$2.50 Gas? Right Idea, Wrong Goal

Today’s Courier Herald Column:

Newt Gingrich has made $2.50 a gallon gas the “9-9-9 Plan” of his campaign.  A single number as a slogan is now the reason he wants you to make him President.  Newt promises that, if elected, pump prices will plummet to levels that were still thought relatively high just a few short years ago.

A while back, the CEO of a major oil company and I attended the wedding of a daughter of a mutual friend.  During the reception, we had a bit of small talk about the politics of oil prices. This was during the middle of a huge price spike and nearing fall elections.  On a trip to Washington, he was pulled aside by a U.S. Senator who demanded that he get prices down to $2.50 before the fall elections.

The Senator didn’t want to hear about market dynamics, supply and demand, external threats to oil supply, or leverage in the speculator market.  He only needed a price, based on nothing.  The CEO decided on a different tactic to make his point, asking “So if $2.50 gas is all that is important, do you promise to do everything in your power to help me get the price to $2.50 the next time gas prices fall to $2.00?”

The Senator walked away a bit miffed, still missing the point – though not really.  The Senator’s only point was that he wanted to be re-elected.  The rest of the equation was the oil company’s problem.

Almost nine of ten cents paid at the pump are a direct result of the price of crude oil and taxes imposed by various levels of government.  The refining, distribution, marketing, retailing, and profit account for roughly twelve cents on the dollar combined.  If pump prices are to be targeted, then crude oil prices must be in the bull’s-eye.  After all, we can’t expect government to reduce taxes, because that’s the only  part of this  equation they have direct control over.  That kind of thinking is what keeps us frustrated voters and not high minded elected folks.

“Drill here, Drill now” then is the obvious solution, as the way to change the supply/demand equation is to alter the amount of oil supplied to the market.  Except, it’s not quite that simple, either.  Much of the U.S. oil reserves are harder to extract, and more costly to refine, that the crude of the light sweet variety found in the middle east.  Yet there are areas currently off limits to exploration – specifically off the coasts of the Southeast and Southern California – where oil is readily available and relatively cheap if open to exploration.

Other North American oil exploration is available, but the logistics of getting the oil to market are more complicated.  The Keystone Pipleline currently is the poster child of this complexity.

Once extracted, the oil is not then branded “American” and forced to stay on this continent.  The oil market is global, and emerging economies are increasing their use of petroleum products at an alarming rate, led by China and India.  As the world begins to recover from worldwide recession, the competition for existing oil reserves will be fierce.

As such, targeting an arbitrary price for gasoline is fool’s errand, but it does help focus on the fact that we need a comprehensive energy policy.   “Drill here, Drill Now” is no more a comprehensive policy than spending hundreds of billions in tax dollars producing technology that is not ready for market.  Both a thin attempts to deal with reality, but the reality of each is that they are both designed to appeal to a specific political base, and little more.

Domestic oil exploration and pipeline construction must be sold to the American people for what it can deliver.  It is not a price strategy.  It is the best jobs program that the federal government can implement in this environment.  North Dakota, currently experiencing an oil boom, has an unemployment rate in the 3% range.  Minimum wage level jobs go unfilled at $12-$15 an hour.  Developing our own natural resources would put the money drained from our wallets at the pumps back into the wallets of other working Americans.

It would also take money out of the wallets of those who want to kill us.  The politics of my entire lifetime have always been affected by what regimes in the Middle East are doing.  A secure domestic energy supply changes the global political landscape dramatically with respect to direct U.S. interests.

Domestic politics of this debate cannot be ignored either.  Neither side will get all of what it wants.  Any reasonable energy policy will have conservation and alternative energy development as key components.  Any policy deemed reasonable will also have us exploiting our own resources over those we buy from those who wish us harm.

The argument cannot be about price.  It must be about jobs and national security.


  1. TheEiger says:

    “The argument cannot be about price. It must be about jobs and national security.”

