There is popular support for policies to minimize retail prices by reducing fuel taxes or providingproduction subsidies. But price-minimization policies are likely to harm consumers and the economy overall by encouraging transportation system inefficiency. Fuel price reductions are an inappropriate way to provide affordable mobility to low-incomehouseholds; other strategies can do far more to increase affordability while also increasing transport system efficiency. Because many transportation decisions aredurable, low fuel price policies will increase future fuel import costs, harming the future economy. Rather than reducing fuel prices it would be better to allow prices to rise anddo everything possible to improve transport system efficiency.
[Editor's note: The link below is to a PDF document.]
Thanks to Todd Alexander Litman