Interesting idea raised by Allen Sloan today, and I’ve read versions of it elsewhere - on occasion, from conservative sources like Charles Krauthammer.
The basic idea: The feds establish a price “floor” for gasoline - perhaps at $3, maybe $4 per gallon - by taxing any drop below that level. Right now, gas taxes would amount to half the cost of a gallon of gas, since gas is back down near $2 per gallon.
Grab the torches and pitchforks, right. But hold on: As Krauthammer advocated, refund this money to Americans in the form of lower payroll taxes. Use some of it, perhaps, to fund needed infrastructure improvements.
The result would be twofold. First, permanently and predictably high gas prices would transform the automotive market. Assuming the Detroit automakers survive, you’d no longer have the problem of carmakers being slow to respond to changing consumer demand (as we clamor for higher-efficiency models as gas prices rise; prefer gas-guzzling SUVs when they drop). If Detroit could assume a consistent, higher price for gasoline, it could focus on building a fleet to meet the predictable needs of consumers.
Lower gasoline consumption obviously has environmental benefits. But it also has foreign-policy benefits, in that it drives down demand; and the falling price cannot reignite demand because as far as the consumer is concerned, the price wouldn’t fall.
That means governmental revenues in Iran, Venezuela and Russia are down permanently.
The benefits of this would be innumerable; the drawbacks… well, gas would cost $4 per gallon. And people resent that - they’d take their ire out on any politician who dared propose it, and the opposite party would immediately make hay of it. If Obama proposed this, the GOP would make this its signature issue.
Pity, because Obama could propose this - perhaps should do it. Long-term, the country would be in a far better position because of it; these are the types of intelligent policies that I’d like to see an Obama administration pursue despite the political hazards. One of these days, we’re going to have to adopt this approach - if we want the country to survive in recognizable form. And there’s no time like the present.
