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So yeah. Gas is nearing $4 a gallon. In many parts of the country, it’s topped $4 already. There’s no sign of prices going back down.
And I don’t care.
Well, scratch that. I DO sorta care (when I fill up and it’s $40), but I’m actually happy about it, despite the blow my bank account is taking. The fact that we drive a Prius as our main car helps (48MPG! Love you, Aluminum Falcon!) but I’ve always thought that higher gas prices would mean more companies and consumers investing in new technologies — hybrids, plug-in cars, etc. — as well as utilizing and expanding public transportation. More demand for these products and services will lead to more supply. And the world will be a less polluted place.
Tom Friedman of the New York Times thinks so, too. He proposes:
…. a “price floor” for gasoline: $4 a gallon for regular unleaded, which is still half the going rate in Europe today. Washington would declare that it would never let the price fall below that level. If it does, it would increase the federal gasoline tax on a monthly basis to make up the difference between the pump price and the market price.
To ease the burden on the less well-off, “anyone earning under $80,000 a year would be compensated with a reduction in the payroll taxes,” said Verleger. Or, he suggested, the government could use the gasoline tax to buy back gas guzzlers from the public and “crush them.”
But the message going forward to every car buyer and carmaker would be this: The price of gasoline is never going back down. Therefore, if you buy a big gas guzzler today, you are locking yourself into perpetually high gasoline bills. You are buying a pig that will eat you out of house and home. At the same time, if you, a manufacturer, continue building fleets of nonhybrid gas guzzlers, you are condemning yourself, your employees and shareholders to oblivion.
What do you think?
Here’s the problem I see: how does that floor help anything? Let’s say under current conditions, a less well off family makes $2 a year, pays $1 in gas costs and there’s no refund on the payroll tax. That family has $1 left over. Implementing that tax plan, said family still makes the same, pays $4 in gas but gets a $3 refund. They have the same $1 left but we have a big entitlement program to show for it and we all know how the government does with entitlement programs.
Meanwhile, rich people (but not Mark Cuban who I saw at Mooyah Burger tonight and he drives a hybrid) make $85 a year, pay 4 in gas and have 81 left over and can buy all the hummers (but not blow jobs) they want. All that hooplah about gas guzzling pigs that bankrupt your family or companies that are condemning themselves to oblivion? Sounds overwrought to me. Rich people can buy any damn thing they want and medium income people can too if they choose to. SUVs are here for our lifetimes for sure and probably longer.
In the end, I think you’re exactly right when you think $4 in gas is good in the long run (though I think the long run should be 36 months from now and that oil will come back down to 80-90 a barrel sometime in the next 12 months) because it’s the only way to effectively convince the market to explore other alternatives. When gas is cheap, it makes no sense to bet your company on alternative fuels. in the end, it will be the market, not the government that drives the move to kick ass plug in cars. The government has a hard enough time buying hammers for the Pentagon.
One more thought on the floor plan: what happens when all the less well off people start noticing that the rich people can still buy SUVs but now they (the poor people) can’t? They won’t figure out that they are in exactly the same place the always were, they’ll blame the government for keeping them down. That sounds like a recipe for a huge civil unrest, not to mention a juicy lawsuit or two.
Brett,
The market has never “decided” a single thing. People do. People manipulate the market just as they manipulate tax law.
The market is not a living, breathing thing… it certainly is not an all knowing god. If it where It would have told its followers to start building developing golden wind farms and hybrid cars to honor it back in the 70’s. That sure would have saved us a lot of pain and suffering. “Oh Great Maraquet! We, your humble servants beseech thee! Tell us how to avoid war in the future!”
“Letting the market decide” only means letting certain people decide. People with money, people with power. I am not saying that government always does things correctly… I think we will both agree thats not true. But it IS the fist the people have to correct things when “the market” gets out of control.
Guess who is out of his cage recently and needs a good lashing?
Trying to use regulation, incentive, and what some would call “big government” may seem very odd to us now especially after the cold war made us scared shitless of doing anything that MIGHT be considered socialist, but these are tools that built many great things about this country we now take for granted.
We used to do great things as a nation and not bat an eye now even the mention of spending money in any way freaks us out, even if it is to do something as important as move us away from oil consumption.
“The Market” has had plenty of time to fix these problems and it simply wallowed in its own greed. Almost outright REFUSING to listen to the science and ignoring the political implications of being dependent on oil. I was a CHILD in the seventies and even I understood how important it was to stop using fossil fuel as soon as possible.
So either I was a particularly bright kid, a good guesser… or this should have been plain for anyone to see but people were lulled into thinking everything was OK again by our comfortable lifestyle.
The market had its chance. It sat around in its toga being fed grapes. Time to give real people with names, faces and real ideas committed to paper a chance.
Bet thing about putting your trust in a group of people and their ideas… you have someone to blame.
Brett,
In reading my comment again, I think I got a little carried away. Try not to take it personally if you can. I am feeling under the weather today and maybe a bit cranky and aggressive.
You know there is no one I would rather have watching my back in a fight against an army of deadly mutant manatee.
I totally agree with the sentiment that higher gas prices are better for the environment. (Ain’t no way I’m weighing in on the “gas floor” debate…!)
My only concern is that the gas companies are raking in record profits at the expense of almost everyone in America, whether or not you drive a fuel efficient car. Congress and the President aren’t likely to do anything to regulate it, even though it’s essentially an industry-monopoly, because nearly every politician on both sides of the fence have friends in Big Oil.
That’s what sucks about $4 a gallon gas!
Now maybe if the gov’t were to tax the shit out of oil companies and invest that revenue in R&D to get us out of the fossil fuel conundrum, that would be a step in the right direction. 🙂