"For all the conditions attached to [the auto bailout], the multibillion-dollar aid package for Detroit's carmakers approved by the White House (with Mr. Obama's support) fails to address one crucial question: Who will buy all the fuel-efficient cars that Detroit carmakers are supposed to make?
Americans have flirted with fuel-efficient cars before only to jilt them when gas prices fell.
Therefore, it might be time for the president-elect and Congress to think seriously about imposing a gas tax or similar levy to keep gas prices up after the economy recovers from recession.
There are several ways to tax gas. One would be to devise a variable consumption tax in such a way that a gallon of unleaded gasoline at the pump would never go below a floor of $4 or $5 (in 2008 dollars), fluctuating to accommodate changing oil prices and other costs. Robert Lawrence, an economist at Harvard, proposes a variable tariff on imported oil to achieve the same effect and also to stimulate the development of domestic energy sources.
In both cases, the fuel taxes could be offset with tax credits to protect vulnerable segments of the population."
Thomas Friedman opines:
"I've wracked my brain trying to think of ways to retool America around clean-power technologies without a price signal - i.e., a tax - and there are no effective ones. (Toughening energy-effiency regulations alone won't do it.) Without a higher gas tax or carbon tax, Obama will lack the leverage to drive critical pieces of his foreign and domestic agendas.
Obama is coming in with enormous popularity. This is his best window of opportunity to impose a gas tax. And he could make it painless: offset the gas tax by lowering payroll taxes, or phase it in over two years at 10 cents a month. But if Obama, like Bush, wills the ends and not the means - wills a green economy without the price signals needed to change consumer behavior and drive innovation - he will fail."
Thanks to John Hartz