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Column: Presidential candidates & the real truth about gas prices

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  • 5/28 New York Times
    Published Thursday, May 28, 2008, by the New York Times Column Truth or Consequences By Thomas L. Friedman Imagine for a minute, just a minute, that someone
    Message 1 of 1 , May 29, 2008
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      Published Thursday, May 28, 2008, by the New York Times


      Truth or Consequences

      By Thomas L. Friedman

      Imagine for a minute, just a minute, that someone running for
      president was able to actually tell the truth, the real truth, to
      the American people about what would be the best -- I mean really the
      best -- energy policy for the long-term economic health and security
      of our country. I realize this is a fantasy, but play along with me
      for a minute. What would this mythical, totally imaginary, truth-
      telling candidate say?

      For starters, he or she would explain that there is no short-term fix
      for gasoline prices. Prices are what they are as a result of rising
      global oil demand from India, China and a rapidly growing Middle East
      on top of our own increasing consumption, a shortage of "sweet" crude
      that is used for the diesel fuel that Europe is highly dependent upon
      and our own neglect of effective energy policy for 30 years.

      Cynical ideas, like the McCain-Clinton summertime gas-tax holiday,
      would only make the problem worse, and reckless initiatives like the
      Chrysler-Dodge-Jeep offer to subsidize gasoline for three years for
      people who buy its gas guzzlers are the moral equivalent of tobacco
      companies offering discounted cigarettes to teenagers.

      I can't say it better than my friend Tim Shriver, the chairman of
      Special Olympics, did in a Memorial Day essay in The Washington
      Post: "So Dodge wants to sell you a car you don't really want to buy,
      that is not fuel-efficient, will further damage our environment, and
      will further subsidize oil states, some of which are on the other
      side of the wars we're currently fighting. ... The planet be damned,
      the troops be forgotten, the economy be ignored: buy a Dodge."

      No, our mythical candidate would say the long-term answer is to go
      exactly the other way: guarantee people a high price of gasoline --

      This candidate would note that $4-a-gallon gasoline is really
      starting to impact driving behavior and buying behavior in way that
      $3-a-gallon gas did not. The first time we got such a strong price
      signal, after the 1973 oil shock, we responded as a country by
      demanding and producing more fuel-efficient cars. But as soon as oil
      prices started falling in the late 1980s and early 1990s, we let
      Detroit get us readdicted to gas guzzlers, and the price steadily
      crept back up to where it is today.

      We must not make that mistake again. Therefore, what our mythical
      candidate would be proposing, argues the energy economist Philip
      Verleger Jr., is a "price floor" for gasoline: $4 a gallon for
      regular unleaded, which is still half the going rate in Europe today.
      Washington would declare that it would never let the price fall below
      that level. If it does, it would increase the federal gasoline tax on
      a monthly basis to make up the difference between the pump price and
      the market price.

      To ease the burden on the less well-off, "anyone earning under
      $80,000 a year would be compensated with a reduction in the payroll
      taxes," said Verleger. Or, he suggested, the government could use
      the gasoline tax to buy back gas guzzlers from the public and "crush

      But the message going forward to every car buyer and carmaker would
      be this: The price of gasoline is never going back down. Therefore,
      if you buy a big gas guzzler today, you are locking yourself into
      perpetually high gasoline bills. You are buying a pig that will eat
      you out of house and home. At the same time, if you, a manufacturer,
      continue building fleets of nonhybrid gas guzzlers, you are
      condemning yourself, your employees and shareholders to oblivion.

      What a cruel thing for a candidate to say? I disagree. Every decade
      we look back and say: "If only we had done the right thing then, we
      would be in a different position today."

      But no politician dared to do so. When gasoline was $2 a gallon, the
      government never would have imposed a $2 tax. Now that it is $4 a
      gallon, the government should at least keep it there, since it is
      really having the right effect.

      I was visiting my local Toyota dealer in Bethesda, Md., last week to
      trade in one hybrid car for another. There is now a two-month wait
      to buy a Prius, which gets close to 50 miles per gallon. The dealer
      told me I was lucky. My hybrid was going up in value every day, so I
      didn't have to worry about waiting a while for my new car. But if it
      were not a hybrid, he said, he would deduct each day $200 from the
      trade-in price for every $1-a-barrel increase in the OPEC price of
      crude oil. When I saw the rows and rows of unsold S.U.V.'s parked in
      his lot, I understood why.

      We need to make a structural shift in our energy economy. Ultimately,
      we need to move our entire fleet to plug-in electric cars. The only
      way to get from here to there is to start now with a price signal
      that will force the change.

      Barack Obama had the courage to tell voters that the McCain-Clinton
      summer gas-giveaway plan was a fraud. Wouldn't it be amazing if he
      took the next step and put the right plan before the American people?
      Wouldn't that just be amazing?
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