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I’ve long thought that gasoline (and petroleum products in general) should be taxed a lot more than they are. People love to talk about the need to ween America off oil. You know, CO2 emissions, dependence on less than stable, not always friendly, developing nations, and all that. Every presidential candidate says it. But you can’t just say it and make it so! If you want to make alternatives more attractive, or if you think there are costs and risks embedded in the use of gasoline not accounted for in the price, the cost has to be increased! Yet, in the last Virginia Gubernatorial race, both candidates were promising explicitly NOT to raise gasoline taxes (I for one would have gladly voted for anyone willing to come out in favor, but the truth I’m afraid, is that most would not).

I was pleasantly surprised to hear Alan Greenspan, in his book, “The Age of Turbulence”, advocating a gas tax of $3/gallon or more.

I come very reluctantly to taxes as an alternative way to accomplish what competitive markets could do. But while oil markets are high competitive in the developed world, the market approach is clearly vulnerable in a world where a single act of terrorism can shut down massive chunks of oil production and cripple the global economy. There is no insurance, or hedging strategy, that can defend against that. We often forget that to function effectively, a competitive market must be voluntary and free of significant threats of violence, and that trade must be unencumbered. Remember, markets are not ends in themselves. They are constructs to assist populations in achieving the optimum allocation of resources.

And I really liked this:

I consider the argument that gasoline tax hikes are politically infeasible irrelevant. Sometimes the duty of political leadership is to convince constituencies that they are just plain wrong. Leaders who do not do that are followers.

He also advocated an increase in nuclear generation, which I think is great. The fear of nuclear power is significantly overstated.

There is, certainly, a short term economic cost to any increase in fuel pricing, just like there are losers for every economic shift (“Creative destruction”, to borrow Greenspan’s term). But, the fact is, it is going to have to happen, sooner is better than later, and talking about it won’t do it. America burns one out of every seven barrels of petroleum produced worldwide on its highways! That is a big chunk that could be significantly decreased fairly quickly.

On a related note: Greenspan is a really smart man, with a lot of experience, and his book is definitely worth a read. He covers everything from history, to current events, even looking a bit towards the future. It is a bit long, and has taken me a while to get through, but it has been more interesting than the couple other books I set aside in favor of it.

“The Age of Turbulence” at Amazon.com

Supposed to have great weather in Southern California, right? To be fair, that is usually true. But recently, we get rain, rain, rain. And my office (next to lots of windows) has been freezing. On a clear day, there is a great view across the valley that is Moorpark on the drive down the hill…not this week.