Various news outlets, commentators, and blogs occasionally address gasoline, its price, and what we should do to wean ourselves off of it.
One of the proposals floating around is to greatly increase the federal taxes on gas but offset the higher cost by reducing the income taxes of individuals. The purpose is to account for the externalities not properly captured by the current price. To reduce our reliance on gasoline to help stop global warming and reduce the wealth of Saudi Arabia, Venezuela, Russia, etc. The proposed effect of the plan is that people don't pay, on the balance, more through taxes but it reduces their consumption of gasoline. This proposal has support across the political spectrum.
Nevertheless, it raises several troubling concerns.
First, approximately 1/3 of the US populations doesn't even pay a federal income tax, and many of them receive the Earned Income Tax Credit (EITC) - which is basically the government paying them. As such, you can't reduce this third of the population's income tax burden. All you can do is give them further handouts at the expense of the other 2/3rds of the population. Now, many will argue that we should help the poor more, but a welfare distribution plan is substantively different than the purpose of this gas tax. As well, this plan would lose much of if support for ths reason, especially from the right.
http://www.taxfoundation.org/news/show/207.htmlSecond, even if a satisfying agreement is reached regarding individuals, this still leaves the harder problem of commerce and industry. A big user of gasoline is the airline industry. By raising the tax, we will effectively price them out of the business, even if you cut their corporate taxes. There aren't any "hybrids" or alternative engines they can use to power their planes. So, you face the hard choice of destroying the airline industry or exempting them (and if you exempt them it will be practically impossible for Congress not to riddle the gas bill with enormous concessions to other interest groups effectively destroying the usefulness of the bill).
Third, the trucking industry. Most physical commercial exchanges (sales of goods) involve enormous amounts of trucking across the country, from ships and factories, to distribution centers and finally to the stores for the consumer to buy. Emblematic of the broader problems with hybrids and (many) alternatively sourced engines is their lack of power. Gasoline is still the most efficient fuel that is (and could be) widely available. It takes an enormous amount of power to truck several tons of goods, let alone all of the massive assortments of cars, steel, piping, etc (practically everything) that must be trucked from one point to another.
By increasing the costs of transportation, we vastly increase the costs to the manufacturer which are passed on to the consumer. The overall efficiency of the economy suffers as capital that would otherwise be channeled into other uses must be brought in to account for the now comparatively (prior to the tax) inefficient uses now required.
Fourth, the alternatives themselves have their own sets of problems. To create one gallon of Ethanol for example it takes 1.29 gallons of fossil fuels. Hardly a good trade-off.
http://www.opinionjournal.com/weekend/hottopic/?id=110008530.comSee this report for a great comparison of the various alternative fuel options. and to see how gasoline stacks up against them overall. Unfortunately, there are no silver bullets. At best, another fuel option might be marginally better than gas after trillions spent in infrastructure upgrades, retooling of factories, and technology investment.
http://www.popularmechanics.com/science/earth/2690341.htmlI'm sure other people could come up with even more problems. However, the point remains.
There are several enormous concerns that must be thoughtfully addressed before such proposals can go anywhere. Unfortunately, the green lobby tends to ignore or assume them away. I for one will never be convinced to go along with such a plan until my concerns are adequately addressed.
After all, even if somehow did work, the best computer simulations show we can't stop global warming, we can only slow it down. Further, Al-Qaeda will hate us no matter what we do. Of course they will receive less funding, but 9-11 cost what? A few hundred grand?
Color me unimpressed.