    The average voter knows the difference in $2.50 for gas and $4.00 for gas. They are less likely to connect the dots on 3% unemployment in North Dakota and folks in the Middle East that hate us. They don’t know that the vast majority of the oil we use comes from Canada and not Saudi Arabia. Why would we then expect the majority of voters to understand all of these convoluted connections with national security and unemployment rates? Newt has done what all campaigns strive to do. Put the solution to a major problem into a short and sweet message. Newt = $2.50. Makes since and I like the idea.

    • wicker says:

      So you like demagoguery? Because Gingrich cannot bring about the massive increase in the amount of the GLOBAL oil supply necessary to cut the price of oil in half. Even if we were to lift ALL regulations and restrictions – which Gingrich can’t do without consent from Democrats, which he isn’t going to get – it would still take years for the oil to get to market: well past the end of Gingrich’s second term (which he wouldn’t receive anyway because his core campaign promise wouldn’t be filled; though all good Republicans will insist that he should be re-elected anyway in spite of it). You want Gingrich to win on a deceitful message that you know that he can’t deliver. How said.

      • TheEiger says:

        It always baffles me that when gas prices spike and people say let’s drill for more the only thing people like you say is it will be years before we can use that oil. Well, hell! If we started drilling last time gas was $4 a gallon we would have that gas right now. Have you ever thought of that?

        For over thirty years people have been saying the same thing. “it will take too long.” you have to start somewhere and at sometime. Do you know what the cost of natural gas is right now? It is at 15 year. Why you might ask? Because they are drilling for it here in the USA and they started years ago doing it. Do you have any other lame excuses as to why we shouldn’t drill for our own oil?

        • wicker says:

          Unlike you, I support BOTH more drilling AND heavy investment in alternative energy. There is NO REASON why we cannot do BOTH except IDEOLOGY and SELF-INTEREST. The ideologues on the left oppose oil drilling because they hate oil companies and who controls them. (They claim other motivations, but that really is just about the size of it. The oil company owners are old money “Wall Street Republican” types, and the left would prefer that the money and political power that will result from controlling a vital sector of our economy be redirected to their ideological peers who control nearly all the new technology companies. It burns the left up that such a vital sector like energy is being controlled by their ideological opponents, so they want to transform it into one that will be more ideologically accommodating, just as they did with education and the media and are attempting to do with health care.) And the leaders on the right have been bought off by the existing energy company monopoly, whose only concern is preserving their market share and profits. The folks who follow their conservative leaders are not willing to acknowledge this, because it would mean acknowledging that YOUR LEADERS are every bit as ethically compromised as the leadership on the left. Instead of admitting that George Wallace was telling the truth those decades ago – that there isn’t a dime’s difference between either bunch – you insist on drinking your side’s Kool-Aid and convincing yourself that it tastes better than the other side’s. Well I am sorry … I don’t like Kool-Aid. So sue me. But please understand this: whether you are someone who ONLY wants to drill or ONLY wants alternative energy, YOU ARE PART OF THE PROBLEM.


          If you support increased drilling, then support it on its own merits, LIKE I DO. BUT DO NOT LIE TO THE AMERICAN PEOPLE BY CLAIMING THAT THE RESULT WILL BE A RAPID DECREASE IN GAS PRICES, BECAUSE THAT IS A LIE. I am not coming up with “lame excuses for not drilling for our own oil.” I AM OPPOSING TELLING WHAT WE ALL KNOW ARE LIES TO GET NEWT GINGRICH ELECTED. It is YOU who is perfectly fine with lying to the American people on this issue, NOT ME. So instead of pointing the finger with “you people” like me, go take a look in the mirror and get a long gander AT YOUR OWN LYING CARCASS BECAUSE THAT IS WHAT YOU ARE.

          • TheEiger says:

            Looks like I touched a nerve. Why so angry on a Friday night? Have a beer maybe a scotch. Relax. I like alternative energy too. Just not the federal government picking the winners and losers. We did that recently with ethanol and it hasn’t worked. It has hurt the American farmer drastically and produced a cheap product that doesn’t work. There are a few things that any president can do to help decrease oil prices. Instead of 23 different blends of gasoline refineries can make 2. A summer blend and a winter blend. Allow drilling of the gulf and East coast. Then allow new refineries to be built. Our true problem is capacity to refine not getting crude. That we can do. We need more capacity to refine gas. See.

