The Price of Gas

Virginia Postrel says:

It's infuriating how all three presidential candidates prattle on about the need to fight global warming while also complaining about the high price of gasoline. The candidates treat CO2 emissions as a social issue like gay marriage, with no economic ramifications. In the real world, barring a massive buildup of nuclear plants, reducing carbon dioxide emissions means consuming less energy and that means raising prices a lot, either directly with a tax or indirectly with a cap-and-trade permitting system. (Alternatively, the government could just ration energy, but fortunately we aren't going in that direction.) The last thing you'd want to do is reduce gas taxes during the summer, as John McCain has proposed. That would just encourage people to burn more gas on extra vacation trips--as any straight talker would admit.

McCain has, as she notes, been the worst offender on this score. But then again as a liberal I do kind of expect more from the Democrats. Rising gas prices clearly carry a lot of sting for a lot of folks, but the responsible reaction is to come up with policies that make it easier for people to cope with higher gas prices by making it easier to get along while using less fuel. More transit and intercity rail, more and better sidewalks and bike paths, more fuel efficient vehicles, etc. leading over the long run to different patterns of development and living so that a high price on carbon remains consistent with a high quality of life.

Meanwhile, note that though the short-term price elasticity of gas consumption is low because changing your behavior takes some time, consumption does respond to sustained price incentives. This is one reason why it's important for politicians to stop BSing around about gas prices. If people think future prices will fall, they won't invest in less fuel-intensive lifestyles. If people believe that future prices will rise but that the policy environment will evolve to try to make it easier for people to live in ways that don't require quite so much driving, then people will adapt to higher prices in constructive ways.

UPDATE: Further note that the decline in gas consumption was largest in the northeast since this is the part of the country where the built environment makes the most alternatives to driving available. Build more transit, more bike-friendly routes, and more walkable neighborhoods and people will respond to higher gas prices by driving less.

Photo by Flickr user rnugraha used under a Creative Commons license

Comments

the last thing you'd want to do is reduce gas taxes during the summer, as John McCain has proposed. That would just encourage people to burn more gas on extra vacation trips...

Woot! Woot! Disingenuity Alert! Virginia Postrel knows as well as everyone else that any kind of proposal involving sacrifice, or even delayed gratification, is a complete non-starter in American politics.

Posted by James Gary | April 22, 2008 11:29 AM

This is one reason why it's important for politicians to stop BSing around about gas prices. If people think future prices will fall, they won't invest in less fuel-intensive lifestyles.

While your point is well taken, I think you're ignoring the fundamental driver of high gas-prices: the OPEC cartel. There is no underlying supply/demand dynamic that is pushing oil higher; the Saudis and their friends are simply milking us for all we can spend.

However, they are canny businessmen and will inevitably lower prices periodically to dissuade people from investing in alternative energy sources, fuel efficient cars, or lifestyle changes. This is easy to see if you look at the 30 year trajectory of oil prices.

The only solution would be to set an artificial price floor for gasoline, which would be deadly for our economic prospects unless the Chinese and other economies could be persuaded to do the same, in effect breaking the power of OPEC. This, of course, will never happen.

Posted by right | April 22, 2008 11:30 AM

This is a nation of abusers. We know certain behaviors, substances, associations, etc are bad for our physical and mental health but we engage in them anyway. Tell a smoker or heavy drinker they better change their ways or the odds of a long life are slim and they'll tell you to STFU and mind your own business. Societies can endanger themselves just as individuals do, disregarding settled truths to their detriment. I think everyone sort of knows the way we live can't last forever, oil is finite, something has to give. Doesn't mean we'll do anything about it. The U.S. is going to be that guy in the alley with vomit in his hair, piss and shit in his pants and no really good idea how in the hell to put an end to the addiction. We'll finally stroke out and end up in intensive care. Without insurance. And no friends or relatives that give a fuck whether we live or die because we screwed them all over for so many years.

Posted by steve duncan | April 22, 2008 11:38 AM

I've come to the conclusion that good intentions don't count for much. Economic pain is the only thing that seems to motivate us American's to alter patterns of high energy consumption. As such, high gas prices are exactly the strong type of medicine we need to reduce our consumption of fossil fuels.

