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Sunday, November 16, 2008

Gasoline prices

When the cost of a gallon of gasoline exceeded $4.00 this summer, Americans began to make changes in their lifestyles. Public transport ridership rose, casual trips were abandoned, and sales of over sized SUVs and pickup trucks plunged. Some governments and companies even began creative programs to reduce commuting.

To ensure our long term financial health, and to reduce negative effects on the environment, a reduction in the use of energy - particularly energy derived from fossil fuels such as oil, coal and natural gas - is still a priority.

Now that the price of gasoline - at least in some places - is below $2.00 per gallon, we can soon expect a collective loss of memory about the pain inflicted by a $4.00 price tag. Really brave politicians (an endangered species unfortunately) should immediately begin raising gasoline taxes. $2.00 per gallon, say, over a four year period would be an entirely appropriate amount.

If revenue neutrality is an objective, then governments could reduce income tax or just rebate the proceeds to all. On the other hand, a strong argument can be made for investing much, or all, of the money in the development and maintenance of our transportation infrastructure.

Falling oil consumption generates two additional benefits. It deprives countries that really do not like us - Venezuela, Iran, Saudi Arabia and other third world hell holes come to mind - of our money while simultaneously creating jobs at home.

It's really hard to outsource infrastructure maintenance and investment jobs to India and China!

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