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June 30, 2008 8:39 AM
55 Miles Per Hour
It has gotten to silly season as Congress prepares to return to their home districts having done nothing about the price of gasoline. There is much to be said about why a barrel of oil has now reached over $140 and the price of a gallon of gasoline (with taxes) is nearing $5.
But rest assured that drilling off the coast of Florida or renewing the solar tax credit will not help. The first is a dumb idea that does not help and the second is a great idea that does not help.
There are a few things that will help some, but none are being seriously discussed at the moment.
For those of us of a certain age who remember the gas lines of 1974, we also remember that Congress forced states to lower the speed limit to 55 miles per hour. This was a great idea then and is a great idea now. Such a move instantly lowers consumption and demand quite significantly. Drivers will save money due to lower consumption, and prices should fall slightly - note - slightly.
A bigger factor within our control is the multi year collapse of the dollar. Since oil is priced in dollars, when the value of the dollar falls, the price the U.S. pays for oil goes up. Why has the dollar collapsed? The Bush policy of running massive Federal deficits to pay for tax cuts for high income folks and nearly a trillion so far in deficit spending for Iraq. Reversing either would strengthen the dollar and lower the price of oil.
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Discussion
I think that those who drive gas guzzling SUVs, gargantu-size pick-ups, and the like, should be required to drive 55, identified by a DMV issued huge 55mph sticker on their bumper.
Also, those who supported the War in Iraq, and anyone who voted for President Bush....TWICE. Oh, and those who support the plummeting dollar by blindly accepting that "globalization is here".
Now after having pulled my tongue from my cheek, I'll make a serious comment.
The first act by Congress, shouldn't be to enforce a 55 mph speed limit on everyone, but rather to re-regulate trading relative to oil futures i.e. close the so-called Enron Loophole.
Furthermore, in the time of record gas prices, an unpopular president, and economically stressed Americans, one would think that some leadership exercised by the Democrats in the House and Senate could manage to pass a bill levying a windfall profits tax on Big Oil.
That money, in turn, should flow directly into research and development out of the hands of Big Oil, into alternative fuels, and to mega-invest in existing technologies such as solar to bring the per unit price down.
The speed limit was introduced in the '70s as a gas-saving measure, but it was really nothing more than a revenue generator for local and state governments, in the form of increased tickets.
If a 55mph limit were truly a gas-saving measure, does that mean that electric cars could be permitted to drive at any speed they like?
The gas savings of the national speed limit were almost nonexistent - less than one percent - and the vast majority of Americans ignored the law.
All a new national speed limit would do is to increase the number of tickets written and anger Americans. I'm sure the Republicans would love to see the Democrats get something like that done over their protestations - it would ensure a Republican landslide in the next election.
Strengthening the dollar is a smart way to deal with the price of oil. Returning to nanny state ideals is political suicide.
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