Posted by Alex Szczech | April 22, 2008 11:39 AM

Oil is sold in U.S. dollars. When the dollar is strong, it gives us cheaper oil and when it's weak, the price goes up. Bad policies like driving a real estate bubble, running huge deficits, getting bogged down in a stupid and expensive war, going overboard with deregulation, and bailing out a private investment firm with public money has crushed our dollar. As a result, the Europeans pay about 1/3 less for a barrel of oil than we do in real money.

For a look at how badly Bush and Co. has driven the U.S. dollar into the dust, here's a 10 year graph. Now that the dollar is in the toilet, more and more oil producers are considering a shift to sales in Euros. Heckuva' job, George.

Posted by LFC | April 22, 2008 11:44 AM

"Further note that the decline in gas consumption was largest in the northeast since this is the part of the country where the built environment makes the most alternatives to driving available. Build more transit, more bike-friendly routes, and more walkable neighborhoods and people will respond to higher gas prices by driving less."

I wonder what Democrats will tell people in rural areas - people who are unlikely as long as they live in rural areas to ever have realistic alternatives to driving - when they try to ram a big, regressive gas tax hike through Congress.

Posted by Linus | April 22, 2008 11:49 AM

There is no underlying supply/demand dynamic that is pushing oil higher; the Saudis and their friends are simply milking us for all we can spend.

Sadly, no!

“One of the main challenges is dealing with the artificial fear about the availability of oil supplies, resources and production capacity. Frankly, I believe this fear has neither a scientific nor an economic basis. Nevertheless, it is creating a perception of scarcity and is therefore helping push oil prices higher,” the minister said in the article that coincided with the meeting of more than 100 IEF oil ministers, officials and experts.

That's to say, the Saudis don't like people who say they're overstating their current production capacity.

The supply/demand dynamic is not secret: at $115 a barrel, most of the major suppliers are at near-full capacity, and there ain't no big discoveries on tap. When there's no elasticity, there's volatility. You don't have to be a full-on Peak Oil nut to grasp this.

Posted by pseudonymous in nc | April 22, 2008 11:53 AM

Societies can endanger themselves just as individuals do, disregarding settled truths to their detriment. - steve duncan

Back in Biblical days, the society at hand (Ancient Israel) had a class of political pundits who would say this sort of thing regularly. The best ones got their utterances recorded in the Bible. We call them "prophets". Given the response to Rev. Wright, could you imagine how we Americans would respond to a Prophet?

Posted by DAS | April 22, 2008 11:54 AM

Oil is sold in U.S. dollars - LFC

For how much longer will that be the case?

Posted by DAS | April 22, 2008 12:01 PM

For how much longer will that be the case?

If we don't start strengthening the dollar soon, not much longer. The Iranians announced plans for Euro based oil sales over a year ago. I think a lot of producers are waiting to see what happens to the dollar when numbnuts is gone. If the dollar rebounds, they'll be positively swimming in highly valuable cash!

Posted by LFC | April 22, 2008 12:07 PM

Pseudonymous,

I don't understand how your comment or the link rebuts my point. In fact, the article reads "The 13-nation Opec has repeatedly shrugged off calls by the United States and other key Western consumers to pump more crude on the grounds extra supplies will not bring prices down as the market has enough crude." The fact is (a) OPEC could produce more oil fairly easy if it wanted to, and (b) this would bring prices down. The marginal cost of oil production is well below $117 a barrel, but they are not increasing production simply because it is in their interest to keep the price high. For the time being, that is.

The article you link to is rebutting "Peak Oil" theorists, who, I agree, are way off-base.

Posted by right | April 22, 2008 12:08 PM

And here we see a reason why big-city liberals fail to win poor rural voters, and in a way that's not about religion or race.

Rising gas prices hit different people differently. Poor people usually don't live in very 'new-urban' environments in which they can easily adapt. Yes, the government can do more in this area, and perhaps it should. However it's pretty clear to a lot of voters, particularly in suburbs and Western swing states, that they're not going to really benefit from this spending.

I only mention this because of the contemporary Democratic arguments about winning working class voter, particularly poor ones. No, Republicans do not work for them generally, as they don't benefit from the reduction in taxes for high-earning professionals. However, it's not as if Democrats offer to take the money from the increased taxes and give it directly to them - it instead is usually spent on something. The distribution of the spending, then, means a lot to people, and people take note when a platform plank is to spend money on a group that is 'not-them'.

This is exacerbated by the fact that taxes and spending are severed in the minds of most people - you can only get so much leverage from proposing to tax the rich, as only a certain group is really For higher taxes for another group. So, the distribution of spending is key in shopping for votes, especially if you will present yourself as the party of the economic interest and not the cultural interest.

