Energy Policy

So here's what passes for energy policy from the remaining three presidential hopefuls:

Clinton/McCain: A "gas tax holiday" which would eliminate the 18.4 cent federal gas tax during the summer driving season. Think about the math for a minute. The average driver logs about 1,100 miles per month. Assuming average MPG of 19, that's 174 gallons of gasoline. Estimated tax savings for your average driver: $31.96 or 36 cents per day. McCain says this will give low-income Americans "a little break" over the summer. Little is a huge overstatement. If this policy proposal is influencing your vote, then your vote can be had for a daily 10-piece pack of juicy fruit.

Obama/Clinton: A windfall profits tax. Obama rightly calls the gas tax holiday what it is - pandering for votes. His idea (and Clinton's with a few differing details) is to take an additional 10% of oil company profits and redistribute them as the government sees fit. This is a very slippery slope. Microsoft made about $14 billion dollars last year. Is that a "windfall?" How about banks? Citigroup had over $62 billion in net income from 2004 to 2006. Why not take more of those profits, redistribute them, and make mortgages more affordable for everyone? In the long-term, any policy of this nature is self-defeating. If each dollar of marginal income is taxed at a higher rate, investment will inevitably decline. As investment declines, production declines and prices rise.

Politicians would be better served to start telling their constituents the things they don't want to hear. The era of cheap oil is over. We need to be thinking about ways to decrease demand and increase supply. Higher gas and oil prices are actually quite necessary to achieving this goal. With higher prices, new technologies become economically feasible. Consumers demand automobiles which provide the best combination of fuel economy, size and power. It would be nice if the government would enact policies that provide long-term leadership instead of myopic gimmicks.