What this country needs is $5-a-gallon gasoline. If I were George Bush, I`d put on a $3.50-a-gallon tax right now, use some of the money to lower the deficit and use the rest to help pay for the most comprehensive public transportation program in history.
For your information, $5-a-gallon gasoline is not unheard of in the world. Several countries now pay that much, and it should behoove the biggest energy wastrels in the world to pay the same.
If we tax ourselves, the money doesn`t go to the oil companies; it is recycled back to us in ways that can be publicly useful. Furthermore, it could touch off a new wave of economic activity-building new transportation systems and research into more energy-efficient cars. Interest rates would fall as the budget deficit was lowered.
Why this much? Simple. It`s clear that Americans won`t do much switching to fuel-efficient cars at current gasoline prices, which happen to be sharply higher than they were before Saddam Hussein invaded Kuwait, and not even if they get another 50 cents to $1 a gallon higher. The American driver needs a real jolt to the pocketbook before understanding that today`s automobiles are gas guzzlers.
Yes, gas guzzlers. In point of fact, there has been little progress in fuel efficiency of the automobile since 1986, when oil prices plunged and the government took off the pressure on fuel-efficiency standards. Cars today get better mileage than the gas guzzlers of the 1970s, but Detroit, Tokyo and the auto capitals of Europe could do much more to improve fuel efficiency, if the public demanded it.
The public would demand fuel efficiency if the price went to $5 a gallon. For example, at the current price of $1.30 a gallon, gas guzzlers that get only 10 miles per gallon can be driven 10,000 miles a year for $1,300. A car that gets only 20 miles per gallon (and I say only 20 because that`s still pitiful under today`s technology), the annual gas bill would be $650. That`s a pretty small sum for anyone to pay for such a basic resource. It`s no wonder that we waste.
But at $5 a gallon, the 10 miles-per-gallon car would run up a $5,000 annual gasoline bill if driven 10,000 miles. To reduce the driver`s annual gasoline bill to the $1,300 he is accustomed to paying, he would have to buy a car that gets roughly 40 miles a gallon. He would have a powerful incentive to get rid of it as soon as possible, since at $5 a gallon, it serves as a big drain on his cash flow.
Detroit is able to sell gas guzzlers because the public doesn`t want fuel-efficient cars. No demand for them, it says. The public likes power and roominess, it says. This is a society of speed and convenience, it says. Big cars are safer, it says. All true. But societies change as prices change, and so will automobile companies.
You can now buy a car that gets more than 50 miles a gallon-the Geo Metro-though you might argue that it`s unsafe and underpowered.
But I would say two things about this. First, we`ve been sold the idea that the only way to improve fuel efficiency is to lower the weight of cars. But this isn`t true. Big cars are now twice as fuel efficient as they were 10 years ago, and there is no indication that scientists have reached some outer limit of discovery in his area. Second, safety is a function of speed. As fuel becomes more precious, drivers will have an incentive to slow down to save it. If gasoline were $5 a gallon, the automobile firms would speed up their research into developing vehicles with alternative fuel, i.e., natural gas. There would be more funds poured into research on the electric and solar cars. We`re told now that the usable technology on these cars is far away. What that means is the research has been starved because gasoline is now so cheap. When Detroit was faced with the need for more fuel-efficient cars in the 1970s, it ultimately came through.
The problem with the current situation is that Saddam Hussein has us betwixt and between at $30-a-barrel oil and $1.30-a-gallon gasoline. This is still extremely cheap fuel for the latter half of the 20th Century; it should be at least twice as much, and the sooner we tax ourselves to put the price up to $5 a gallon, the better we will be.
I have no doubt that within a decade the market price will jump to $5 a gallon anyway, considering the world`s oil reserves and the tepid way we are responding to the energy crisis. The only problem is that the $5 gas will be the market price, sans tax, so we will not benefit from it at all. There will be no conservation to speak of, and we will have lost a decade.
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I say do it now. The government`s fuel-efficiency standards have been a valiant effort to force Detroit into improving the mileage of cars, but they`ve lost their steam because of political pressure. A $3.50 tax per gallon would shift the pressure from supply to demand, which is where it should be.
We`d have a cleaner, more efficient, more independent country, and Saddam Hussein would worry us no more.