Sunday, June 03, 2007

So, what solution would I have for current gas prices?

In large part, the dot com boom and bust caused the current problem by diverting attention and resources away from energy. The other thing that happened is that as refinery locations had problems, the oil companies started to reap the benefits of inventory appreciation due to shortages. We have a system where the producers and sellers of energy products have an artificial choke on production -- that comes from the outside -- that makes them rich.

However, we also have a national infrastructure that is falling behind because gasoline taxes have not kept up with inflation.

First, I would raise the tax on gasoline by a dollar. Fifty cents to the highway trust fund, fifty cents to deficit reduction (the deficit is the largest threat to American Security, energy prices are the second largest, terrorists are still not as expensive as drunk drivers).

Second, I would stop the unofficial embargo on Brazilian ethanol. Even with an extra dollar a gallon in tax, one could drive on Brazilian ethanol for around two dollars a gallon. That would drive prices down across the board.

Third, I would renew research grants and focus on energy areas, both the usual (shale oil research, etc.) and some of the emerging areas (biodiesel, including biodiesel from plankton, for example).

Fourth, I would push for two new refineries. Realism aside, that is probably the best we can do in the current circumstances.

I need not go into how the invasion of Iraq has led to higher oil prices, or how by invading Iraq we have funneled money to places we would rather not have it go, and created a huge "nationalization" program in Russia that is destroying democracy there at an accelerated rate. Four things to do are enough. There are many more things that could be done, but those four are essential, painful and the core of any solution.

The gas tax, which we need, is enough to make people think of rioting. Letting the embargo lapse will make the rest think of rioting (as it would drive down profits in a number of industries, though the price of meat would become reasonable and the pain and the pump would reduce). Refineries are hated enough that we are in critical risk right now due to reduced refinery capacity, and maintenance schedules at refineries are a way to coordinate price pressure on oil without an overt communication or conspiracy.

But, if someone were asking me to make the decisions we need to make, to take steps that would push forward to protect the country and plan for our children and grand-children's future, that is what I would do.

I might blog later about what I would do about the greatest threat to American Security -- the incipient collapse due to unfunded entitlements (we are already getting towards Jimmy Carter days shortly) or what to do with the guys who are doing those "don't tax our windfall profits" advertisements on the radio (lock them up with mood rings and more of that music -- ok, I'm joking there). But, I thought I'd blog right now about something topical that no candidate for president is likely to say or acknowledge.

3 comments:

Lisa M. said...

Interesting prospective.

Thank you for sharing.

Barb said...

Lower gas prices!!!!

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