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No. 111 (January/February 2010)


Recommendation Concerning
U.S. Energy Policy


by Win Wenger, Ph.D.


 
Photo courtesy of Elan Sun Star


 

To stop the half-trillion-dollar-per-year hemorrhage out of our country, and to do so quickly without extraordinary deficits, extraordinary bailouts or other major injuries to our economy —

— half or more of our oil dollars now going into hands which are unfriendly and some of which are pursuing active terrorism against us....

— and to break the circular problem which now keeps alternative fuels and energy sources from developing and reaching the market....

We levy a light tax on new gasoline engines sold in the United States, using that to partially fund a credit against taxes for purchase of engines which are flexfuel.

  • This is a modification of the proposal which candidate Obama carried in his website during the '08 presidential campaign, which apparently was adopted from the proposal originally made by rocket scientist Robert Zubrin, Ph.D.

  • Such a combination light tax and light tax credit preserves individual freedom and avoids severe hardships, contrasted to the original proposal which would mandate that all cars sold after a certain date be flexfuel. Individuals are free to pursue their individual choices, yet aggregate behavior moves in the desired direction and solves the problem.

  • The original and continuing problem at basic level is that although alternative fuels and fuel sources exist and even now, before economies-to-scale can be realized, can be produced in absolute terms of cost which are comparable or favorable relative to petroleum and gasoline, there isn't enough of a flexfuel market to afford the development and retail of flexfuels together with their support infrastructure.

    The problem is exacerbated by the oligopolistic cartel behaviors of Big Oil and the other big energy companies. Every time investment begins to develop in the alternatives, oil prices come down just enough to prevent it. (The light tax and tax credit suggested in this briefing, among other things is a quick and easy way to bring down the price of oil substantially and keep it down.) When the public's attention wanders again, up go the prices again to squeeze everything possible out of our sorely beset pockets and the fragile American economy.

  • The proposed light tax and tax credit is hardly an infringement on the free market.  In energy and fuels, a free economy does not exist.  The economy there is instead an oligopoly, in which individual choices have no effect, all turns in the economy are engineered to bulge the purses of the oligopolist few.  Some of that distorted wealth, in turn, is used to buy most of our politicians in order to expand that unfair advantage even further, and to head off the possibility of alternatives.  The proposed light tax and tax credit is, instead, the one realistic chance we have to create and develop a free market in the energy economy.

  • Flexfuel vehicles can run on gasoline AND they can run on a number of other fuels.  They are not the hybrids we are now seeing, guaranteed to remain so expensive as to never be a threat to the gasoline industry, running either on gasoline or expensively canned electricity.  Under the suggested light tax and tax credit, enough people would be buying flexfuel vehicles that a meaningful number and proportion of such vehicles would soon be on our roads, which in turn would allow flexfuel sources and purveyors to develop and to compete with gasoline.  Existing service stations might even opt to add ethanol, methanol and other alternative pumps to what they offer motorists.

    Even the constrained and limited supply of ethanol we now have at the pumps in America has been so engineered that neither you nor anyone else has a choice. The ethanol is pre-mixed with the gasoline so you can't choose between gasoline and ethanol. You are stuck with one package, and Big Oil is safe from having the public drift away from gasoline each time the cartel hikes prices on us. Big Oil is super-defended in depth against there ever being allowed a free market to develop in energy. Only the provision we recommend here has a chance of changing that.

  • Lastly, don't you think it's a wee bit odd how nearly everyone has been pussy-footing around what has to be your answer to these two questions:

    1. What HAS to be the effect on the fragile American economy, of losing a half trillion dollars a year overseas to mostly hostile oil nations?

    2. What HAS been the effect of this on America's national security?

This briefing is the position of Win Wenger, Ph.D., and not necessarily that of any of his associates or organizations. He will welcome replies either at
P.O. Box 332, Gaithersburg, MD 20884-0332, or by email.

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Win Wenger


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