The EconoPundit National Energy Policy

Steve Antler has a three point energy independence plan:

  1. Impose a sliding scale oil import tax that would effectively fix the price of imported oil at $95 a barrel.
  2. Use some of the resulting revenue to ease the transition and, research alternative energy, and support conservation..
  3. Use some of the resulting revenue to speed the development of domestic recoverable oil shale.

Since I’ve been advocating exactly this plan for almost 30 years now, to say that I support it would be an understatement. Here’s why I think the plan is politically impossible or unworkable.

First, the powers-that-be which includes oil companies, auto manufacturers, foreign oil producers, and thousands of other parties with interest in the issue will oppose it tooth and nail. They like things just the way they are very nicely, thank you. They’ll do whatever is necessary to make the idea go away, and they’ve got the contacts and years of practice.

Second, government has a way of becoming addicted to revenue. There’s a sort of Parkinson’s Law involved: needs for revenue expand to consume any available source of revenue. That precludes any comparable titrated system from actually working—predictable revenue will become necessary and if the price of oil goes up the tax will go up right along with it.

4 comments… add one
  • if the price of oil goes up the tax will go up right along with it.

    That’s not so bad if energy independence is the goal.

    You’re right about the powers-that-be opposing it. That’s true of a lot of things that won’t ever be fixed, which is a good reason to support campaign finance reform.

  • True. But the beauty of the notion of a sliding scale tax that effectively fixes a higher price on imported oil is that it promotes stability. The burden of a lack of oil price stability will inevitably fall on the poorest and will, consequently, result in more political pressure to help those affected. That means that more money will be redistributed to poor people (and, of course, those administering the redistribution) and less will be spent on research.

  • Well, I just don’t think there should be a sliding scale, because I don’t think that price stability should ever be the primary goal of a program, as that will prevent the market from reacting naturally to a price change. Besides, if the price and revenues both go up, that will automatically cause more money to go towards those hit hardest by this anyway (as well as research).

  • Ron Link

    By fixing the price of imported oil at a much higher cost than domestic oil (does that domestic oil include Candian oil?) there is a strong incentive to expand the volume of oil that comes under the category “domestic oil.” International oil industry lawyers would get to work on loopholes immediately.
    Certainly a black market would spring up virtually overnight, as overseas suppliers find themselves priced out of the american market by decree. Chinese buyers would attempt to nail down long term contracts with oil suppliers, declaring the US market an unpredictable trading partner for foreign oil suppliers.
    The next elections after this legislation is passed and signed into law, everyone responsible for enacting the policy will be voted out of office and replaced by people promising to do away with the “damnable” oil tariff. It wouldn’t last long enough to have an appreciable impact on development of oil shales or other alternatives, unfortunately. Another nice idea. Pack it up, crate it, forklift it into the warehouse portrayed at the end of “Raiders of the Lost Ark.”

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