Wednesday, March 30, 2005

The Benefits of Higher Gasoline Prices

As the price of the higher grades of gasoline at service stations in Malibu pushes up against the $3.00 barrier, it's difficult to think that even higher prices might be desirable. Nonetheless, that's the argument that Michael Mandelbaum of the Johns Hopkins University School of Advanced International Studies makes in Newsday.

Several points are worth noting about Mandelbaum's case for higher gasoline prices. First, it is an argument that has been made many times before. In fact, it forms an important part of the conclusion in Michael T. Klare's recent book entitled Blood and Oil: The Dangers and Consequences of America's Growing Dependency on Imported Petroleum.

Second, higher gasoline prices might not be necessary if the government were willing to impose conservation measures by other means. Higher corporate fuel economy standards, luxury taxes on gas-guzzling vehicles such as the Hummer and the Escalade, the end of tax credits for "farm vehicles" driven by people who have never set foot on a farm, and so on would all encourage conservation, which is the purpose of Mandelbaum's proposal to raise gasoline prices.

Third, gasoline prices have increased--and will continue to increase--even in the absence of the policies that Mandelbaum and others advocate. Market-driven increases, however, will put more money in the pockets of OPEC members and the oil companies while gasoline taxes would insure that higher prices would result in more money being available for socially beneficial purposes.

Mandelbaum's argument is certainly one that deserves to be debated in the United States. Chances are, though, that it won't be.