What if you knew gas was $5/gallon and it would stay that way for ten years?

What would you change? Anything? And how could we possibly stabilize gas prices (and why should we?)

Interesting questions. Many of them are answered in this video. Well, maybe not directly, but if you think about it, they are.

Here’s the basic argument – tax gas at such a rate that it costs $5.00 gallon (my number). Regardless of what oil costs, gas is $5.00/gallon. Prices go up, the effective tax rate goes down. Oil prices go down, the effective tax rate increases to keep gas at $5.00/gallon. This additional cost will spur new companies to invest in alternative energy solutions. It becomes profitable to invest in alternative research. The added tax revenue over and above the real costs of fuel would go to a "Manhattan Project" scale of research (again, this is my idea taken from what I (think) I learned in the video).

In the short term gas prices stabilize – we all know what air travel or a trip to grandma’s will cost. In the long term we eliminate the economic flux caused by wildly varying oil prices. We put a ton of money into solving this problem and reducing our need on foreign energy – of any type.

Put a 10 year irrevocable cap on the tax – force government to act in a rational way, and empower business to respond in a responsible manner. But the tax absolutely ends after ten years.

Who loses? Sure, if gas suddenly jumped to $5.00 a gallon it would hurt many of us – a lot. But what if you couldn’t buy fuel at any cost?

Something drastic needs to happen, and soon. This seems like a rational and financially responsible way to make something happen. Stabilization of gas prices here in the US, even if it were at $5.00/gallon would take away a great deal of uncertainty that causes prices to vary greatly (and the financial markets to swing to and fro). Let’s remove the uncertainty and use the $5.00 baseline as a way to both spur innovation and direct tax dollars towards solving our energy problems.

Or we can do nothing, except hope energy becomes cheaper. We might as well be rolling stones and rubbing crystal balls in that case…

Juan Enriquez offers a glimpse of some ground-breaking research to explore the potential of bioenergy. Our current energy sources — coal, oil, gas — are ultimately derived from ancient plants — they’re "concentrated sunlight." He asks, Can we learn from that process and accelerate it? Can we get to the point where we grow our own energy as efficiently as we grow wheat? (Less than a month after this talk, his company announced a process to do just that.)

TED | Talks | Juan Enriquez: Why can’t we grow new energy? (video)

Comments

  1. @David – I think the point is that the sooner we kick our fossil fuels addiction the better – and by keeping gas at a stable high we will spur investment into alternative energy.  This should (might) break our reliance on foreign oil sooner.

  2. I did now… I’m not sure Paul did though because the guys point was that you needed a stable, higher price inorder to allow investment and research into alternative energy. The guy also seems to indicate that the oil producing entities manipulated the prices down to squash alternative energy companies (not sure about that one).

    I personally still believe that we let the market decide the prices. If oil gets scarce then the prices will rise which will make alternatives feasable.

  3. @David – did you watch the video?

  4. so what is the problem where something has to change?

    Gas price is what it is. It goes up and down with the market.

  5. ok, cool.  So make the number $10/gallon. We won’t drive Smart cars – our country is too big and semis too much bigger.  (It’s an issue of mass – we want more protection than Smart cars currently provide – and we drive further – so we need to carry more "stuff"

    Trains aren’t a good option because this country is a LOT bigger than your home country. We need a different solution here… (my humble opinion)

    But I am glad to open the dialogue!

  6. $5 a gallon for gas will NOT do much for any kind of energy revolution.
    Having it go from 80 cents (when I first moved here, 15 years ago) to $3, hardly did anything.
    Neither will a hike from $3 to $5.

    How do I know this?
    I know this, because I’m from a country (of proverbial thrifty people) where they would LOVE LOVE LOVE to pay $5 per gallon for gas. (They’re paying more than 60% MORE than that right now! Over $8.50/gallon).
    Has this lead to alternative energy for their cars?

    No!

    What HAS changed?

    The cars!

    America! BE PREPARED to start driving cars like this: http://en.wikipedia.org/wiki/Image:Smart_car.jpg