Article content continued

Simple analysis of time trends, unfortunately, yields little insight into why gasoline demand changes and won’t help Ontario choose the appropriate carbon pricing path. Many factors influence gasoline sales and failure to account for these spawns incorrect conclusions. Good policy evaluation compares gasoline sales to a counterfactual scenario in which the carbon tax doesn’t exist. Our study on British Columbia statistically controls for things such as prices, incomes, unemployment (and other business cycle variables), the exchange rate as well as seasonal and annual driving patterns. This allows us to attribute changes in gasoline demand to particular policies such as British Columbia’s carbon tax. Our main finding is that British Columbia’s carbon tax is responsible for a significant reduction in gasoline demand.

In their attempt at a similar analysis of gasoline consumption in Ontario, Corcoran and Cross neglect the large increase in gasoline prices that accompanied the transition to a harmonized sales tax in 2010. Likewise, since the carbon tax has remained flat since 2012, our study provides little reason to think that continued changes in demand would materialize in British Columbia.

Cross emphasizes the data used in our research. Why, he wonders, did we only look at data to 2011, when data are available to 2014? He suggests that our failure to use more recent data is “at best based on intellectual laziness and at worse are an overt attempt to deceive the public and policymakers.” This is a strong and nasty statement. In fact, the reason is straightforward: we conducted this academic study and wrote the paper two years ago using all data available at the time.