Why a Gas Tax Is Good for You
Twenty months ago, when plenty of folks were reeling at $48-per-barrel oil, energy economist Philip Verleger predicted that the price was headed for $60. A prolific author, Verleger served in the Treasury Department under President Carter. He now runs a consulting business out of Aspen, Colo., and is a visiting fellow with the Institute for International Economics. Verleger explains why more pain could be ahead at the pump.
President Bush is going to stop adding crude oil to the Strategic Petroleum Reserve. What impact will that have?
Since we don't have any refining capacity now, none. The tanks are full. This is like offering somebody who just had a seven-course fancy meal a prime rib dinner.
How about the proposed waivers of environmental regulations?
We could knock a dollar a gallon off the retail price of gasoline if we did a couple of things on environmental rules. My environmental friends look at me and say, "Phil, why are you saying this?" I propose a trade-off. Bush has called for construction of new refineries. It takes years to build a refinery. It takes one year to build an ethanol plant. Let's move toward ethanol more rapidly. We'll suffer the cost of higher pollution this year, and then next year, we're going to insist that people use more ethanol ... . Insist all gasoline has to have 10 percent ethanol.
You frequently advocate a gasoline tax, while acknowledging it's a political nonstarter. What good would it do?
First--global warming. We're burning too much. I think everybody but George Bush and Dick Cheney understands the problem. You have to find a way to force people to use less. Second, were we to adopt a gasoline tax of say $2 or $3 a gallon, offset by a reduction in Social Security [payroll taxes] and some other things to minimize the effects [on working Americans], our consumption would be significantly lower. World oil prices would be significantly lower. And the income that's flowing to [Iranian President] Mahmoud Ahmadinejad, [Russian President] Vladimir Putin, [Venezuelan President] Hugo Chavez, and a lot of the other people we don't like would be drastically reduced. Right now, we're paying twice--first for the oil that flows into the hands of our enemies, and then [to fight] a war in Iraq. It's important for the nation as a whole to do something like this.
This story appears in the May 8, 2006 print edition of U.S. News & World Report.
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