After reading an article in yesterday's Wall Street Journal explaining that Using Taxes to Keep Gasoline Prices High Makes Sense to Some (it's actually available to the unwashed masses), I thought that rather than limiting opinions on the matter to a select "some", I'd get a take on it from my favorite economist. Leave it to King to come through with an analogy near and dear to all our hearts; drinking good Scotch:
Via The Elder, I read this article in the Wall Street Journal (subscribers only) in which "experts" are saying we should raise gas taxes now, that the time is right. And why? "To diminish thirst" for petroleum products. Why? I have a great thirst for single-malt scotch, but its price helps to deter me from drinking it with meals. It's savored on special occasions. So why doesn't this work for gas?
Walter McManus, a University of Michigan automotive economist, estimates that if prices jumped to $2.86 a gallon and stayed at that level, sport-utility vehicle sales would fall 18% in five years. If gasoline rose to $3.37 a gallon, SUV sales would fall 28%. Sales of pickups and vans would plunge. "If you want people to economize fuel, increasing the cost through taxes would be effective," Mr. McManus says.
But why do you want them to economize? It seems to me that this is a backdoor attempt to create a tariff wall against OPEC and particularly against Saudi Arabia and its extremist Islamic funding. You want to do that? Do it directly, as a matter of foreign policy. People seem to know that we have too many SUVs and vans. Ask them how they know that.
In my view, a hefty increase in the gas tax would be nothing but an artificial attempt to impose conservation that will eventually result from the market anyway. Anytime the government starts messing around with market forces (more than they already do), I tend to get nervous. That whole supply/demand thing has a funny way of working itself out as long as you leave it alone.
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