  2. John Konop says:

    Very well said! The job of the CEO is to sell the oil to highest bidder to make stockholders the highest ROI ie capitalism. That is why the all of the above approach we must support. We need competition with oil companies, lack of competition hurts consumers, economics 101.

  3. elfiii says:

    Quit printing money and devaluing the USD and the price of gasoline will moderate quite nicely.

    • seenbetrdayz says:

      I could fill up my 17-gallon tank with a Morgan silver dollar. If I actually wanted to part with it. But, I got a feeling that no one wants to discuss monetary policy.

  4. Joshua Morris says:

    What I don’t understand is how these prices have changed over the last 20 yrs or so. I remember well buying gasoline for $.699/gallon in 2000 or 2001. IIRC, shortly after 911 was the first time gasoline went over $2/gallon, and I remember the fear I felt the first time I saw prices over that threshold. I also remember Hurricane Katrina being a major turning point in the price of gasoline in 2005 due to a short term loss of refining capacity, and by the time its effect had pushed gasoline over $4/gallon, people everywhere were bracing for economic armageddon. Certainly we have recovered from the effects of Katrina, and even with other economic forces in this world, $4/gallon gas just doesn’t make sense to me. Someone is gaming the system, and we’re quietly taking it on the chin.

    • Calypso says:

      Not quite. The last time the gasoline average cost dropped under $1.00 was March 22, 1999 when it was $.99 and stayed there for one week before it was back over $1.00. It had been in the low $1.xx range for the nine years prior to that as well.

      The first time it went over $2.00 was May 24, 2004. Even as early as 1990 it was averaging $1.19

      I am not easily finding records prior to 1990 to ascertain when gas was as low as the $.69 figure you cite, but I’m guessing sometime during the 1970’s.


      • The Last Democrat in Georgia says:

        I remember getting gas for under 60 cents-a-gallon in the early 80’s for a brief time after peaking out at close to $1.30/gallon in the late 70’s, back when there was still leaded gasoline and use of unleaded gas hadn’t necessarily become all that common yet.

        Ahhh, leaded gasoline…takes me back.

        • Calypso says:

          Remember odd/even gas buying days based on the last digit of your auto tag in the mid-70’s? I do.

          As a kid in the mid to late 1960’s, I also remember going to the gas station on the corner with a 1 gallon gas can for the lawn mower, and using the quarter ($.25) I got from my dad, and almost filling the thing. About $.33/gallon if there wasn’t a gas war going on, dropping it into the upper $.20 range.

          Today ‘gas war’ has an entirely different meaning.

      • Joshua Morris says:

        I’m not talking about averages. I remember the $.699 price vividly at a QT station on Old Milton Pkwy in Alpharetta, just off 400. I worked right up the road, and obviously, it didn’t last long. The last time I had seen a price that low before then was in the early 90s when my dad would drive across Clayton County to save 2 cents a gallon. Still, I remember around that time that gas prices typically hovered in the <$1 to $1.35/gallon range.

        I guess my memory is off a little on the $2 threshold, but the Katrina aftermath is undoubtedly what accelerated prices to the range we see now. It dipped a couple times since then only to climb steadily right back.

        It's really amazing to me that people would consider $2.50/gallon an unreasonable goal. I believe that if this Nation would quit pandering to the environmental doomsday prophets and actually promote the harvesting of our existing energy resources (while still encouraging new and greener technologies, of course), we would easily see a stable $2 or less/gallon gasoline supply.

    • Engineer says:

      I don’t know about 69¢/gallon gas but I clearly remember 89¢-99¢/gallon for regular throughout the 90’s.

  5. Bucky Plyler says:

    I heard someone say that he had been smoking MJ since he was 18 & now he’s 38. He said the price for a bag is still the same. His point was to legalize pot because drug dealers manage the business so well. (supply /demand, production, customer service, marketing, etc.) I bet if MJ was legalized & the gov’t was regulating it the price would go up.

    Before you cry apples to oranges comparison..please remember that MJ is a global business and every business on the globe has similarities.

