The Gas Pump Ate My Wallet!
You may have noticed that gas prices are at ‘historic’ high levels. What that means is that they’re super high compared to what we’ve gotten used to, but not quite as high as they were under Jimmy Carter when prices are adjusted for inflation. Everyone’s moaning and whining about how much they’re paying. Right now it’s an average of an extra $500 per vehicle per year, and that’s a shock. It’s counterracted the Bush tax cut, it’s breaking the back of the working man, it’s going to lead to runaway inflation, and so on.
Here’s the truth. Gas prices have been artificially low in the US for decades. It’s been great for the auto industry and it has helped keep other consumer prices down, but it’s also built up hugely false expectations, led to dangerous complacency in a number of industries devastated our balance of trade and cost us a good measure of our economic independence. People in every other country around the world are paying more than twice what we pay for gas and they find a way to live with it. Right now we only see the short term cost, but maybe it’s time to look at the long term benefits of higher gas prices and really embrace reality and encourage them to go even higher.
Yes, lower gas prices do save us gas money and let us drive bigger and more expensive cars. They also reduce the prices of most consumer goods which are distributed nationwide by truck. Here’s what low gas prices have also done. They’ve destroyed our domestic oil industry by making it unprofitable to exploit the massive oil resources here in the US. They’ve destroyed the railroad industry because they make trucking goods cheap enough that trucks can outperform railroads which are by nature a more cost effective and efficient means of transporting goods. They’ve encouraged stagnation in the auto industry. Better, more efficient engines have been designed, but because gas prices are so low the market demand for them is low, so they aren’t being produced with much enthusiasm. As a side effect of this, low gas prices contribute to higher levels of pollution. They increase the tax burden for everyone because high levels of traffic increase maintenance cost for highways. They’ve encouraged urban sprawl, made urban mass transport impractical and expensive, put us at the economic mercy of terrorist nations in the Middle East, and the list goes on and on. They’ve even been a large factor in the decline of small farmers because with cheap trucking it’s easier to bring in produce from outside of the country or from huge agrobusinesses than to buy from small local producers. Low gas prices are at the root of many of the economic problems we face today.
Yes, high gas prices hit us hard in the wallet. But what’s the natural response to an unexpected expense? You look for ways to economize. You don’t like paying so much for gas for your Hummer? Go out and buy a smaller car. Go out and buy an electric car. Go out and buy a hybrid car. You might even take a look at public transportation. Did you know that a company called UQM has developed a hybrid engine for your Hummer? But because gas prices have been so low it hadn’t been planning to make it available to the public. Higher gas prices change that. Higher gas prices mean that you might soon be able to buy a Hummer which gets better gas mileage than a mid-size sedan does now. Several companies have viable electric cars ready to go to market as well. They’ve just held off from major distribution because they couldn’t compete with regular cars because gas prices have been so low.
With higher gas prices we can reopen our oil fields, cut our trade imbalance, revive the failing railroad industry, give the lazy car companies a kick the right direction and even give small farmers a shot in the arm as regional produce distribution becomes more economically attractive than nationwide trucking of produce. That might even lead to an end for farm subsidies. Every additional cent you pay for gas is an investment in strengthening our economy, improving our environment and making our nation stronger. Plus, higher gas prices mean lower taxes. Fewer drivers and smaller cars reduces wear on the highways. Subsidies and bailouts to railroads, urban transport systems and farmers will become a thing of the past if gas prices go high enough.
Realistically, gas prices around $2 a gallon aren’t high enough to cause all these changes quickly. But they’re a step on the way to the key breaking point of $3 per gallon. What we really need on top of this increase in gas prices is a whopping big federal gas tax. Don’t expect to see such a move from the Bush administration, but a $1 a gallon tax on gas would push the price high enough to bring about immediate change, plus it would put enough revenue into the federal coffers that they could balance the budget and pay for the War in Iraq and maybe even lower our taxes at the same time. Another quarter or so in state taxes would solve state budget problems just as quickly. Conservatively, with a $1 tax on each gallon of gas we’d be looking at over $200 Billion in added revenue for the federal government per year. That’s enough money to solve a lot of problems. Here in the State of Texas a quarter a gallon would be at least $4.5 billion for the state each year. That’s more than we need to solve our education funding problems.
So, embrace higher gas prices. Write your congressman, write your governor, write the president. Tell them you’re ready to see gas at $3 a gallon and the sooner the better. Pay more for gas, stick it to the Arabs and see our economy boom.