A SIMPLE SOLUTION TO BUY BACK ONE’S SOUL

• A SIMPLE SOLUTION TO BUY BACK ONE’S SOUL[i]
  
  Two recent posts have highlighted the Author’s market-based solution to profligate American oil consumption. Even our president from the oil patch is paying lip service to that old canard “independence from foreign oil”. America is running out of domestic oil. It is oil we must be come semi-independent from.
  
  The Author has a plan. The plan is simple:
  
  Artificially raise the price to $4.00 per gallon. This price of $4.00 per gallon will be called the Conservation Parity Price, CPP. The difference between the wholesale price of gasoline, plus an allowance for a retail markup, will be collected and remitted as taxes to federal, state and local governments.
  
  The higher cost of gas will have the effect of restraining American’s unfettered appetite for gasoline. This higher cost will lower demand and lower consumption of fuel. It will also trigger entrepreneurs and industry to develop fuel saving solutions and alternative transportation modes.
  
  Because the CPP will remain in effect for the foreseeable future, the expectations of all parties will be that the price will be $4.00 per gallon in the future. Economic actors can rely on that price, or something a little higher. Entrepreneurs and industry can factor that price into their fuel saving and alternative transportation solutions. Consumers can make their transportation choices accordingly.
  
  The CPP will occasionally be adjusted upwards for inflation or special events such as oil embargoes or massive disruption of oil supplies. The underlying price of gas will fluctuate, but the CPP will remain static. Only the amount of tax collected will change.
  
  ISSUES AND ANSWERS
  
• The proposal is regressive. A regressive tax is a tax that causes low-income people to pay a higher percentage of their income in taxes than more wealthy people. Flat income taxes and sales taxes are regressive taxes. Tax credits could be put in place to cushion this effect for low-income people. But it is also worth remembering that we are seeking to lower the demand for oil. We must cause changes in people’s behaviors.
• Where will the taxes go? From the federal side, deficit reduction might be a place to start. But a better place would be public transportation construction, research grants for promising technologies (like fuel cell vehicles and hydrogen combustion), and tax credits for energy conservation measures. States and local government could also be permitted to direct these taxes for similar uses.
• The market should decide the price. The market will decide the underlying price. It is the tax that changes. But in the interest of being less smarmy, think of the tax as a savings account. Most or all of these taxes will go to help reduce energy consumption. And these savings will cushion Americans for the energy shocks that WILL occur in the future because of political instability in the Middle East and other oil-producing regions.
  
  MAKE SENSE?
  
  COMMON SENSE IS THE COMMON CURRENCY IN THE DESERT OF THE REAL!

[i] Tom of the Car Talk Guys said on a broadcast that America had sold its soul to the automobile. While many nations rely on primarily public transportation, or have a mixed public-private automobile system, America is all automobiles. Only New York City, Chicago and Boston have large public transportation infrastructures. This decision to rely primarily on private automobiles requires massive amounts of fossil fuel to turn the collective wheels. Americans are currently killing and dying in American-occupied Iraq to attempt to secure future oil supplies.