5.13.2008

GAS IS STILL TOO CHEAP

Two of my bosses wrote a sterling editorial in yesterday's Daily News: "We Need a Gas-Tax Hike, Not a Tax Holiday." So Hillary, here are two of the legions of economists who disagree with the idea.

The fact of the matter is that we have built much of our economy on the cheap gas secured for us by almost three decades of presidential deals with Saudi Arabia. But geopolitics and climate change have woken us up to the reality that gas is far more precious and costly than we have priced it.

It will be a painful transition for many, and more thought needs to be given to figuring out how to help the most vulnerable among us to make that transition. But make no mistake: a transition needs to be made; SUVs that seat one and far-flung suburbs and a society in which you have to fire up a two-ton steel box just to go five minutes to pick up a gallon of milk are just not sustainable, economically or environmentally.

A federal gas tax hike, on the other hand, gets us to a better price, at which consumers will start to make more rational decisions, about what car they buy and how they plan their trips and even where they live. Businesses will respond with more efficient packaging and shipping strategies, and car manufacturers will offer more fuel economy because of market demand and not federal legislation.

A generation from now, will it be said of us that we did the hard work to get ourselves transitioned from an economic and social system that didn't work to one that did? Or will our kids be in a world of pain in terms of air quality, scarce resources, and crumbling infrastructure? When I hear people complain about high gas prices, I fear that the latter is a more likely scenario.
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