All of which is to say that I think the Democratic candidates are smart to keep their mouths shut about this if they want to win in November.

Posted by Vermando | April 22, 2008 12:10 PM

And here we see a reason why big-city liberals fail to win poor rural voters, and in a way that's not about religion or race.

Rising gas prices hit different people differently. Poor people usually don't live in very 'new-urban' environments in which they can easily adapt. Yes, the government can do more in this area, and perhaps it should. However it's pretty clear to a lot of voters, particularly in suburbs and Western swing states, that they're not going to really benefit from this spending.

I only mention this because of the contemporary Democratic arguments about winning working class voter, particularly poor ones. No, Republicans do not work for them generally, as they don't benefit from the reduction in taxes for high-earning professionals. However, it's not as if Democrats offer to take the money from the increased taxes and give it directly to them - it instead is usually spent on something. The distribution of the spending, then, means a lot to people, and people take note when a platform plank is to spend money on a group that is 'not-them'.

This is exacerbated by the fact that taxes and spending are severed in the minds of most people - you can only get so much leverage from proposing to tax the rich, as only a certain group is really For higher taxes for another group. So, the distribution of spending is key in shopping for votes, especially if you will present yourself as the party of the economic interest and not the cultural interest.

All of which is to say that I think the Democratic candidates are smart to keep their mouths shut about this if they want to win in November.

Posted by Vermando | April 22, 2008 12:12 PM

What's most infuriating about gas politics is that higher prices (probably through taxes) for investment in developing alternative fuels has been the clear path for years. With prices climbing, a window is closing.

Posted by Jason Schwartz | April 22, 2008 12:12 PM

The fact is (a) OPEC could produce more oil fairly easy if it wanted to, and (b) this would bring prices down.

If that's a fact, rather than a sincere hope, you'll have citations, won't you?

All signs point to a deep reluctance to increase whatever capacity exists for a number of reasons: most importantly, the current price pays for the increasingly costly task of finding and bringing new reserves into production. You don't need to be a Peak Oiler to appreciate that the days of Jed Clampett gushers are over.

In short, Aramco and the markets are pricing the future cost of extraction into the current per-barrel. The Saudis are obviously going to put the most optimistic gloss on the current supply issues-- Naimi blames the bottlenecks on infrastructure, not reserves -- but either way, that needs to be built and paid for. It's not like a kitchen faucet, even if you seem to think otherwise.

As for the topic: we'll see how McCain's tax holiday pander goes down, because if there's one thing Americans like more than driving around in huge vehicles, it's not having to spend shitloads on filling them up.

Posted by pseudonymous in nc | April 22, 2008 12:25 PM

Vermando, Of course Democrats want rural and ex-urban votes, but they shouldn't buy them at the expense of advocating an egregiously bad policy. And lowering the cost of fossil fuels at exactly the moment we need to be sharply curtailing our use of said fuels is an egregiously bad policy. Somebody needs to stand up, take the political hit, and lead the country towards a more sane energy policy.

Posted by Chris Conway | April 22, 2008 12:30 PM

"The last thing you'd want to do is reduce gas taxes during the summer, as John McCain has proposed."

Considering that money is fungible and demand for gasoline is fairly inelastic, is there a huge difference between temporarily waving the federal gas tax and sending everyone $600 checks that they can spend on gas? Both are forms of temporary economic stimulus.

Posted by Fred | April 22, 2008 12:34 PM

Although Vermando touched on the issue, i find it a bit frustrating to listen to people endlessly berate Americans as a "nation of abusers" and insisting that inflicting "economic pain" is warranted and needed to rectify these problems.

All of this ignores how we got here. America did not have to develop as a decentralized, suburban phenomenon. Instead of focusing on smart/dense/multi-use growth early on, we chose to subsidize suburban development and inhibit multi-use city growth. So, to blame people for living in areas away from transit and relying on auto ignores why they are doing so. They did not decide to live far away, per se, but did so following housing, development and job trends to which they had little to no choice.

If liberals want to actually win an election, they might try to examine these problems from a micro economic perspective. Many people are choosing gas over groceries, education and other needs in order to get to work. They have to drive. It is a viscous cycle, but if you want to truly alleviate these problems do so in a humane, empathetic fashion that takes into account the reality of the problem rather than employing the tough-talk rhetoric of putting people on "diets" or "benign neglect."

