Sunday, April 30, 2006

Unintended Consequences at work again!

Unintended Consequences at work again!

Focusing on the effect...
Contrary as it sounds, (even temporary) elimination of the 18 cents a gallon Federal tax on each gallon of gas "to reduce the effect of high gas prices on consumers" will ultimately result in... you guessed it - higher gas prices. Same as a "windfall profit tax" on oil companies.

Why? Cheap gas keeps us hooked on gasoline as our primary fuel (and we use more!), while higher prices encourage everyone to look for alternatives. With higher prices, we use less gas... bringing a downward pressure to prices! (Simple supply & demand.) If we let market forces work... we will have renewable energy, sooner! Not later! These are just two examples of the Law of Unintended Consequences!

... when we should be focusing on the cause:
The cause of high gas prices is that Americans simply want lots of cheap gas... and will do most anything to keep it that way. That is, our dependence on foreign oil is due to having had so much cheap gas for so long! And it also due to the lack of competing energy sources. (The U.S. Government has been subsidizing Big Oil for a very long time!)

We must break this decades-old cycle! We must take back energy leadership. We must create an Energy Independence Fund. It would be operated like a Venture Capital firm, by business people... with the mission of funding innovation & new technology to enable the U.S. to become a net-exporter of renewable energy. It would be funded by the day to day fluctuations in gas-at-the-pump: about 15 cents a gallon. This EIF would also have the secondary effect of (slightly) dampening demand, thereby putting (lowering) pressure on gas prices.



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