I am not immune to high gas prices–my poor wife commutes by car to her current teaching assignment (though next year sheÂ may not have to)–but I still don’t have a whole lot of sympathy for those feeling pain at the pump. Truthfully, the world would be much better off if the pump were more painful still; as this Post story notes, prices need to rise more for consumers to begin substituting away from gasoline consumption to any noticeable extent. As few news organizations have noted, using less gas would be a very good thing. Still, the New York Times writes about long term refinery bottlenecks as a negative, and theÂ House of Representatives puts together a profoundly dumb piece of gasÂ priceÂ relief legislation.
We need to reduce our gasoline consumption for many different reasons. But here’s the thing. If we allow OPEC to dictate supply constraints, then the benefits of higher oil prices flow to OPEC nations. If we allow refinery bottlenecks to dictate supply constraints, then we allow the benefits of higher gas prices to flow to oil companies. If, however, we use gas or carbon taxes to reduce consumption, and we constrain gasoline use in that way, then instead of extra profits for the Sauds or for ExxonMobil, our money is sent to the federal treasury, where it can be used to subsidize renewable fuel sources or to give travelers more options by making a serious effort to increase national, regional, and local mass transportation services.
I know that high gas prices are unpopular, but it seems like there’s room here for a politician to sell sacrifice in a popular way. Namely, demand sideÂ constraints give us control over excess oil revenue. Supply side constraints give that control to others–to foreign nations and corporations.