Sitting on Our Hands

When John McCain and Hillary Clinton called for temporary relief from the 18.4 cent federal tax on gasoline, the White House offered no support.  In the face of the almost unimaginable upward spiral in gasoline prices of the past year, federal policy has been to do nothing to reduce prices (except to plead with our friends the Saudis) .  For once, this is the right policy.   As the sale of trucks and SUVs collapses, as the Hummer is about to hum off into the sunset, markets are doing exactly what someone or something needs to be doing, forcing people to economize on fossil fuels.

For the last seven years, policy has denied the specter of global warming; policy has been inactive as we drained our own diminishing petroleum reserves.  Throughout, the Bush administration and Congress have done next to nothing to address these challenges.  Politicians were afraid of the political consequences of policy to push citizens to economize, and resources were tied up in our overseas wars, so we did little to increase the support for science and R&D.

If the ideology of those in power is to restrict the role of government, then that perspective needs to inform policy when markets deliver bad news as well as when they put the gas in our tanks.  Right now, and until there are breakthroughs in energy technology, there won’t be gas for our tanks.  The people of world are joining us to consume more petroleum than we can recover and than the environment can sustain. This is bad news and it means that we must cut back fast and furiously.  Only the markets are delivering this bad news, and one must credit the Bush administration with not getting in their way.

Government could do a lot to mitigate the effects of the energy shock.  For example, it could raise the tax on fossil fuels and distribute the revenues to low income households, for whom energy is a larger part of total expenditures than high income households.  That will never happen.  Government could get rid of the structural budget deficit, which forces us to borrow so much overseas, driving down the dollar.  Which candidate will commit to such policies?

Absent a public that is willing to elect politicians who offer tough, realistic energy policies, the best we can hope for is that the market will hammer us into shape.  That is what is happening now.