Here are a few:
Mr. Goldberg,
If we were to fix oil prices by raising taxes on them whenever the price dropped below it, would the sellers really be daft enough to sell below that price? Furthermore, the reason why high prices encourage alternatives is because the alternatives are preferable to the high prices but not the low ones — otherwise we’d already be seeking those alternatives. Artificially raising the prices of gas in order to gain some laudable objective is simply forbidding the best of three options in order to take the second best — it must decrease total utility and value. More or less by definition. I’m all in favor of taxes designed to internalize externalities (the cost of carbon and other pollutants, for instance, or wars and other foreign policy costs attendant with our consumption of foreign oil). But with all due respect to yourself and Mr. Krauthammer, there’s a reason why price fixing is generally considered a bad idea by economists.
And…
Jonah,
Put down the banana peels my friend. You’ve jumped off the deep end with this adjustable tax to keep oil prices stable. Haven’t we already learned this lesson in innumerable ways that the government and more specifically the politics that drive it are a very poor substitute for a free market. Btw, why are you proposing a tax increase of any kind? What happened to shrinking the size of the government. Lets push to kill obsolete departments instead.
P.S. Can the real Jonah come out and play?
P.P.S. Love your work. :-)
And…
Here’s my concern on this, Jonah: If we opted for stable pricing, and a notionally adjustable tax, then this pegging would distort the wholesale market price, since consumer demand would be factored out, and intermediaries could, in essence, take the Treasury’s share of the revenue. In short, it will not work. Taxes are instruments of confiscation, not market control. The only way it might work is if the USG has a monopoly of oil distribution, so that it could buy on the world market and sell to all the refiners at the pegged price, and the retailers had a fixed markup from the crude price. I suspect that’s more market changes that we would want. Now, if you want to make the tax 90% of the price, like in Europe, then you will be able to curb the swings in the pump price, but you damn well better spend all the money on hydrogen fuel cell development.
And…
Jonah:
We do more with oil than make gasoline. The problem with oil is it comes from places with bad governments run by bad men. If oil came from Iowa we would not care whether it was highly taxed (and would no doubt be against it). In order to have energy companies invest in other fuels/syntheticproducts/energy and improve our trade balance deficit foreign, non-Nafta oil should be taxed at some dollars a barrel.
Gas taxes kill Republicans, a national security enhancing, “protectionist” measure might not.
And…
Jonah,
When I hear conservatives talking about raising taxes at
the pump, I know that bad times are ahead.
For automobiles, development of alternative technologies is
well underway. This year will mark the introduction of several
new hybrid vehicles, a point that Jerry Flint at Forbes
highlights in a recent article (http://www.forbes.com/flint/).
Fuel cell technology continues to improve, and the stocks in
the companies developing them continues to rise. Everyone
knows a breakthrough is coming, and soon. Toshiba is now
talking about a Lithium Ion battery for a car that can take
a full charge in a minute (see http://slashdot.org over the
next couple of days). We’ll have a wide selection of
alternative fuels soon.
In the meantime, a hike in gas taxes is simply guaranteed to
make everything more expensive. My family owns one car (not
two), a Honda minivan. I have three children, and routinely
carry more, so there is justification for the vehicle.
The recent increases in oil prices have made a sizable dent in
my family budget. (I’m a 36 year old graduate student.) If you
think raising taxes is anything but a loser for conservatives,
you’ve got too much disposable income. And if you think ‘other
taxes’ will be cut to offset, then you need to back off on the
drug habit.
Of course, if transportation goes all electric, I hope we have
enough copper for the motors.
Me: Message received.






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