Jay Currie

The consumer response has been modest so far, but the pattern is clear. The number of miles traveled on U.S. roads fell 4.3 percent in March from a year earlier, the U.S. Department of Transportation said on Friday, the sharpest yearly drop on record and the first decline in the month of March since 1979, when the last major oil shock hit drivers.

Sales of gasoline-guzzling sport-utility vehicles have plummeted. The prices for used SUVs dropped by 17.5 percent year-over-year in April, according to Manheim Consulting, which tracks used vehicle sales. Compact cars were up 2 percent. reuters

In the real world, rather than the one inhabited by M. Dion and Gordon Campbell, people respond to price signals. Price of gas goes up you drive less and you look around for a fuel efficient car. That’s how markets work.

I suspect that, in relatively short order, oil prices will fall and with them the price of gasoline. However, the smaller cars will remain.

But while that is going on it is the height of folly to put an additional tax on an already too expensive commodity. In BC we are going to see a carbon tax in June. In the rest of the country, pace Jason “The Economist” Cherniak, M. Dion is promising a special, magical, carbon tax which will not cause the price of gas to go up. It is not clear how this trick is to be performed but if M. Dion says he can suspend the basic law of supply and demand who am I to argue.