Posted by: David Kiley on May 28, 2008
We won’t hear much in the way of intentionally maintaining high gas prices from Barack Obama and John McCain this year. That sort of talk is toxic to voters, especially those in the key states of Ohio, Michigan, Pennsylvania and Wisconsin where labor and non-college educated voters are so important to anyone election and would recoil at the idea of keeping gas prices high no matter how much sense it makes for the country.
But The New York Times’ Tom Friedman, one of the bright lights on energy policy in the U.S., has another good column today about the need for oil and gasoline price floors to keep gas prices at near $4.00 per gallon even if oil prices drop at some point.
The only potential flaw I see in the price floor scheme is that speculators and producers might rig the market to keep prices above the floor were the U.S. to set one. Better for them to make that money than let it fall into the tax coffers of the U.S. to then be used to suppress demand for oil and gasoline by the country that consumes more per capita than any other country.
I especially like Friedman’s story about what his Toyota dealer told him about trade-ins: “I was visiting my local Toyota dealer in Bethesda, Md., last week to trade in one hybrid car for another. There is now a two-month wait to buy a Prius, which gets close to 50 miles per gallon. The dealer told me I was lucky. My hybrid was going up in value every day, so I didn’t have to worry about waiting a while for my new car. But if it were not a hybrid, he said, he would deduct each day $200 from the trade-in price for every $1-a-barrel increase in the OPEC price of crude oil. When I saw the rows and rows of unsold S.U.V.’s parked in his lot, I understood why.”
Also worth pointing out is Friedman’s take on an op-ed piece written by Tim Shriver in the Washington Post: “Cynical ideas, like the McCain-Clinton summertime gas-tax holiday, would only make the problem worse, and reckless initiatives like the Chrysler-Dodge-Jeep offer to subsidize gasoline for three years for people who buy its gas guzzlers are the moral equivalent of tobacco companies offering discounted cigarettes to teenagers…I can’t say it better than my friend Tim Shriver, the chairman of Special Olympics, did in a Memorial Day essay in The Washington Post: “So Dodge wants to sell you a car you don’t really want to buy, that is not fuel-efficient, will further damage our environment, and will further subsidize oil states, some of which are on the other side of the wars we’re currently fighting. … The planet be damned, the troops be forgotten, the economy be ignored: buy a Dodge.”