    There are 150 world wide oil companies according to famed Wikipedia stats. Do we need 300 or 3,000 to make gas cheap? I suspect that the capital needed to start and maintain an oil company is one of the reasons that there are 150. However, there is plenty of capital in the world to start new companies. Another reason for the 150 number may be that China, Chavez, Russia, Iran, Saudi Arabia, etal aren’t interested in friendly competition.

    All I know is that gas in the US has been under $2 in recent years. Prices in the UK, for example have remained about the same during the same period. I also know that Obama’s energy sec., Mr. Chu, doesn’t currently own a car & has said that we need $10 a gallon gas so that US citizens will be forced to make changes.

    Charlie, Drill Baby Drill is a better policy than spending billions of US tax dollars for technologies that are not ready for anybody’s market. DBD just makes sense.

    • wicker says:

      “Charlie, Drill Baby Drill is a better policy than spending billions of US tax dollars for technologies that are not ready for anybody’s market. DBD just makes sense.”

      Here is the deal. If we don’t get behind these technologies, they will NEVER be market-ready. Why? Because the alternative energy companies that are into those technologies don’t have the vast amount of capital required to make it ready. Meanwhile, the traditional energy companies are rolling in cash from oil, coal, natural gas, nuclear etc. and have no incentive to invest in alternative energy technology that will compete with their fossil fuel business.

      The neocon echo chamber has a lot of you thinking that it was private industry that drove the tech industry. It wasn’t. While private industry did do some R&D, the vast majority of it was driven by government agencies: DOE, NSA, DOD, NASA etc. and a huge chunk of it was also done by universities. They had the resources AND they weren’t driven by the need to turn a profit to stay in operation. All the private sector did was take the things invented by the government and universities and adapt them into commercial products.

      The oil companies and their lobbyists know that if the government never invests in alternative energy, alternative energy will never become viable. Result: we’ll still rely on oil no matter how expensive it gets or where we get it from. My goodness: take the Internet that you are using. It – and the computers too – were created by government agencies and university researchers DECADES before there was ever a viable commercial market for it. If we had the same attitude towards electronics research decades ago that we have towards energy research now, we’d still be relying on mainframes the size of buildings that rely on vacuum tubes.

      Mike Huckabee stated that if he won the White House, the first thing that he would do is create a “Manhattan Project” type research program for alternative energy. And that was when the oil company-funded opinion-makers in talk radio began taking the guy apart. Rush Limbaugh was particularly brutal. So instead of going back to the approach that worked great for R&D in this country for decades, we got the “Obama stimulus package” approach.

      Here’s the irony: most of the drilling projects that the oil companies are promoting would take years before they start actually producing significant amounts of oil. That means that it would take years before there is any significant effect on the oil supplies, and by then the increased demand (and not just from India and China by the way!) will pretty much gobble up the increased supply. More proof that the agenda that you are parroting is just the oil company one.

      “I also know that Obama’s energy sec., Mr. Chu, doesn’t currently own a car & has said that we need $10 a gallon gas so that US citizens will be forced to make changes.”

      That is precisely the tactic of the oil companies and their house organs. They want to get you angry at the left, and become convinced that more drilling is “beating them.” So long as you are only concerned with beating those liberal elitists, you will never give much thought to energy policy.

      Let me say this: I once lived in a moderately sized city that owned and operated its own power company. As a matter of fact, it wasn’t that long ago when lots of citizens purchased power and other utility services from local governments. SOMEHOW we were able to do those things back then without lapsing into socialism. Even now after years of privatization movements, there are still 251 municipal electric and gas utilities in this country that offer services and rates that are competitive with the private sector. Imagine how much more we could be doing if the oil company lobbyists didn’t have you convinced that anything other than their agenda was un-American socialism.

      • TheEiger says:

        How’s that Chevy Volt that Obama preaches about working out for you? A $40,000 piece of crap. I’m not sure if you heard, but that have stopped production. That’s what happens when you let the federal government pick winners and losers. They cannot give the things away. Also, when you plug those things in at night to get a charge for 20 miles where does that juice coming from the wall socket come from??? COAL and NUCLEAR!

