Finally the market stepped in and prices have started to rise. It's a pity that the excess revenue is going to the oil companies instead of the government. The government could be offsetting the pain of higher gas prices by improving urban transit, inter-city passenger and freight rail, home insulation programs, and on and on. That's the whole point of gas taxes.
Now Stephane Dion has suggested a carbon tax and he risks losing the next election over it - even though it is an idea that is not only good but necessary to effect a transition that will prevent disaster for Canadians. I disagree with one major part of Dion's proposal: the carbon tax should not be revenue neutral. Revenue from the carbon tax should be earmarked for programs that will help offset the pain of higher carbon prices, as outlined in the previous paragraph.
I have an 11-year old Corolla that I drive sparingly - a couple thousand kilometers per year. I have put off replacing it, in part, because I'm waiting for more fuel-efficient car options to come on the market. The SmartCar is a little too small; it's more suitable for a two-car household. Hybrids offer lower gas prices but a higher purchase price and higher maintenance costs; plus, their battery presents environmental problems for disposal. The diesel VW Beetle is an excellent car with better mileage than even a hybrid, but it's way too pricey. The Toyota Echo (3-door model) was just about perfect but it disappeared almost as soon as it was introduced. Surely, now that gas prices have risen car manufacturers will start to offer more fuel-efficient options.
Better fuel efficiency in vehicles is only part of the solution. Disposable diaper prices are rising 8% this summer, according to the Globe's Report on Business. The RoB laments that low-income consumers are being disproportionately hurt by higher prices, and "their influence on demand is so weak that even a concerted effort to cut consumption might be ineffective in cooling the hot market and pushing prices back down." The RoB misses the point. The goal is not to push prices back down, but to change consumption patterns. And in that regard lower income consumers could lead the way. For example, there is a convenient alternative to disposable diapers: the disposable diaper insert. You buy a washable diaper that has a pad that can be flushed. This product is thousands of times better for the environment; it is even more convenient; and it is far cheaper. Once widely known, I have no doubt it will be adopted. We continue to rely on disposable diapers because there's big profit in them for certain companies who advertise like crazy.
Toiletries, cosmetics, home cleaning products and the like tend to face non-price competition: consumers react less to price and more to advertising, packaging, and brand loyalty. That's why people buy toilet paper and paper towels that cost more than twice the lowest price brand. That's why they fall for heavily-advertised but ridiculous products like disposable brooms. It will take a massive force to get the market to stop succeeding with ever-more ridiculous disposable products. Sharply higher prices and resulting exposure to cheaper alternatives might just wake us up.