Generally, there are three approaches toward cutting our dependence on oil: taxes on gas to increase the cost and cut demand; subsidize alternative fuels to make them competitive; and requirements to force more energy efficient cars and trucks.
• High gas prices were tested conclusively last year and we don’t want that.
• Subsidies for alternative fuels require lobbyists to determine who gets the money and corn always wins.
• Cafe standards also require lobbyists and we’ll never get there by that alone.
Here’s an idea that will cut our dependence, that is fair and relatively painless. Don’t be freaked out by the name: Gas Rationing. It’s really just a variation on Cap and Trade used to cut pollution where a standard is set and users buy or sell allowances.
• First, we set a national standard for gasoline consumption – for the sake of discussion, let’s say in the first year it is 80% of what we used in 2007 (we consumed 142.35 billion gallons *80% =113.88 billion gallons). It could be more or less dependent upon how long the lobbyists decide we need to stretch this thing out.
• Next, we take our national standard and divide it by the number of licensed drivers in US (113,880,000,000 gallons/196,165,666 drivers=580.53 gallons per driver per year; 11.16 gallons per week.
• Then, we send every licensed driver a smart card that starts with a balance of 580.53 gallons and that they swipe at the pump when they buy their gas and it is up to them to manage their allowance.
• For most of us, this is more gas than we need in a year and might even turn a profit.
• For some, particularly those who have long commutes or business travel, it gets interesting. They can, of course, carpool, use mass transportation, buy a car that gets better gas mileage or one that runs on alternative fuel. Or, our blessed free market system can takeover and they can go to a web site (eBay or Craigslist works for me) and buy or trade their ration (yes, computers can track of all of this just as well as Wall Street keeps track of hedge fund trades). This way, the rich can always have as much gas as they can afford and the poor can earn extra money by doing what they have to do anyway – stay home since their car is too expensive to drive.
Sounds too simple to work? No, it is complicated enough to unpopular with talk radio, Lou Dobbs, all Republicans and consumers in general. Mostly, people would just hate the name, that the government is doing it, that it is somehow anti-capitalist and that it would require some effort. Then, of course, someone would get caught abusing it and it would stay on the news every night until the program was killed. But it would work and it would be pretty painless. Look at the benefits:
• We start paying attention to how much we drive.
• We have an incentive to drive less without having to pay more for fuel.
• We have an incentive to get a more energy efficient car or one that uses alternative fuels.
• The auto industry has a market for more energy efficient cars and those that use alternative fuels.
• The rich can still drive Hummers if someone continues to make them and even with the cost of buying more ration credits, the price per gallon is still probably less than last year.
• The poor has something they can sell to buy clothes or food for their children.
• We immediately start cutting some of the $400 billion we spend to import oil.
• The air and water become cleaner. The earth’s temperature stops rising so fast.
• Exxon has to begin spending some of their billions on developing alternative fuels that they can market.
One note: We likely would need to exempt trucking and delivery companies and use subsidies to move them to alternative fuels.