        • wicker says:

          Fella, if it weren’t for the DOD, there wouldn’t even be an Internet for you to plug into to the conservative blogosphere in the first place. If you aren’t intellectually honest enough to acknowledge that even after you have been informed of this FACT, then you’ve got bigger problems than Obama.

          Buddy, right now if you try hard enough, you can get a quality computer for $100. Well just 20 years ago, you had to pay $500 dollars – and I mean $500 in 1992 money, not today’s money! – for a desktop PC that was a bigger piece of junk than the Chevy Volt. News flash: technology improves. The problem is that guys like you don’t want the technology to improve for ideological reasons.

      • Clone Of B. Plyler says:

        Hi Wicker,

        “Here is the deal. If we don’t get behind these technologies, they will NEVER be market-ready. Why? Because the alternative energy companies that are into those technologies don’t have the vast amount of capital required to make it ready.”

        So that’s the best reason you can cite that we need our federal gov’t to borrow more money for them to blow on R&D? Solendra is a good example of why that isn’t the best solution even if the gov’t is in the black. GMC is a good example of why you don’t want the unions to have a controling interest in the company they just drove to bankruptcy.(unless they vote for your party!)

        “Meanwhile, the traditional energy companies are rolling in cash from oil, coal, natural gas, nuclear etc. and have no incentive to invest in alternative energy technology that will compete with their fossil fuel business. ”

        And your point is…? If their businesses are meeting the demand thru their supply ..why should they invest in alternative tech? Please don’t tell me it’s because resources are running out or they are destroying the planet…please..

        “The neocon echo chamber has a lot of you thinking that it was private industry that drove the tech industry.”

        I like the word neocon. So many people use it on PP. Maybe you should actually listen to talk radio sometime as well as think for yourself while they are talking….just sayin’.. On this issue of who drives who… I think you must agree that it’s a mix of R&D between govt., private, public, & industry in the USA. There are many industries that have done great R&D without the gov’t. It’s not accurate to say the energy producers are rolling in dough because of gov’t R&D.

        Forget about liberal or neocon. Our current Administration’s energy policy is not a good one.

        I actually worked for a local gov’t over 15 years that owned & operated it’s own power, gas, water, sewer, & now broad band utilities. It made nice profits & still does. I’m conservative & never thought about that city being socialist. That city is capitalist to the hilt and uses all their revenue & resources for the citizens & the city’s interests. However, that city (just like Georgia Power, EMC, Atlanta Gas, or AT&T) did & still does everthing possible to keep the competition either out or at a minimum in their service district.

  6. saltycracker says:

    No idea how Newt is going to control a worldwide commodity price and local taxes or even reduce the Federal taxes, while Georgia maintains a low tax approach with a disfunctional D.O.T.

    per: http://www.eia.gov/petroleum/gasdiesel/

    22.70 Federal tax on gas – cents @ gallon
    22.68 Average State tax
    + State sales tax or local options which varies

    07.50 Georgia state tax (Texas is 20 cents, North Carolina 35 cents)
    04.00 Georgia state sales tax

    And we want a 1% T-SPLOST to assist MARTA which considers any increase in Board representation outside downtown a racist move ?

    • gt7348b says:

      Actually Salty, the only MARTA Board member I know of that might live downtown is Robbie Ashe. Mrs. Abernathy lives in West End, Ms. Southall in South Fulton, Adam Orkin and Barbara Babbitt-Kaufman in North Fulton, Mr. Buckley, Mr. Daniels, Mr. Durrett, and Ms. Butler in DeKalb County, and Dr. Edmonds I think in Buckhead. And MARTA didn’t call the change (not increase) in board representation “racist” – that was Fulton County Commissioner Bill Edwards.

      Also – there are other projects other than MARTA projects on the referendum such as I-285/I-20 West, I-285/GA400, grade separation of intersections on 316. If you’re gonna spout off about the transportation referendum and other transportation issues, at least do it with facts.