All this class-tinged rhetoric reminds me of the sort of stuff Republicans (and their democratic friends) used to employ about welfare and spending programs, laced with armchair admonishments about discipline and tough love.

Posted by jeff | April 22, 2008 12:38 PM

is there a huge difference between temporarily waving the federal gas tax and sending everyone $600 checks that they can spend on gas?

Yes. Those $600 checks are just an advance payment on your tax refund that the government was going to send you next year, anyway. Getting rid of the gas tax over the summer would blow a whole in actual revenues.

Plus, since demand is inelastic, it makes sense for gas retailers and wholesalers to just raise their own prices in order to pass them on to the consumer.

Posted by Tyro | April 22, 2008 12:40 PM

Build more transit, more bike-friendly routes, and more walkable neighborhoods and people will respond to higher gas prices by driving less.

Your common sense and practical solutions have no place in the politics of today. I wish it weren't so,but for some reason an actual solution is the last thing any of the Candidates want.

Anecdote time, I was watching Top Gear once and they interviewed a popular English Actor, who admitted that there, in his 30s he just learned how to drive.

As his whole life he found cars impractical and an inefficient way of getting around time.

Posted by Evinfuilt | April 22, 2008 12:44 PM

If that's a fact, rather than a sincere hope, you'll have citations, won't you?

The amount of oil OPEC produces under its quotas has barely moved in ten years, even in the face of massively spiking demand from China, India and other developing economies. Saudi Arabia has raised its production from 8.4B bbl in 1998 to... 8.7B bbl in 2007. You can see here the long history OPEC has of cutting oil production, just for the sake of manipulating prices.

the current price pays for the increasingly costly task of finding and bringing new reserves into production.

It's only so costly because we are looking for new reserves outside of OPEC countries, such as oil sands in Canada or offshore in Brazil. Saudi Arabia, Iran, Venezuela all have plenty of accessible reserves, if they choose to exploit them.

Aramco and the markets are pricing the future cost of extraction into the current per-barrel.

The futures markets are only guessing what OPEC will do in the next few months.

Posted by right | April 22, 2008 12:47 PM

It is a viscous cycle

OT: When I read that, I couldn't help but imagine a Harley-Davidson made out of rubber cement, slowly subsiding into a gooey puddle.

Posted by James Gary | April 22, 2008 12:55 PM

It is a viscous cycle, but if you want to truly alleviate these problems do so in a humane, empathetic fashion that takes into account the reality of the problem rather than employing the tough-talk rhetoric of putting people on "diets" or "benign neglect."

I'll agree with you halfway: there needs to be sympathy, but there also needs to be a degree of honesty about how the hidden costs of those lifestyle choices aren't going to be as hidden any more. Trying to swaddle suburban motorists just motivates silly glibertarians like Mixner, who I'm sure will be around to tell us that driving is as essential to American life as oxygen.

Anecdote time, I was watching Top Gear once and they interviewed a popular English Actor, who admitted that there, in his 30s he just learned how to drive.

I was in my late 20s before I learned to drive. My mother can't drive. My sister can't drive. I have plenty of friends in London who either can't drive or who passed their test as teenagers but have never driven apart from occasionally renting cars.

Posted by pseudonymous in nc | April 22, 2008 1:00 PM

While less energy consumption is desirable, I do want to point out the injustice of forcing the working class to do without driving during what are more likely to be essential errands (probably no public transportation between their middle-ring suburban or rural areas and a lot of their destinations, including work). The richest, who travel the most and vacation the most - much of it by air - are the biggest generators of CO2. So I think that trying to keep gas prices high is not nearly as important as a policy goal as actually building the infrastructure needed for a post-carbon cycle energy economy. After all, that infrastructure has to be in place and powering the economy at just the right time so that the cost of the transfer isn't disastrous. And yes, that a big part of that infrastructure is going to be lots of nuclear power plants. What a lot of green activists seem to be calling for is 17th century Europe for the poor, and early-21st century America for the rich. That hardly seems like a progressive answer.

Posted by Chuck | April 22, 2008 1:28 PM

What a lot of green activists seem to be calling for is 17th century Europe for the poor

Hm. Really. You don't refer to any specific "green activists," here, so I'm wondering if you can name the ones who are calling for that.

Posted by Tyro | April 22, 2008 1:42 PM

George Monbiot has Green-Syndicalist tendencies, but unquestionably on the list are Graham Purchase, Murray Bookchin, Judi Bari, Jeff Shantz, Diana Christian, Jonathan Dawson, R.A. Hill, and many others.

