The first major protest of the post-Communist era in Eastern Europe was not about corruption. It wasn’t about disappointments with democracy.
It was about gas.
In October 1990, furious at the new liberal government for raising gas prices by 65 percent, taxi drivers in Hungary set up barricades and established roadblocks that brought transportation to a halt around the country. The price hike was partly in response to cutbacks in petroleum deliveries from the Soviet Union and supply problems related to Iraq’s invasion of Kuwait the previous August. For four days, Hungarian cities were paralyzed. Eventually, the government had to back down.
It wasn’t the first such protest, and it wouldn’t be the last. A survey of world politics over the last several decades suggests that a sure-fire way for a government to generate destabilizing protests is to increase the price of gas.
The latest example is Kazakhstan, where gas prices doubled in the new year, prompting protests in the remote western part of the country. Those protests spread throughout Kazakhstan, which has been ruled by an authoritarian government since it became independent following the collapse of the Soviet Union. In response, Kazakhstan’s President Kassym-Jomart Tokayev ordered his security forces “shoot to kill without warning.” A contingent of mostly Russian soldiers from the Collective Security Treaty Organization deployed to the country to help “stabilize” the situation.
Between Hungary’s taxi blockade and Kazakhstan’s aborted uprising, the price of gas has precipitated numerous, large-scale demonstrations around the world:
- Three days of protests in Zimbabwe in 2019, after a 130 percent increase in fuel prices.
- A series of protests in Iran beginning in November 2019, initially as a result of a 50-200 percent increase in fuel prices.
- Protests in Haiti beginning in 2018, after steep increases in the price of gasoline, diesel, and kerosene.
- Yellow Jacket protests in France in 2018 that initially began because of discontent over fuel taxes.
- Protests in Mexico in 2017 that began over rising fuel costs after the government privatized the oil industry.
This is just the tip of the oil rig. Some revolutions, like the Saffron Revolution in Burma in 2007, began with humble protests against higher gas prices. Oil exporters are not immune as the cases of Kazakhstan, Iran, and Mexico demonstrate. According to data from the last four decades analyzed by political scientists Krishna Chaitanya Vadlamannati and Indra de Soysa, rising prices for oil around the world indeed precipitate anti-government protests in oil-importing nations while falling prices strongly correlate with instability in oil-exporting countries.
Nor is the United States untouched by the turmoil of higher gas prices. In 1973-4, truckers launched a series of protests around the country as prices at the pump increased because of the OPEC-induced oil crisis.
Nearly 50 years later, the Biden administration faced rising discontent, considerably fanned by right-wing media, over gas prices that jumped from around $2.50 a gallon last February 2021 to around $3.50 a gallon by November. Anxiety over this discontent informed the government decision to release 50 million barrels from the Strategic Petroleum Reserve late last year—the largest such release in U.S. history—and to coordinate with other countries to get more oil into the global supply.
Many countries have experienced waves of protests connected to austerity policies. The removal of government subsidies for food, water, and essential services generated “IMF riots” throughout the Global South in the 1980s and 1990s. The Chilean protests in 2019 were triggered by a relatively small—4 percent—increase in Santiago’s subway fares.
Gas, however, is an unusual commodity. First of all, many governments have direct control over the supply and price of gas at the pumps. Even in countries where the petroleum industry is not in government hands, consumers perceive that it’s the government’s fault if gas prices rise (like recently in the United States).
Moreover, the price of gas has a ripple effect throughout the economy. Higher gas prices translate into higher food prices (because of farm and transportation costs). A spike in the cost of oil, a key input in manufacturing, usually depresses output, which can have an impact on employment, and increases inflation as well.
Of course, it’s not a simple correlation between rising oil prices and public protest. People are usually motivated to come out onto the streets by a variety of grievances.
In Kazakhstan, write Pauline Jones and Regina Smyth in The Washington Post, “Data from the Central Asian Protest Tracker illustrates growing local grievances over issues such as environmental degradation, labor, food costs and land use. Political opposition also intensified in response to Kazakhstan’s January 2021 parliamentary elections. Both types of mobilization produced new leaders, activist and organizational networks, and political frames likely to influence future events.”
