Three Cheers for Expensive Gas

Everyone’s all worked up about the price of a barrel of oil these days, with certain pandering candidates proposing a gas tax holiday for the duration of the summer. But look what’s happening with prices being as high as they are. Drivers in the Northwest have reduced fuel consumption eleven percent to 1966 levels and long-haul freight is moving off trucks to rail, a trend driven by the 3-to-1 fuel efficiency advantage of trains over trucks. I would say this is all good news brought to you in whole by astronomical prices at the pump (Barnett, Erica C., “Northwest Gas Consumption at Lowest Level Since 1966,” SLOG, 18 April 2008; Ahrens, Frank, “A Switch on the Tracks: Railroads Roar Ahead,” The Washington Post, 21 April 2008).

Expensive gas isn’t as good as a carbon tax or a cap and trade system, but it’s progress. So let’s not give up while we’re ahead. Instead of a summer gas tax holiday, why don’t we double down? Let’s add a few more cents of gas tax. Every penny in Uncle Sam’s coffer is one less in that of the House of Saud.

And as for those truckers in Pennsylvania, it’s called creative destruction. It’s part of the capitalist system. Time to take that tech school cert in diesel engine maintenance. The rail companies are hiring like gangbusters and those are better jobs anyway. Instead of pandering on fuel prices to an industry that should be paired down to everyone’s advantage anyway, the Democrats should be pushing a grand bargain between capitol and labor: an enhanced social safety net to cushion workers against the currents of globalization in exchange for greater liberalization.

The whole argument of freemarketeers is that prices are signals to consumers and by consumers acting on those signals, optimum or near-optimum resource utilization will be achieved. I’m actually in favor of enhanced signaling. Price leveling schemes by utility companies are a convenient service to their customers who have to plan household budgets, but it is signal-dampening. I think that price leveling should be done away with favor of hyper market in utilities. Power, water and gas prices should fluctuate on a per minute or per hour basis with a price readout in every house and some smart planning tools available to consumers to help them make consumption decisions. People might run certain appliances at night when power generation and distribution systems were underutilized and the electricity at its cheapest or refrain from watering their lawns so much in the summer.