Arguing for high gas prices, and losing

Thomas Friedman:

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.

Cynical ideas, like the McCain-Clinton summertime gas-tax holiday, would only make the problem worse, and reckless initiatives like the Chrysler-Dodge-Jeep offer to subsidize gasoline for three years for people who buy its gas guzzlers are the moral equivalent of tobacco companies offering discounted cigarettes to teenagers.

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.

This candidate would note that $4-a-gallon gasoline is really starting to impact driving behavior and buying behavior in way that $3-a-gallon gas did not. The first time we got such a strong price signal, after the 1973 oil shock, we responded as a country by demanding and producing more fuel-efficient cars. But as soon as oil prices started falling in the late 1980s and early 1990s, we let Detroit get us readdicted to gas guzzlers, and the price steadily crept back up to where it is today.

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.

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This is the dirty little secret of why Democrats won't permit oil production to increase. They want higher prices and they want even more to get higher tax revenues from them. They are willing to use the coercive powers of government to achieve this objective.

As for those complacent Europeans and their high fuel prices, think again.

Hundreds of truckers shut down a central London highway Tuesday, French fishermen blockaded ports and French President Nicolas Sarkozy proposed cutting European fuel taxes as already high gasoline prices soared even higher.

"It's hard to find words to describe the severity of the problem. It's not even a problem really; it's a meltdown," said Peter Carroll, a trucking industry spokesman who, like hundreds of other drivers, parked his rig on London's A40 highway Tuesday morning, shutting that key commuter artery for most of the day.

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Most European countries long ago chose to heavily tax gasoline, partly to encourage use of public transportation. The British government, for example, charges a $3.77-a-gallon fuel duty and a 17.5 percent consumption tax on top of that -- the highest levels in Europe.

By contrast, U.S. drivers pay an average combined federal and state tax of about 47 cents on a gallon of unleaded and 53.6 cents on a gallon of diesel, according to API, a U.S. trade association.

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The Democrats want those high prices and more than anything they want those high taxes. They view fuel and energy as sins, much the way Friedman does. They are just less honest in their ambitions. But, as the situation in Europe shows, liberals need to understand their limitations. They also need to get out of the way of the production of energy in all forms.

The Strata-Sphere also discusses the Democrats desire for high energy prices.