Much Ado About Gas Prices

With gas prices continuing to go up, up, up, we are undoubtedly going to be inundated with politiking over who is to blame. The Republicans blame Nancy Pelosi for raising gas prices and just about everything else wrong with our economy. The Democrats will blame Big Oil and the friend in the White House. On top of the blame game, presidential candidates McCain and Clinton are proposing lifting the federal gas tax. Obama is courageously refusing to support this short term fix which will have no long term effect on gas prices.

Unfortunately not everyone lives in a metro happy city like DC or can sell their car and buy a bike like me. So what are we to do as we near $4 a gallon? Tom Friedman’s excellent column in today’s NY Times gets it right - if we are going to help people survive in world of higher gas prices, we have got to start investing in alternatives.

“But here’s what’s scary: our problem is so much worse than you think. We have no energy strategy. If you are going to use tax policy to shape energy strategy then you want to raise taxes on the things you want to discourage — gasoline consumption and gas-guzzling cars — and you want to lower taxes on the things you want to encourage — new, renewable energy technologies. We are doing just the opposite.

Are you sitting down?

Few Americans know it, but for almost a year now, Congress has been bickering over whether and how to renew the investment tax credit to stimulate investment in solar energy and the production tax credit to encourage investment in wind energy. The bickering has been so poisonous that when Congress passed the 2007 energy bill last December, it failed to extend any stimulus for wind and solar energy production. Oil and gas kept all their credits, but those for wind and solar have been left to expire this December. I am not making this up. At a time when we should be throwing everything into clean power innovation, we are squabbling over pennies.

These credits are critical because they ensure that if oil prices slip back down again — which often happens — investments in wind and solar would still be profitable. That’s how you launch a new energy technology and help it achieve scale, so it can compete without subsidies.”