Posted by Chuck | April 22, 2008 2:02 PM

Please note that I am on the left and fully support a reduction of CO2 emissions to pre-industrial levels if that's possible. But I don't want to do it by allowing the upper classes to buy their right to a modern lifestyle and forcing only the working classes to adopt. I want to use technology to get us out of the fossil-fuel age.

Posted by Chuck | April 22, 2008 2:07 PM

One person I've heard of, seven I haven't, and 'many others'.

Thanks for making Tyro's point for him.

Posted by pseudonymous in nc | April 22, 2008 2:09 PM

Well, then, maybe we shouldn't bar the possibility of building a lot more nuclear plants. Of course, that is really just a stand-in for all sorts of alternative energy investments we could be making. The bottomline is that generating a lot more clean energy is possible (including in forms usable in cars), but it will take considerable sunk cost investments to make that happen. And since that is pretty much the same issue with public transit, I don't see why one idea is more viable than the other (I'd suggest doing some of both).

Posted by DTM | April 22, 2008 2:51 PM

And I didn't see any specifics about the "17th century europe" state that the poor are supposedly advocated to live in.

Unless we're talking "poor" as in "3rd world destitute", in which case that's hardly what MattY was referring to when talking about changing our energy consumption patterns and policies in the USA.

In any case, to a certain degree, when you're genuinely rich, you can buy your way out of anything. The truly wealthy fly via private jet and aren't affected by onerous security laws, too. Not only will they be able to be insulated from any policy changes we force through to cut CO2 emissions, but they will ALSO be insulated from the environmental consequences of not doing so. But spending time angsting over whether such-and-such a policy will sufficiently impact the lives of the top 0.5% isn't really worthwhile unless their behavior is what's causing the overwhelming amount of problems we're trying to alleviate.

Posted by Tyro | April 22, 2008 2:56 PM

Matt isn't proposing a less carbon-intensive America; he's proposing a less energy-intensive America. That's not what his candidates are promising, so perhaps the message needs to be refined.

The worst offender isn't McCain; it's Obama. He manages to promise a fully-auctioned carbon cap while at the same time telling people they pay too much for gas. The word 'disengenuous' doesn't apply to that sort of rhetoric; 'dishonest' or 'incompetent' perhaps.

Posted by Thomas | April 22, 2008 3:13 PM

horseshit.

The point people are making is that there is no sense of shared--or economically proportionate--sacrifice. Asking people who are skimping on fixed costs (mortgages, utilities etc) and food, because they have to use there car, to be further decimated is filthy. Why can't we develop these technologies and programs--that will be disproportionately negatively borne on working people--by subsidizing the negative externalities. Why does the debate have to focus on the tired truism of 'well, when your rich, "you can buy your way out of anything."

Sure. But does that mean that suffering people should be forced to suffer further. Is it too hard to develop an agenda that does not further devalue their lives. That is all I am asking.

To be clear, from my end, I am not talking about Matt. I am talking about the tired mantra of green activists bemoaning the supposed annoyance of economic concerns and the dual insistence of ignoring them in installing their plans. And further, the invocation of American poverty as minimal because its not 3rd world is pathetic. This kind of technocratic elitism is of no use to the democratic party.

Posted by jeff | April 22, 2008 3:23 PM

The crux of the problem for liberals here is that your environmentalist tendencies are at odds with your progressive tendencies on this issue. Your environmentalists want gas prices to be as high as possible, to discourage consumption, but your progressives realize that there's nothing progressive about raising taxes on energy, and that these are actually highly regressive taxes. So liberals often try to split the difference by proposing higher gas taxes with some sort of exemption for the poor and/or the middle class. Such an exemption, of course, would mean that there would be negligible impact on consumption by just raising gas taxes on the rich: it's not as if someone making $200k spends 10x as much on gas as someone making $20k; in fact, he probably spends less (because he can afford to live closer to his high-paying job in the nice part of town).

Liberals also seem to forget that people are mostly rational when it comes to gas. If hybrids and electric cars were cost effective, we'd all be driving them. In time, technology will make them cost effective, and the current high oil prices are already spurring investment in alternatives (e.g., Tesla Motors, the Chevy Volt, Arvin-Meritor's diesel-hybrid trucks, etc.). Technology can't be rushed. Best to give it time and not try to make everyone poorer in the meantime.

