Friday, November 11, 2005

The Case for $3-a-Gallon Gasoline

Yeah, I know we've done the gas tax issue here before, but this column by Washington Post columnist Charles Krauthammer is interesting if only because of its conservative source. "Thank God for $3.50 gasoline," he writes in a piece titled "Pump Some Seriousness Into Energy Policy."

Says Krauthammer: '..the Senate is attacking the problem by hauling oil executives to hearings on "price gouging." Even by Senate standards, the cynicism here is breathtaking. Everyone knows what the problem really is. It's Economics 101: increasing demand and precariously tight supply.... We have a unique but fleeting opportunity to permanently depress demand by locking in higher gasoline prices. Put a floor at $3. Every penny that the price goes under $3 should be recaptured in a federal gas tax so that Americans pay $3 at the pump no matter how low the world price goes.

'Why is this a good idea? It is the simplest way to induce conservation. People will alter their buying habits. It was the higher fuel prices of the 1970s and early '80s that led to more energy-efficient cars and appliances -- which induced such restraint on demand that the world price of oil ultimately fell through the floor. By 1986 oil was $11 a barrel. Then we got profligate and resumed our old habits, and oil is now around $60. Surprise.'

On the supply side he calls for drilling in the Arctice National Wildlife Refuge and building more refineries, and closes with the certainty that nobody will do anything he recommends. 'And there is not a single national politician who dares propose raising gas taxes by even a penny. We are criminally unserious about energy independence, and we will pay the price.'


At 8:28 PM, Blogger Ray Hyde said...

Aren't artificially high prices counter to the free market philosophy of Republicans?

We just had oil executives on the carpet for gouging, and now we are going to propose that the government engage in some gouging of its own?

If it is really economics 101, won't the prices/demand take care of themselves, as Krauthmmer pointed out happened in the 1070's?

What is the recaptured gas tax going to be used for, new roads? If not, isn't this really a transfer tax, another Republican no no?

Unless we switch back to coal, we will never be energy independent - get over it.

At 9:19 PM, Blogger Toomanytaxes said...

Krauthammer has been hanging around the Post too long. The paper, which has been improving its coverage of Virginia lately, is, of course, obsessed with raising taxes. Krauthammer caught the virus.


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