tax per gallon of gas by Una’s reckoning and 13 cents according to the Sierra article.

This page traced through the economic implications of a 10, 30 and \$50 carbon tax. It is interesting that higher tax rates were not even considered.

I’ve also seen Friends of the Earth mention an \$80 per ton carbon tax, which they say will raise about \$100 billion of revenue (recall that it is imposed on all fossil fuels, not just petrol).

Occasionally \$100/ton is proposed.

Apparently, 10 countries have carbon taxes, though the levels range from \$19 (Finland) to about \$30 (France) to \$125 (Switzerland). Various exemptions for favored industries often undo the effects of those policies.

Well, hold on just a second. With much respect, I believe the posters above are incorrect in thier calculations. If I remember correctly, the term “carbon tax” is a misnomer, in that a \$100/ton carbon tax is not a tax on the carbon in gasoline, but rather on the carbon dioxide emitted after combustion. This sort of makes sense, in that the intention of the tax is to penalize processes that put greenhouse gasses, like carbon dioxide, into the air.

(Just as I was about, to submit, I found this from the NZ government: “The carbon tax is based on the rate of \$25/t CO2.” That’s pretty conclusive, but I hated to waste all the stuff below, so I’ll keep it.)

This site on the New Zealand carbon tax seems to support me, in that it describes the tax as a “proposed NZ\$25- (US\$11.17-) a-ton tax on carbon dioxide emissions. [my itals]” Furthermore, your own pcdf site discusses the issue of a “modest federal carbon tax (\$100 per ton of carbon dioxide generated)… [my itals]”

Since roughly all carbon is burned to produce CO[sub]2[/sub], what that means is that you need to multiply the numbers above by the ratio of CO[sub]2[/sub] molecular weight to carbon atomic weight, which is 44/12, or a factor of 3.66. That would result in something more like \$1.30/ gallon for a \$100/ton tax.

Now, I just realized that your Sierra Club site gives a cost per gallon that matches Q.E.D.'s, Una’s, and Chronos’s calculations, so I went back to the New Zealand proposal. From here:

Apparently, petrol in NZ costs about \$1.06NZ/ liter. Now, a liter of petrol contains 0.77 kg of carbon (per Q.E.D), which will produce 2.82 kg of carbon dioxide. If “carbon tax” means a tax on carbon weight, then the \$25/ton (per tonne, I assume) tax works out to 1.9 cents per gallon. If “carbon tax” means a tax on carbon dioxide weight, then the \$25/ton tax works out to about 7 cents per gallon. The 7 cent number matches the quoted 6% rise in cost more closely.

So why does this not match the Sierra Club site? I dunno. I assume that “carbon tax” may be a mutable term, and at the very least, care should be taken to discover what the definition is. I should stress, though, that the definition I’m familiar with (which, granted, is hardly a definitive cite) is a tax on the amount of carbon dioxide, not carbon.

Dang, zut, you really threw a wrench into this!

1. This page maintains that a \$5 a ton carbon tax corresponds to a 1 penny a gallon gasoline tax. This estimate is roughly consistent with the Sierra article which matched a \$50 carbon tax to a 13 cent gasoline tax. Both calculations are at the low end of the preceding estimates.

2. In New Zealand, a \$25NZ/ton pure carbon tax will correspond to a 1.7 - 1.9 cent (NZ) increase in the cost of a liter of petrol (by my calculations), which doesn’t match well to their “up to 6% increase” claim.

Furthermore, page 3 of NZ’s “Climate Change: The Government ’s Preferred Policy Package: A Discussion Document” (riveting stuff, available here, -click the link at the right (or better yet don’t)) refers to an, “Introduction of an emissions charge for CO2 approximating the international price of emissions,but capped at \$25 per tonne of CO2 equivalent (except for Competitiveness-at-risk)”.