Last week President Bush, for the nth time, did not propose a serious energy policy in his State of the Union address. Big surprise. So I will do it. You read it here first.
The United States should impose a $70 per barrel tax on imports of oil from outside North America.
Consider the alternatives. One is to do nothing: continue consuming fossil fuels with abandon, and wait for the consequences of global warming. Meanwhile, outsize oil revenues will continue to bankroll *****, both sides of the civil war in Iraq, the genocidal Sudanese regime, and closer to home, the ailing Fidel Castro. Among others. (If you read the newspapers, you know where the bad guys turn to for credit.) So waiting for the problem to go away, or blow up in someone else's hand, does not sound like a very good idea.
Closely related to doing nothing are the uncountable gimmicks which are calculated to hurt no one. A good example appeared in the NYTimes blog http://pipeline.blogs.nytimes.com/ on 22 January. Resynchronize traffic lights, says one. Require trucks to use aerodynamic apparatuses, says another. Fluorescent light bulbs, of course. Regulate the refrigerator and air-conditioner industries, good point. Lower the thermostats, and prohibit idling automobiles in front of schools, on pain of hanging, I myself feel good about saying. All worthwhile suggestions in their own merits, but they do not add up to an energy policy. We can safely dismiss the chances of lowering energy usage without anyone feeling any pain as wishful thinking.
So what could America do? It is hard to impose taxes because of opposition among interests groups directly affected. Because of the energy lobby, politicians are unwilling to create a carbon tax targeted at all sources of greenhouse gas, although it would have a healthy effect on the environment and national security. There is opposition to a gasoline tax from drivers and car companies. Same for fuel economy standards, which in any case are unlikely to have a major impact on total oil usage and prices. Subsidies for alternative energy sources are just that - subsidies for the use of energy. They may increase the use of alternative sources, but will not change the fact that the US uses a lot of fossil fuels.
An import tax on oil is different, politically speaking. First, it will not generate opposition among the domestic oil producers, and it does not single out the auto industry to make efforts towards fuel efficiency. Second, the impact on energy prices will be diffused. Several alternatives to imported oil will step in: domestic, Canadian, and Mexican oil, ethanol from Brazil, and alternative energy sources - including the cheapest and most significant, conservation. Because the US is such a major importer of oil, any decrease in its demand for imports will lower significantly the price of oil in international markets. That will mean less money for tyrants who control most of the oil deposits in the world, in the Arabias, Persia, Russia, Venezuela, and so on. If you complain, we know whose side you are on.
An import tax will increase the price of imported oil to the consumer to some extent, but because alternatives are available, in effect the tax will amount to a transfer of income from oil-producing governments to the US treasury. So third, and most important, it can be explained clearly that it is a national security measure (that happens to have an important environmental benefit). Politically, this would make sense. The extra government revenue should be allocated as across the board tax relief. It will help individuals cope with higher energy costs and companies invest intelligently in alternative sources, unlike subsidies which only encourage more use of energy, although of a different type. And Congress can legislate it without waiting for the lame duck.
What about the obvious drawback that an import tariff goes squarely against the idea of free trade? Let the reader of "The Economist" call it a bad idea whose time has come. Oil is not traded freely in international markets. Nominally at least, prices are controlled by OPEC, a cartel of oil exporting countries. Oil is not regulated by the WTO, oil exporters do not practice free trade, most are not members of WTO, and frankly, let them scream.
A US tax on imports of fossil fuels from outside North America will be good for the environment, and good for world peace.
***** Insert the names of your favorite or least favorite international terrorist groups here. If I do it, Google will censor my blog!
