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Friday, October 24, 2003
The Future of Energy:
The above caption is the title of an article in the Economist predicting the imminent "end of the oil age". Should we be promoting alternatives to fossil fuels? Almost certainly this would benefit all, especially Western ecomonies that would be crippled by the loss or reduction of oil availability.
Being an advocate of Adam Smith's "invisible hand" policies, I am all for letting the market dictate such development of alternative fuel sources. It does, however, make me ill to read the author's proposed solution to the oil "addiction" of the West:
The best way to curb the demand for oil and promote innovation in oil alternatives is to tell the world's energy markets that the “externalities” of oil consumption—security considerations and environmental issues alike—really will influence policy from now on. And the way to do that is to impose a gradually rising gasoline tax.
By introducing a small but steadily rising tax on petrol, America would do far more to encourage innovation and improve energy security than all the drilling in Alaska's wilderness. Crucially, this need not be, and should not be, a matter of raising taxes in the aggregate. The proceeds from a gasoline tax ought to be used to finance cuts in other taxes—this, surely, is the way to present them to a sceptical electorate.
It concerns me when the view is purveyed that a tax is the solution to such problems. At present, the market has a dependence on oil in many forms, and for many things. Heating, infrastructure, and transportation all lean heavily toward all things oil. Imposing a tax on a daily necessity would be akin to taxing food to alter consumption (wait, that's been proposed, too, huh?). The end result would not be consumption of alternative resources, but a stagnation of consumption in other, less essential areas. It helps no one to simply raise the price of oil at the expense of everything else.
The author's position that taxes should be cut in other areas to offset the difference would be a novel, unprecedented maneuver for any Western bureaucrat without "Republican" on his/her business card. Standard operating procedure within politics is that, once a tax is levied, it remains generally intact (just consider the American income tax if you have any doubts). These offsets would likely never occur (just as when Reagan cut spending with the promise of tax cuts from the legislature, only to see this idea never realized), so committing to them would be fiscal suicide. I, for one, am not willing to provide the bullet for the gun.
So how do we encourage such innovation without crippling the economy? Anti-capitalists beware: such things would best be facilitated by giving incentives to businesses to develop such technologies. This is a capitalist society, and capitalists are motivated by profit. If businesses see the possibilities of profit, whether in the form of tax credits, or emerging markets for goods and services, they will begin to enter those markets, and resources will be allocated for research and development. This is American innovation at its best. Penalizing consumers is not the answer; rewarding producers is.Labels: Archives_2003
.: posted by
Dave
10:53 AM
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