Sunday, May 11, 2008

How to Lower Gas Prices

With gas prices nearly four dollars a gallon, people need relief. But only the right proposals will ease the "pain at the pump".

A variety of ideas have been bandied about. Some would be ineffective, others would be counterproductive. One idea, a gas tax holiday, would have only a small benefit.

Here are some measures that the government can take to cut the price of gas.

State Level:

Eliminate sales taxes on gas. Offset this with spending cuts.

Repeal the law that prohibits setting gas prices too low. This law is supposed to combat the supposed threat of gas stations underselling their competition, driving them out of business, and then raising prices. Anyone who thinks this is a problem should read the section on this issue in Freedomnomics by John Lott.

Allow slant drilling under the Great Lakes. This would be drilling through rock, would not involve and oil rigs, and would not involve any danger of spills. A proposal to do this at the beginning of the decade was shot down due to irrational NIMBY fears.

Federal Level:

Repeal the tax on gas. Cut spending to offset this.

Eliminate the EPA mandate of "boutique blends", that is, special types of additives to gasoline in different regions of the country and different seasons. This increases prices, particularly in the summer.

Produce more energy. In particular,

Drill for oil in the Arctic National Wildlife Refuge.

Drill for oil offshore, and in the gulf of Mexico.

Drill for oil wherever it is profitable to do so. Repeal regulations and the threat of lawsuits that prevent this from happening. Note that while developing new sources of oil would take some time, it would help to lower prices immediately, since current prices are based in part on perceptions of future supplies.

Build more oil refineries. Repeal regulations and the threat of lawsuits that prevent this from happening.

Produce more nuclear energy. Repeal regulations and the threat of lawsuits that prevent this from happening.

Repeal ethanol mandates that waste gasoline on ethanol production.

High gas prices are not inevitable. They are the result of destructive government policies. Repealing those policies will bring prices down. But this will take public pressure. Are people willing to do what it takes to lower gas prices?

Gouging by Government
Alternative Energy Inanity

2 comments: said...

And, of course, drive less!


Adam said...

I agree with everything except the last paragraph.

India and China have developing economies with many of the lower class moving up to the middle class.... and they want to drive cars.

Thats 2+ billion people wanting to drive vehicles. The gas has to come from somewhere right?

I'd assume you would understand the laws of supply and demand.

Bring back Allen.