Oil is expensive, and it's getting worse. But wait, isn't that a good thing?
A gallon of gas now averages $3.65, up from just $1.96 two years ago, an increase of 86 percent. Even if gas prices don't climb further, that tiger in your tank is taking a painful bite out of your budget. When gas prices rise, so do gas taxes -- by an additional 49 cents per gallon. And the gas tax is among the most regressive, hitting the low-income as hard as the rich.
On the other hand, environmentalists see high gas prices as a helpful step toward the development of alternative energy. Secretary Treasury Steven Chu notably said "we have to figure out how to boost the price of gasoline to the levels in Europe" to make Americans trade in their "love affair with the automobile" for a marriage to mass transit.
This week's Working it Out question: If you were the U.S. energy czar, what would be your #1 proposal to influence the price of gas?
Here are some possibilities to get you started. Prices might RISE if the government:
-- restricts future drilling. Politicians could perhaps get that costly medicine to go down by couching it as "protecting the safety of environmentally sensitive areas against another BP- or Exxon/Valdez-like disaster."
-- restricts oil importation. That could be couched as "enhancing our energy independence while protecting American jobs," or some such.
-- further increases FERC, EPA, OSHA, and other federal and state regulation of oil companies. Politically, sticking it to the oil companies, should be a winner.
Prices might FALL if the government:
-- opens up more areas for oil drilling and streamlines the approval process, which now takes over a decade and costs the applicant a fortune, which of course gets passed on to us at the pump.
-- mandates ethanol E-85 gas, even though there are questions about what it does to engines that aren't "ethanol-proofed" and whether, net, it's a carbon saver or expender.
-- makes driving more onerous: raise tolls, car registration fees, and gas taxes, build no new freeways, turn more freeway lanes into carpool lanes so gridlock increases. (That's quite realistic: it's being done in California.)
-- allows the Keystone Pipeline to be built.
So, what one thing would you do to change gas prices?
Later in the week, my editor, Derek Thompson, will publish your most thoughtful, provocative, and/or amusing comments. And next Monday, I'll propose my favorite bold idea for changing the price of gas.
"Working It Out"
6. Should gas prices be higher or lower?
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