How Alberta's Carbon Tax May Have Made Gas Cheaper

Rick Perry is not an economist and neither am I, just so you know.  I was, however, paying attention in junior high when I was taught about 'supply and demand' (note: I was educated in the Canadian public school system which is pretty darned good).  I also live in Alberta which is only just starting to get its bearings back after a nasty recession caused by... an increase in the global supply of oil... which caused the price of oil to drop.  It's therefore entirely possible I have a better perspective of supply and demand than the Energy Secretary of the United States of America (I'm so sorry, America).

In what was termed a "Canada Day Miracle", gas prices did not increase as Canadians headed into a long weekend.  Not only did they not increase at all during the week, gas prices are at a seven year low... because the supply of available gas is higher than the demand.  When there is more supply than demand, prices go down; it's what the "law of supply and demand" is (again, I'm sorry, America).

When the Alberta NDP announced they would implement a carbon tax in an effort to get people thinking about their personal contribution to emissions, there was an uproar in Alberta.  To be fair, Albertans seem to hate paying taxes more than most citizens.  Somehow, there's a belief that Alberta is so rich we shouldn't have to pay taxes at all:

Fall 1998:  The government surveyed Albertans about their fiscal priorities in the "Talk it up. Talk it out." survey. Albertans gave increasing savings in the Heritage Fund an importance rating of 19.2 per cent, behind eliminating the debt, reducing taxes and increasing spending in priority areas. 

                                                     - Alberta Government, Ministry of Finance

In any case, Albertans were angry; still are.  I had a multitude of conversations with Kenney-Wildrose-esque conservative supporters about how they could not, under any circumstances, reduce their gas use.  Others said they would take the bus to avoid paying a carbon tax... (you can't make this stuff up).  The point of the carbon tax, I believe, was not to get everyone to reduce their use but to encourage those who could to do so.

As previously mentioned, Albertans seem to hate paying taxes more than anyone else.  There are also
a lot of Albertans who are concerned about climate change.  To my basic understanding of supply and demand, I think the carbon tax may have reduced the cost of gas for those who actually need it most.

Simplistically speaking, if people who didn't need to use as much gas stopped doing so, it would reduce the demand.  If the demand goes down, those who actually need to travel for work would reap the benefits of a lower price.  Again, I'm not an economist, but in my opinion, the introduction of a carbon tax in Alberta might have actually reduced both environmental and gas costs to everyone.