Bring back $4-per-gallon gas!
At the time, the price of gasoline was approaching $4 a gallon.
Despite the drain on our wallets, much of the news was actually good. Demand for small fuel-efficient cars was rising, gas guzzlers weren’t selling, people were driving and polluting less, and many were finally taking mass transit. We were adopting some good habits. Moreover, the demand for imported oil dropped, making us less dependent on Middle Eastern oil fiefdoms.
And our carbon footprint got smaller.
Under the plan floated by Friedman and proposed by energy economist Philip Verleger Jr., the government would never allow the pump price of gas to fall below $4 a gallon. If the market price did fall below that level, Washington “would increase the federal gasoline tax on a monthly basis to make up the difference between the pump price and the market price.”
Verleger’s proposal would use the extra money to help the less well-off by reducing their payroll taxes. It sounds overly generous to me, but anyone earning under $80,000 year would get the tax cut.
The economist proposed another option: use the money to buy back gas guzzlers and send them to the crushers.
That was then and this is now. The price of gas is now less than $2.50 a gallon. I paid $2.29 a gallon at the local Chevron on Saturday.
If the Verleger plan were in place, the tax revenues would be rolling in and we would be making the much needed changes in habits we were making in the spring.
The other change since the spring is that the economy is tanking, and the automobile industry is on the ropes. The Big Three, too long wedded to a gas-guzzler strategy, are about to go down for the count, taking thousands of jobs with them.
It’s pretty clear that Verleger had the right idea, but the new tax revenues need to be retargeted in these dire economic times.
The new Obama administration should use the money to subsidize 50 percent of the purchase price of all-electric cars. The provision would kick in in the fall of 2009, giving the auto industry time to retool.
Before the electric car subsidies kick in, the money should be used to modernize alternative forms of transportation, including metropolitan commuter rail and high-speed intercity Amtrak trains. Build sidewalks and bike lanes. Provide more incentives for transit-oriented commercial and housing development.
The resulting work would provide much needed jobs in the flagging economy. The promise of subsidized electric car purchases would force the American automobile industry to change and end its own axis of evil with the profiteering oil industry and the petro-fiefdoms in the Middle East, Russia and Venezuela.
There’d be an added benefit. The policy would indirectly cut into the flow of funds to radical Islamic terrorists who are sustained by Middle Eastern, oil-rich interests. Paying $4 a gallon at the pump, might even be seen as an act of patriotic sacrifice in a time of war.
We may be getting ahead of ourselves, but in the long term the policy might even allow us to trim defense spending and produce a peace dividend.
It all seems worth paying an extra $1.50 per gallon at the pump, at least until the emission-free cars powered by solar, tidal and wind generated electricity start rolling off the American production lines.
Then driving our new electric trucks and cars, we'd end our dependence on foreign oil, to cut off funds to terrorists, to turn back global warming and to rebuild our economy.
Sounds like a change we can believe in. What to you say, President Obama?