Focusing on externalities, what harms is a gasoline tax trying to address? Are there any other ways of addressing the harms listed above that don’t involve raising the gas price?
Now, why do you suppose that the legislature felt that oil companies would lower prices? Why do you suppose we didn’t see a decrease in gasoline prices? In answering this, think of substitute uses for oil (which can be turned into gasoline) also, what do you think is the primary force behind gasoline price changes?