He nails it.............again! "We need to make a structural shift in our energy economy. Ultimately, we need to move our entire fleet to plug-in electric cars. The only way to get from here to there is to start now with a price signal that will force the change."
Thanks to my father for sending this along. And a happy birthday to my sister Wendy!
May 28, 2008
Op-Ed Columnist
By Thomas L. Friedman
Link to Op-Ed Column
Imagine for a minute, just a minute, that someone running for president was able to actually tell the truth, the real truth, to the American people about what would be the best — I mean really the best — energy policy for the long-term economic health and security of our country. I realize this is a fantasy, but play along with me for a minute. What would this mythical, totally imaginary, truth-telling candidate say?
For starters, he or she would explain that there is no short-term fix for gasoline prices. Prices are what they are as a result of rising global oil demand from India, China and a rapidly growing Middle East on top of our own increasing consumption, a shortage of “sweet” crude that is used for the diesel fuel that Europe is highly dependent upon and our own neglect of effective energy policy for 30 years.
...
I can’t say it better than my friend Tim Shriver, the chairman of Special Olympics, did in a Memorial Day essay in The Washington Post: “So Dodge wants to sell you a car you don’t really want to buy, that is not fuel-efficient, will further damage our environment, and will further subsidize oil states, some of which are on the other side of the wars we’re currently fighting. ... The planet be damned, the troops be forgotten, the economy be ignored: buy a Dodge.”
No, our mythical candidate would say the long-term answer is to go exactly the other way: guarantee people a high price of gasoline — forever.
...
We must not make that mistake again. Therefore, what our mythical candidate would be proposing, argues the energy economist Philip Verleger Jr., is 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.
...
We need to make a structural shift in our energy economy. Ultimately, we need to move our entire fleet to plug-in electric cars. The only way to get from here to there is to start now with a price signal that will force the change.
Barack Obama had the courage to tell voters that the McCain-Clinton summer gas-giveaway plan was a fraud. Wouldn’t it be amazing if he took the next step and put the right plan before the American people? Wouldn’t that just be amazing?
We must not make that mistake again. Therefore, what our mythical candidate would be proposing, argues the energy economist Philip Verleger Jr., is 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.
...
We need to make a structural shift in our energy economy. Ultimately, we need to move our entire fleet to plug-in electric cars. The only way to get from here to there is to start now with a price signal that will force the change.
Barack Obama had the courage to tell voters that the McCain-Clinton summer gas-giveaway plan was a fraud. Wouldn’t it be amazing if he took the next step and put the right plan before the American people? Wouldn’t that just be amazing?
Frank - I am going to have to take issue with Mr. Friedman. I think this plan he espouses is really dumb and actually hurts the environmental cause. First off, I agree with your point that we need to move quickly to a plug in hybrid auto fleet - but a price floor for gasoline is not the way to get that to happen. A price floor is too complex, its meddling with markets (which are already meddled with) and its using a tax to change behavior through pricing - which is a convoluted and inefficent way to get a desired effect for the general wellbeing of society. Not to mention that this smacks of socialism which is just going to cause large swaths of our population heartburn...
A far more sensible way to get the same effect would be to pull out the externalities associated with gasoline powered vehicles. These are both direct subsidies - just as production tax credits to oil producers - and indirect - such as pollution costs borne by all of us through our tax dollars or the cost of maintaining our oil-centric foreign policy. For instance, how much of our military budget goes to protecting our interests in the middle east? All those costs should be properly allocated to the cost of oil as a tax at the crude barrel level - which would naturally flow right through to the pump to get Mr. Friedman's desired effect of high enough gas prices to change purchasing behavior - not to mention drive conservation and make renewable technologies, which generally don't enjoy the benefits of externalizing costs like oil, more competitive. This way you don't have to worry about managing buying behavior - the market will do it for you.
I don't understand why anyone would want to try and use a tax to regulate behavior. Its not what taxes are for (they exist to raise revenues for the government). If its that important to make Americans buy hybrid vehicles - then instead of trying to manipulate the oil and gas market (a sure recipe for disaster) the government should pass a law that outlaws the sale of certain gasoline only vehicles - that's the right mechanism to change purchase behavior - not some silly endrun by using the tax code. I am not saying its a good solution, and its a political hand-grenade (which should tell you something) - but at least its not likely to have the multitude of unitended consequences that putting a floor under the gasoline market is likely to spawn...
Posted by: Mark Langner | May 29, 2008 at 04:50 PM
Well said. Market driven. Not Government imposed.
Posted by: bruce | June 03, 2008 at 08:03 AM