WASHINGTON – The United States and other developed nations should take advantage of low oil prices to impose a tax either on gasoline or fossil fuels — or both — according to the head of the Paris-based International Energy Agency.
In an interview during a recent trip to Washington, Maria van der Hoeven didn't shy away from the controversial issue of fuel taxes or on normalizing relations with Cuba, which she said provided opportunities for the United States to loosen its ban on the export of crude oil. Of the major developed nations, only Mexico has a lower federal gas tax, she said.
The IEA was created in response to the oil supply crisis of 1973-74, but today serves as both statistician and research guide for 29 developed nations (including the U.S.) that are large oil consumers.
Van der Hoeven is a former economics minister for the Netherlands. Here are some of her thoughts:
Q: Falling oil prices have been like a tax break for consumers, but you want to raise gasoline taxes now. Why?
A: We are not a climate agency … but what I really do hope is that these low oil prices will be used by policymakers as an opportunity to cut down fuel subsidies in those countries [such as Indonesia, Malaysia and Thailand] that do have them. Whether it is a carbon tax or you do it in a different way … put a price on carbon. Because now with the low prices, the economy won't be hurt, or will be less hurt, than in any other time so use that opportunity.
Q: Some have suggested a carbon tax to discourage emissions; others a gasoline tax to help pay for infrastructure improvements. You favor both and spending more on renewable energy. Explain.
A: Stick to your policies on energy efficiency, fuel efficiency, since it is helpful for your climate policies as well. Now it is possible. With high gasoline prices at the pump and cars that drink a lot of gasoline, it's a much different situation than you have now. You can't just talk about it. Put your words into action.
Q: If and when diplomatic relations are normalized, will the United States supplant Venezuela as a leading energy supplier to Cuba?
A: It's really too early to answer that question.
Q: Where are the opportunities in Cuba? Offshore drilling?
A: It's very early to answer that question. … We all know that the Cuban economy is in a very difficult situation. Much needs to be done there. The power [generation] needs are greater than the oil needs, but the power has to come from something. The problem in Cuba is not just about power needs. It's about transmission lines, and not all people have access to energy. There will certainly be growth in demand, let's be honest about that.
Q: Did abundant global oil supplies, the factor that caused the oil-price collapse, just sneak up on everyone?
A: This is not new. We have seen this happen before, this huge volatility … although it hasn't always been with such short notice.
Q: You've said new oil production in the United States and elsewhere has boosted supply, what about demand?
A: At this moment, the growth of oil demand is much lower than expected, and that has to with less demand in some oil-producing countries … and slow growth in China and a slowdown in [global] economic growth that is still not recovering … We expect that in 2015 there is still growth in demand, but it is much less steep than was expected.