In Burma, France, Iran, Zimbabwe and elsewhere, anger over fuel costs was but one of the sources of discontent with governments and their performance. The intensity of the protests usually also reflects the inequality of the burden imposed by higher fuel costs. For people living at the edge of their means, even a few more dollars at the pump translates into considerable hardship, while the middle class and wealthy can more easily absorb the surcharge.
It starts with gas, but it doesn’t end there. A notoriously volatile substance, gasoline lights the fires of protest, which then fan out to consume anything combustible within reach.
We don’t pay enough for gas.
According to one estimate back in 2011, when gas cost around $4 a gallon at the U.S. pump, Americans should have really been paying $15 a gallon, taking into account the true costs of drilling, the damage related to oil spills, the impact of exhaust on air pollution, and of course the effect of carbon emissions on global warming.
But that’s probably an undercount.
Consider that each gallon of gas produces about 20 pounds of carbon dioxide (a little less for regular, a little more for diesel). The usual price affixed to a ton of carbon emissions these days is about $50 or about 2.5 cents per pound. So, each gallon gives off 50 cents worth of carbon that is not incorporated into the price.
But that’s just a baseline figure. When Columbia University researcher Danny Bressler incorporated into the price of carbon something he called “the mortality cost of carbon”—the mortality rates directly connected to climate change—he got a number five times higher, nearly $250 per ton of carbon. That would add another $2.50 to every gallon of gas.
Then there are the additional costs associated with fuel subsidies, Pentagon operations to secure access to petroleum, and the opportunity costs of not pursuing alternative sources of energy.
Imagine putting a tax on gasoline to account for these additional costs. Imagine trying to get Americans to pay even $5 a gallon for gas much less the truer price of $10, $15, or even $20. It would be political suicide for any administration.
Of course, there’s already a federal tax on gasoline: an excise tax of about 18 cents that hasn’t changed since 1993. Adjusted for inflation, it would be about 30 cents today, which still isn’t much. States and localities add on another roughly 35 cents to push the actual fuel tax today above 50 cents, with California at the top rate of nearly 67 cents.
That number is worth repeating: 67 cents.
The amount of money raised by the federal excise tax on gasoline isn’t even enough to cover the costs of roads and transportation and hasn’t since 2008. Proposals to increase it have gone nowhere, and the Biden administration opposed using a gas tax increase to pay for any of its infrastructure plan.
As a result, gas tax proponent Earl Blumenauer (D-OR) has concluded, “Let’s just not beat our heads against the wall for something that is not going to happen. We ought to start now accelerating the transition to a different system.”
Who’s Going to Pay for Transition?
I’ve always thought it was eminently sensible to tax gas in order to discourage use and raise revenues for a clean transition. But recent history demonstrates that price increases at the pump are an invitation to protest and political instability. Even when fuel taxes are rescinded, as Emmanuel Macron did in response to the Yellow Jacket protests, unrest often continues.
Meanwhile, the price of renewable energy continues to fall, with solar and wind producing cheaper electricity than coal or nuclear and now competitive with natural gas. But it still costs a good amount of money to build clean energy infrastructure, and it is difficult to overcome all the sunken costs and political lobbying of the fossil fuel industry. It might seem to make sense to simply to do an end run around oil and gas by offering cheaper alternatives on the market (electric vehicles, home solar panels). But those alternatives are only going to be cheaper for those who can afford the initial investment.
Which means that the world will continue to diverge, with the middle class and wealthy enjoying their Teslas and off-the-grid electricity while the poor remain dependent on the fluctuating price of gas at the pump.
The market will not alone power a shift to clean energy. It will require government intervention to close down coal mines, oil drilling, and fracking and build the necessary clean energy infrastructure that can benefit everyone. It’s going to require forcing fossil fuel corporations to pay reparations to the environment—in other words, into a fund for cleaning up messes and creating clean energy infrastructure—even greater than the nearly $250 billion tobacco companies have to shell out to cover the medical costs associated with smoking or the multi-million dollar settlements that petroleum companies have already forked over for various oil spills.
Yes, everyone is eventually going to have to pitch in to pay for the transition. But taxing people at the pump, which I used to think was a no-brainer, is just going to make everyone cling even tighter to something more powerful than guns or God: our addiction to cheap oil.
FPIF, January 12, 2022