Finally... $4 per gallon!

I for one am happy gas has hit $4 a gallon. Hopefully it’ll be the turning point at which Americans get a clue and start looking more seriously at alternative forms of energy and alternative types of vehicle propulsion.

Before I go too much further I’d like to address the term ‘alternative fuels.’ I think the combustion engine has outlived its usefulness and we need to be looking miles beyond new fuels, but toward Alternative Means of Propulsion (AMP). The term alternative fuels keeps us stuck with the antiquated notion that we can move society forward with a new fuel for an old technology.

What I hear…

I hear neocons on the radio and read columns by them online blaming the high prices on the government’s prohibitions on drilling and building refineries in America. ‘Open ANWAR,’ they say. ‘Let us drill here and the price will go down! It’s simple economics stupid!’

The pseudo-socialist left blames the oil companies because they see record profits. ‘Prices are rising and their profits are increasing exponentially,’ they say. ‘Let’s tax them so they’ll lower their prices! Government can solve all of our woes!’

In Tom Friedman’s NYTimes column this week he suggested that perhaps congress should create a tax that will ensure that gas never drops below $4 per gallon ever again. He supposed that by doing so, it will push American consumers into the arms of the AMP markets.

I like Mr. Friedman’s end, but his means are a little sloppy. Creating new laws is never a good idea.

So I have developed my own pretty simple idea that falls a somewhere in between the left and the right: eliminate oil subsidies and temporarily shift them to AMP research and development.

In the beginning of the oil days, the American government subsidised the industry to help get it started. Their justification being that the automobile was an invention that could benefit society as a whole, and to help launch that industry and standardize a fuel source would benefit all people. A noble concept, but now, more than 100 years later, the oil companies have a government subsidized monopoly on vehicle fuel. They make billions of dollars a year in profits, yet they are still subsidized by the government.

A 1998 study analyzed the actual cost of gasoline when subsidies and tax breaks were accounted for. For every area they looked at, direct and indirect subsidies and tax breaks, health costs, inspection costs, defense costs, and many other areas, they assigned a low and high estimate for the cost paid for by the federal government. Their conclusion was that in 1998, when premium never even hit $1.50, the actual cost of a gallon of regular unleaded was between $5 and $15. I can only imagine how much that’s grown today with gas at $4.01.

I propose that rather than create new laws to add to the legal quagmire, we do some shifting. We move all of the direct subsidies and tax breaks given to oil companies and over the next three years, we shift those benefits to AMP research and development. Then, over the following three years, that money is incrementally decreased and the fuel tax breaks are abolished. From that point on, we leave the propulsion of our vehicles to the market to decide.

If the government weren’t involved, market costs would have driven oil into the ground (pun intended) long ago and we wouldn’t have this problem. And drilling in ANWAR or anywhere else is like the little dutch boy sticking his finger in the dyke. It can only stop the inevitable for so long. If we eliminate the problem for future fuel sources, future generations will have a much easier time transitioning to newer, better technologies… but, if, after 10 years, there is still a demand for oil, we’ll open up American soil.

The combustion engine is in its death throws. Let’s put it out of its misery and use our superior technology to run the world in a more efficient, sustainable manner.