The Corner

Krauthammer’s Gaseous Argument

Charles Krauthammer’s argument for higher gas taxes is even more “gaseous” than Ramesh indicates in this morning’s piece. One aim of Krauthammer’s proposal is to reduce U.S. “dependence” on MidEast oil, but his proposals will do no such thing. Oil “dependence” — that is, an economy’s vulnerability to price shocks caused by sudden changes in foreign oil produciton — are a function of oil’s proportion of overall energy consumption, not whether it is imported. Because oil markets are global, increasing domestic production and tax importation does nothing to insulate the U.S. economy from price spikes caused by supply disruptions, such as could occur were Saudi production sabotaged. This would be true even if the U.S. produced all of its own oil and imported nothing. Moreover, insofar as domestic production is more expensive than foreign production (and nearly all global production is more expensive than Saudi production), a marginal decline in U.S. oil consumption will result in less domestic produciton, and an increase in the relative share of U.S. oil that comes from the Middle East. In the end, all Krauthammer’s proposal would get us is higher energy prices — which have a significant dampening effect on economic activity — and greater government intervention into the economy. And for what? So Americans could drive smaller (and, on the margin, less safe) cars. No thanks.

Jonathan H. Adler — Mr. Adler is an NRO contributing editor and the inaugural Johan Verheij Memorial Professor of Law at Case Western Reserve University School of Law. His latest book is Marijuana Federalism: Uncle Sam and Mary Jane.

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