I really, really, really don’t understand how the solution to $4/gal gasoline can be $5/gal gasoline.
It’s not really hard. It’s like this:
1. The US consumer doesn’t pay the full price of oil at the pump. We pay a huge amount via the military budget, a lot as externalities, and even more in hidden taxes due to currency debasement as payments deficits drive the dollar down.
2. Paying the full price at the pump, instead of just part, helps market forces minimize the total cost. That’s impossible now due to the subsidies.
3. Excessive dependence on imported oil is a security risk, both economic and military. Taxes can be considered as insurance payments.
4. Paying taxes at the pump allows people to choose how much they want to pay. This is very much unlike income and payroll taxes.
Unfortunately, the time for $5 gasoline is past. We probably need $7-$8 gasoline to get people’s vehicle purchases, driving habits and commuting patterns on a course that will let us weather the price increases that are coming all too soon. We’re already seeing predictions of $200/bbl oil by 2012. This may be low.
McCain’s proposal is excellent politics.
It’s more of the “same old, same old”. There’s only so much oil being pumped, and consumer demand will equal the total supply at some price to the consumer; we only get to decide who gets what fraction of that price. Taxes cut demand at a given crude oil price, so the price of crude goes down. This works. If Europe’s auto fleet got the same lousy 22 MPG that the US fleet does, oil would be $150/bbl already and heading higher. The main beneficiaries of low US gas taxes are Hugo Chavez, the Saudi royal family, the mad mullahs of Iran, etc.
We also see the infrastructure being build to impose rationing of electricity and natural gas under the rubic of “Smart Grid.”
Would you rather have blackouts?
It’s a fact that the last 1% of electric demand is the most expensive part to meet. If you can clip demand peaks, you can eliminate a lot of expensive generators and reduce wear and tear on the transmission system. If you think the consumer doesn’t ultimately pay for all of this, I’ve got a bridge for sale.
Energy policy should be on the table this election.
Yes, it should. And demagoguery like cutting our paltry gas tax is exactly the kind of policy nonsense which should get a candidate laughed right out of the race.
