You would normally think a magazine entitled BusinessWeek would be pro-business, for free markets, and against big government. A write-up in their August 4th edition suggests otherwise.
In the cover story entitled "The Real Question: Should Oil Be Cheap?", the author John Carey makes the argument that oil prices should have a floor to them.
But Amite Foundry's resurgence is just one of countless examples of a deeper truth: Expensive energy, in many ways, is good. Why? When the price of oil goes up, people will use less, find substitutes, and develop new supplies. Those effects are just basic economics. Things are so painful now, many economists say, because of the past two decades of cheap oil. Prices stayed low in part because they didn't reflect the full cost of extras such as pollution, so there was little incentive to use energy more wisely. If those extras had been counted, the country would be better prepared for both today's soaring prices and the day that global oil production begins to decline.
That's why there is growing interest, from both the left and right, in a policy that uses taxes to put a floor under the price of oil. Above a certain level—say $90—there would be no tax. But if the world market price dropped below that, taxes would kick in to make U.S. users pay the target amount.
Expensive energy is a powerful medicine. It may hurt when taken, but it brings long-term cures for a host of ills. It compels companies and people to put fewer miles on the car, ditch the SUV, or install more efficient heating, as Eastern Maine Medical Center in Bangor did: The hospital saves $1 million annually with a system it installed two years ago. Higher costs are beginning to nudge America away from its traditional traffic-congested suburban sprawl to denser, less car-dependent communities. Utah has a government-sponsored bike-to-work program. "When the Republican governor of the reddest state in the union is promoting bicycling as a preferred mode of transportation, you know people are paying attention to the price signals," says Keith Bartholomew, professor of urban planning at the University of Utah.
Sounds like just another argument to use the IRS tax code to prod U.S. citizens to do what the government mandates. This time, it's mandating better gas mileage. It's better when the free market itself moves people to do things. That's what is really occurring now. It's been said that necessity is the mother of invention. When people actually need to, they find ways around problems. Right now, that problem is high fuel prices. If the problem was high taxes, they'd find another solution. I don't think we'd like the consequences created by higher taxes if it was the cause of high fuel prices rather than some part the free market being the cause.
-Colonel Steve
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