Instead of raising energy prices, the point of the gas tax should be to raise revenues. In fact, a $5 gas tax could raise about $40 billion annually, as Avent notes, without consumers feeling much financial pain at all. These revenues could then be dedicated to the kind of public-private partnership that has successfully catalyzed private sector entrepreneurialism and innovation and delivered transformational technology investments throughout America's history.
There is little historic evidence that marginal price signal changes can spur significant innovation -- after all $5 gas taxes throughout the EU haven't given Europeans affordable electric cars or bio-fuel alternatives.
I think the fiscal necessity is increasingly argument enough. And Europe is far further ahead on non-carbon energy than the US at this point, so perhaps those hints at industrial policy are not dispositive.
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