Alternative Energy Investments and Conservation At Risk From Declining Prices
If you check back in the last paragraph of my June 3 post, I warned that alternative energy investments and conservation would be at risk if we allowed oil prices to decline too far. I suggested a tax to keep oil prices at the equivalent of $80 a barrel. That seemed like fantasy back then, when crude oil prices were hovering around $125 per barrel. Now that they have dropped to $62 per barrel yesterday, fantasy has become reality.
Robert Samuelson of the Washington Post made the same point in an op-ed today that we should add one cent per gallon to the 18.4 cent federal motor fuel excise tax per month for the next 48 months to preserve energy saving behavior and investment. He rightfully suggested offsetting that tax increase with other tax cuts to keep from damaging the economy. Unfortunately, I doubt Congress or the president will take on the unpopular task of movng us toward energy independence by keeping oil prices high despite all the campaign rhetoric to the contrary.
Just to hammer home the point, a friend recently told me of a neighbor with three kids in college who bought each an SUV last week to take advantage of fire sale prices on the SUV's and of lower oil prices. This behavior will just set us up for the next energy price spike in a few years time.