"Yes. Those $600 checks are just an advance payment on your tax refund that the government was going to send you next year, anyway."

Any evidence to support this assertion, Tyro, or are you just pulling this out of your hat?

Posted by Fred | April 22, 2008 3:29 PM

Any evidence to support this assertion, Tyro, or are you just pulling this out of your hat?

Actually, it turns out I'm wrong about this. The 2001 rebate checks were, in fact, simply advances on what we would have received in the following year's rebate, but this year's are different. So I take that back.

Posted by Tyro | April 22, 2008 3:57 PM

I'm sorry that you haven't heard of any of the people I mentioned other than one of them, but then again if I've shown that you're not only ignorant of these people but unwilling to spend 30 seconds looking them up, I suppose I have made Tyro's point for him.

Posted by Chuck | April 22, 2008 4:03 PM

Bill Bishop, in his rather brilliant book, The Big Sort, which is coming out in May, points to the fact that the biggest indicator of whether a district is Republican or Democrat is population density. The more the population density per square mile, the more Democrat the district is likely to be.

Now, MY's suggestions are all the kind of suggestions that will be welcomed by people who actually like that increased population density - the urban types. However, this stat also suggests a nice dimension of demagogary awaiting Obama when he gets the nomination. You are not going to make the rural and exurban areas Democratic. However, you can address why they are pissed off - for these are the people who are really going to feel the rise in gas prices this year. While I imagine they will welcome McCain's idea of a tax holiday - the sort of things pundits tut tut, but that is actually an excellent pandering strategy - Obama should tie the gas prices, at every turn, to the war in Iraq. At every turn, he should harp on the rise of gas prices under Bush and tie it to the single minded Middle Eastern policy of mindless aggression. He should show that a foreign policy that, by threatening war in the Middle East at every turn, steps on our gas. Threaten war with Iran - the price of the barrel of oil goes up. Encourage fighting in Basra - the price of a barrel of oil goes up. It would be easy to chart. It would be easy to point out that before Bush was elected, there was discussion of the problem of 5 dollar a barrel oil (via Krugman).

Do not reason with the Republican masses. Exacerbate their anger. Do the goody goody transportation bills once you are in office. Are the Dems never going to learn that elections are won by rancor, appeals to superstition, and the finding of convenient villains? I'll give Hilary credit there - she has learned a lot about how to run in America.

This is one of those golden opportunities which, I fear, the Dems will be too "responsible" to seize.

Posted by roger | April 22, 2008 4:03 PM

It's impossible to separate the gas tax issue from the inflation issue. Gas taxes are usually some flat amount per gallon. If the value of the dollar is cut in half, and income tax at least will collect more money, because it is collecting at a percentage rate.

A 10 cent gas tax, however, will collect half the money it did before the dollar's value was cut (in half). So it makes sense to raise it. After all, roads are going to cost twice as much.

Posted by wellbasically | April 22, 2008 4:33 PM

I wonder how much of the difference between the Northeast and Midwest on one hand and the two southeastern regions on the other also has to do with comparative growth rates. If people in two regions both cut back their gasoline usage, but some share of them are moving from Region A to Region B, then Region A is going to cut its usage more.

Posted by Brittain33 | April 22, 2008 4:55 PM

Or you could do what Professor Smalley recommended: slap a ten cent gas tax on and use the proceeds to fund a nanotech energy initiative. Up the tax after ten years when your results start to show up and push it to the finish line over the next ten or twenty years.

Future Global Energy Prosperity: The Terawatt Challenge (Warning: PDF)
http://cohesion.rice.edu/NaturalSciences/Smalley/emplibrary/120204%20MRS%20Boston.pdf

Posted by Richard Steven Hack | April 22, 2008 5:43 PM

Personally, I always liked the idea of something like a gas tax that you just took the revenues from and directly rebated to people on a flat per household basis. That makes the proposition simple: beat the average American household's consumption of gas, and your household should come out ahead--and in terms of cold, hard cash. So let the anti-gas-usage games begin!

Posted by DTM | April 22, 2008 6:16 PM

"Actually, it turns out I'm wrong about this."

Might white of you to acknowledge this, Tyro.

Posted by Fred | April 22, 2008 11:08 PM

http://ostseis.anl.gov/guide/oilshale/index.cfm

This could be a possible answer. US has the largest shale oil reserve in the world.

Posted by Dean | April 23, 2008 5:23 PM