Tuesday, March 06, 2012
Newt's Gas Plan
$2.50 per gallon of gas beats $3.50, $4.00 and $5.00, but I'd like to see $1 per gallon of gas. I think it's fair and with the amount of ongoing gasoline consumption throughout the nation, the oil companies would still make a profit.
Still, the question remains: what role does government have to play in setting gasoline prices, if any?
My first answer is "none." The government has no role in setting gasoline prices. But, that obviously is incorrect. The federal government reams the backside of every industry into which it pokes its unwanted digits. Everything from onerous taxation to punitive regulation impedes business and production which, in turn, causes prices to skyrocket.
Of Course, Gingrich's plan is to open the Keystone pipeline, to authorize more drilling and to incentivize innovative means of producing energy. These measures seem like they will be effective. Note: There is a critical difference between creating incentives for industry and subsidizing industry. Creating incentives is to encourage private industry to seek out the solutions and reward them for doing so. Subsidizing industry is carrying industry from point A to point B. The federal government has subsidized far too many industries for far too long and has drained the coffers in the process.
Lower taxes and fewer regulations will decrease the price of gas automatically. Ironically, creating incentives for fuel efficient cars--though nice for the consumer initially--will eventually balance out the savings created by tax cuts and deregulation because demand for fuel will inherently decrease. Still, from a consumer perspective, the trade-off might be worthwhile.
But, an incentive that will work is for the oil companies to find more efficient ways to refine the oil and ship usable product to the consumer.
Then, while the private sector resolves government's problems, government can decrease taxes and eliminate many regulations in order to make everything less expensive. At that point, a miracle will happen: the economy will rebound and quality will return to US manufacturing.