It's very encouraging to see thugs like Chavez and Putin get the wind knocked out of their sails a little; and obviously many Americans are relieved to have some relief in their budgets. But the sad truth is: only high gas prices will ever wean us off Middle Eastern oil and provide the real market incentives to pioneer non-carbon energy. Falling oil prices could derail a serious move toward energy independence, which will be achieved in the end by the private sector, not the government. My own view is that the one thing the government can do right now is keep gas prices high, by raising gas taxes. We now have a golden opportunity. Robert Samuelson proposes:
My suggestion: Raise fuel taxes the equivalent of one cent a gallon per month for four years (total: 48 cents). For now, consumers would benefit from most of the lower prices, but they'd also be on notice that prices won't permanently stay down. To offset any depressing effect of higher fuel taxes, we could lower other taxes in lock step. But the signal of higher long-term prices should affect Americans' driving habits and vehicle purchasing preferences. Congress has increased fuel economy standards for new vehicles from today's 25 miles per gallon to 35 mpg by 2020. But it must also create a market in which buyers favor fuel efficiency.
The point of this is not big government trying to find a solution to our energy needs. It is for government to provide the context and incentives for us to innovate. Obama has not been a real leader on this, and neither has McCain.
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