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A way to change oil prices without reaching into the pockets of big oil and business

I will refrain from publishing my thoughts on the economic policies of Senators McCain and Obama for a little while longer since the jury is still out on which plan is actually productive and which is full of air. In the meantime, permit me to offer an idea into the internet discourse on how the Republicans and Democrats over on Capitol Hill can do something to help out the middle class in this growing gas crisis.

The Senate today rejected this bogus concept of taxing windfall profits on oil companies. See Gas lines, Rationing Scare More Drivers; Senate Republicans Block Bill to Tax Windfall Profits of Oil Companies. Good for the Senate. The government has no business meddling in the affairs of corporate profits any more than they already do.

With the premise that something is rotten in the state of Denmark (and by state of Denmark, I mean big oil companies), I must specify that I am basing this entry on my suspicion that there is some sort of price fixing (in addition to the speculation on oil futures and weak dollar) that is working to drive up the price of a gallon of gas. And, unlike other private or public business, oil is sort of an industry of its own. Notwithstanding the ways the government can check this, taxing "windfall profits" is not the answer.

I think a more reasonable solution would be for the government to use its power under the commerce clause to require all cars (imported and exported) to have a MPG requirement of 40 MPG by 2015 and 60 by 2020. This can be accomplished by the increase in hybrid technology or something else. While this acts as an incentive for the car industry, I think it can be pushed into oil company's financial interests by offering tax incentives for those companies who sponsor significant portions of their profit to the car company's R&D departments. Further incentives to big oil can be given for companies that develop new fuel stations (e.g., hydrogen), energy production stations (e.g., hydroelectric, solar, geothermic, wind), and other facilities that would employ thousands of people around the country.

Will this reduce our dependence on foreign oil? Over time, yes. The problem is that these are long term solutions and the immediate results will not come quickly. Basically, the person that pushes for these big ideas is looking at (in all likelihood) a four-year term. Is this the only solution to the big oil problem? Of course not. But it's the only one I feel like developing on a broader forum at this time. We'll see if it gets picked up by anyone of importance.

I must give some credit to Bill O'Reilly for suggesting this in one of his shows a couple of weeks ago. And some derivation of this idea is floating around in Congress. I'm just expanding it to be a little more realistic. Also, I saw a special on the Aptera last weekend that was pretty neat. See my previous writeup on it here.

Full post as published by The Once and Future Lawyer on June 10, 2008 (boomark / email).