America Enters the ‘Trance’ Phase of ‘Shock and Trance’

Tom Friedman presents another in-depth case for a dramatic increase in the national gasoline tax, or an economy-wide carbon tax, in the NY Times on Sunday.

His basic argument is that with falling gas prices, we’re quickly falling back into a sense of trance, which is the second half of America’s standard “shock and trance” cycle that has shaped American energy policy over the past forty years. 

Although President-elect Obama has articulated his concern that we avoid this oft-repeated mistake of following petro-panic with petro-complacency, he has been opposed to new gas or carbon taxes.  Friedman says that this is a terminal mistake. 

Here are the highlights of Friedman’s argument:

Regarding the current situation, he notes:

“Of course, it’s a blessing that people who have been hammered by the economy are getting a break at the pump. But for our long-term health, getting re-addicted to oil and gas guzzlers is one of the dumbest things we could do.”

Friedman wryly observes:

“Have a nice day. It’s morning again – in Saudi Arabia.”

Friedman notes that unfortunately, “…the Obama team has no intention of [imposing a gas or cabon tax] at this time. I understand why. Raising taxes in a recession is a no-no. But 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-efficiency regulations alone won’t do it.)

“[But] without a higher gas tax or carbon tax, Obama will lack the leverage to drive critical pieces of his foreign and domestic agendas.

“How so? According to AAA, U.S. gasoline prices now average about $1.67 a gallon. Funny, that’s almost exactly what gas cost on the morning of Sept. 11, 2001. In the wake of 9/11, President Bush had the political space to impose a gasoline tax, a “Patriot Tax,” to weaken the very people who had funded 9/11 and to stimulate a U.S. renewable-energy industry. But Bush wimped out and would not impose a tax when prices were low or a floor price when they got high.”

[Instead, Bush asked the country to “go shopping.”]

Friedman insightfully notes:

“Today’s financial crisis is Obama’s 9/11. The public is ready to be mobilized. 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.

“The two most important rules about energy innovation are: 1) Price matters – when prices go up people change their habits. 2) You need a systemic approach. It makes no sense for Congress to pump $13.4 billion into bailing out Detroit – and demand that the auto companies use this cash to make more fuel-efficient cars – and then do nothing to shape consumer behavior with a gas tax so more Americans will want to buy those cars. As long as gas is cheap, people will go out and buy used S.U.V.’s and Hummers.

“The same is true in geopolitics. A gas tax reduces gasoline demand and keeps dollars in America, dries up funding for terrorists and reduces the clout of Iran and Russia at a time when Obama will be looking for greater leverage against petro-dictatorships. It reduces our current account deficit, which strengthens the dollar. It reduces U.S. carbon emissions driving climate change, which means more global respect for America. And it increases the incentives for U.S. innovation on clean cars and clean-tech.

“A gasoline tax “is not just win-win; it’s win, win, win, win, win…

“I know it’s hard, but we have got to stop “taking off the table” the tool that would add leverage to everything we want to do at home and abroad. We’ve done that for three decades, and we know with absolute certainty how the play ends – with an America that is less innovative, less wealthy, less respected and less powerful.”

However, for Friedman’s wish to come true, the modern American public will have to dramatically change its knee-jerk opposition to any tax increases or requests to make sacrifices… even if they really can be patriotic

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