      • Andre says:

        I’m not going to sugarcoat this:

        Bill Edwards is a loathesome bag of wank whose only desire is to protect his power in the decaying fiefdom known as unincorporated south Fulton County. Any attempt to curtail Edwards’ power is obviously a racist ploy by the blue-eyed devils in north Fulton.

  7. Cassandra says:

    Newt will never get gas prices down to $2.50:

    “You can’t put a gun rack in a Volt.” Newton Leroy Gingrich

    ~sound of head pummeling stone wall~

  8. Monica says:

    But to voters it is about the price. And this article actually supports Gingrich’s argument that the price of gas would come down – so what’s wrong with putting it in numbers? Gingrich actually said this is just an estimate, a careful one, that the price could actually end up being lower. And in that 30-minute video about energy he talks about everything that’s mentioned here. We care about the price, while we’re concerned about national security and unemployment numbers, the bottom line is we need to be able to put gas in the car to get to our place of employment, and not at a cost of putting food on the table. It’s unrealistic to expect someone with a coherent plan to not mention how it would affect the voters financially, it would make little sense, actually.

  9. Three Jack says:

    Politicin’ is all about gimmicks….999 / 2.50 gas / 20% income tax cut (Mitt) / end of birth control & abortion (Rick) / New Deal, Great Society, free healthcare for all, on and on. It would be awesome if one of them would actually just get up and tell the damn truth.

    • seenbetrdayz says:

      Gimmicks is right. This election is all about totally arbitrary numbers.

      I suggest:


      Those sound like good numbers to kick around (or out).

  10. saltycracker says:

    ~sound of head pummeling stone wall~

    Newt’s Plan – see below from his site is to gut all restrictions or environmental controls on the oil companies and products – even a radical right winger like me pounds head on wall –

    Just one thought of dozens:
    With the billions of dollars U.S. serving mfgs. have spent on emissions, the ability to bring in dirty components from all over the world or pollute us locally would do what for U.S. manufacturers and the environment ? Start by kissing U.S. mfg’d trucks adios.

    What our businesses have maintained is the left wing legislation has gone overboard demanding out of control cost to value…..they have not suggested radical reductions as rational cost balanced controls protect our businesses and lifestyles.

    Fed Report below on record oil exports – how about we slap an export tariff from hell on U.S. oil products ? That’ll keep a bit at home.

    U.S. petroleum product exports exceeded imports in 2011 for first time in over six decades

    Newt’s not saying much about the special tax deals/subsidies/give ’em the keys for oil companies.

    Newt’s American Energy Plan:
    1. Remove bureaucratic and legal obstacles to responsible oil and natural gas development in the United States, offshore and on land.
    2. End the ban on oil shale development in the American West, where we have three times the amount of oil as Saudi Arabia.
    3. Give coastal states federal royalty revenue sharing to give them an incentive to allow offshore development.
    4. Reduce frivolous lawsuits that hold up energy production by enacting loser pays laws to force the losers in an environmental lawsuit to pay all legal costs for the other side.
    5. Finance cleaner energy research and projects with new oil and gas royalties.
    6. Replace the Environmental Protection Agency, which has become a job-killing regulatory engine of higher energy prices, with an Environmental Solutions Agency that would use incentives and work cooperatively with local government and industry to achieve better environmental outcomes while considering the impact of federal environmental policies on job creation and the cost of energy.


  11. I believe the Republican plan is to crash the economy, kill demand and have the price plummet to January 2009 levels when we weren’t even sure if the banking system would survive.

    Sounds like fun!

    • And by that, I mean if you simply look at a 6 year or longer chart (like on gas buddy) you will see that the price of gas was steadily going up and actually peaked above $4 in the summer of 2008. Then the economy crashed and it temporarily went low, rebounded to the mid $2’s by summer of 2009 and has been slowly increasing back to where it used to be. Blame Obama sure, but only to the extent that he’s mostly pursuing the same policies that were pursued by previous administrations.

      I also believe the most recent year set a modern record for % of gas used that came from domestic/continental sources. The problem has a lot more to do with global demand and the fact that 100,000,000 Chinese drive cars now (not to mention want to read or watch tv at night) and drill baby drill or any other boneheaded proposal ain’t gonna stop that.

      • Doug Grammer says:

        “the same policies that were pursued by previous administrations.” I don’t think previous administrations forced all of the oil wells on the gulf to be shut down because of 1 long leak.

        If you take 30 minutes out of your life to watch Newt’s video, it makes sense.

        I don’t think that the government should bankroll all R & D. I’m for drilling. I also think we should have taken 10% off the top of whatever IRAQ sold/sells to pay for our improvements and get rid of Sadam, but that’s just my opinion.

  12. wicker says:

    The funny thing about the Keystone Pipeline – which I 100% support by the way – is that its talk radio/Fox News supporters claim that it will reduce our need for foreign oil. So … the Canada-US integration has happened already? When did Canada become the 51st state? Well, why not go ahead and add Mexico too? (Mexico has huge oil reserves that they cannot exploit for reasons too silly to get into.) It would solve both the oil and illegal immigration problem in one fell swoop.

  13. Dave Bearse says:

    “and emerging economies are increasing their use of petroleum products at an alarming rate”

    The adjective “alarming” struck me as a bit odd. Care to expound?

  14. Dave Bearse says:

    I think the approach that would best harness the market is to begin to significantly escalate taxes on fossil fuels, especially for electricity generation. Keep it revenue neutral on the macro level by reducing other taxes. Seek tax neutrality on the micro level in manner of tax reduction. Broadly reduce the corporate income tax based on higher offseting corporate taxes on fossil fuel. Reduce income or payroll taxes based on citizen-paid taxes on fossil fuel in a manner that broadly mirrors the additional taxes by citizens. (Provide a fixed income tax exemption, exclude the first “x” amount from payroll taxation, etc.)

    Controlled price escalation sets a target not subject to the wide gyrations of the global marger. The macro approach more importantly causes the market to direct the innovation, and pick the winners and losers. If taxes on the economy remain the same because higher fuel taxes are offset by lower taxes elsewhere, but fossil fuel energy is increasingly expensive, you can bet businesses and people are going to both use less fossil fuels and seek out alternate eneregy, not wait for it to come to them.

    (I’d allow transportation a little break on the fossil fuel tax in that there’s simply nothing likely to come close in the way of alternative power to fossil fuels in moving freigth for the forseeable future.)

  15. Harry says:

    According to T. Boone Pickens, we sent $1 trillion to OPEC in the last ten years, and will send them $2.2 trillion in the next ten.

    The government subsidized the building of the railways. Admittedly there was resulting inequality and abuse, but the job got done. The government built the interstate highway system. The govrnment has attempted to subsidize solar, wind, and electric/hybrid vehicles – and this has proven a failure because the politics and lobbying didn’t follow economic reality. Right now, there is a proposal before congress to subsidize purchase of CNG over-the-road trucks and POVs. The subsidy would be paid for by excise taxes on the consumers of the CNG used in said vehicles. It’s bipartisan, but it may not pass. Some on the right don’t like to see further government involvement in energy markets. Some on the left are concerned with increased fracking, etc. T. Boone says he had owned 3,000 fracking wells, there are 200,000 such wells in the US, and the process is safe and effective.

    • saltycracker says:

      Government involvement in research and development is one thing.
      Passing out money to users and purchasers is a piss poor way to redistribute taxpayer money.

      Passing out incentives to high income electric car buyers is hit or miss dumb. Incent the manufacturing. Helping research more efficient batteries or figuring out ways to competively build them in the U.S. (without owning the plants) is smarter use of public monies.

      CNG, LNG, bio-diesel and such could be assisted by tech/production/supply advances. The Gov’t can help here. Boone’s idea to get freight moving on nat.gas is good but to change trucking industry over he needs to look into the history. The gov’t has drifted in subsiding alternative fuels and finds limited success until the political mood shifts then ground is lost. The idea is to get the tech right and the payback right without forever incentives. That will not happen teasing a fad or P.C. buyer in that industry.

      • saltycracker says:

        P.S. The same folks that buy a Volt with a $7,000 buyer incentive thinking it helps the cause are the same ones that buy a premium Georgia Wildlife Auto Tag thinking the money helps that cause.

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