A Jimmy Carter Moment
THE NATION'S careless guzzling of fuel harms the environment and creates an unhealthy reliance on autocratic oil exporters. This never caused President Bush to advocate conservation. But now that high energy prices appear to be hurting Mr. Bush's poll ratings as well, the president has changed his tune. "We can all pitch in . . . by being better conservers of energy," Mr. Bush pleaded on Monday. If Americans "are able to maybe not drive . . . on a trip that's not essential, that would be helpful."
Although Jimmy Carter was ridiculed for his cardigan campaign, Mr. Bush's rhetorical U-turn is welcome. It recognizes that any serious energy strategy has to include conservation. But there is a difference between supplication and policy. If Mr. Bush really wants to promote more careful energy consumption, he ought to tax it.
Contrary to what you might suppose, there is something to be said for imposing an energy tax when prices are already high, as they are at the moment. Precisely because consumers are already outraged by fuel prices, a further, tax-induced price increase would force demand down more sharply than it would in normal market circumstances. This would be painful: Consumers don't like cutting back. But the sharp reduction in demand would cause the pretax fuel price to fall sharply, too, offsetting the after-tax increase.
This is a smart way to make oil producers subsidize U.S. taxpayers. Because of the energy tax, producers would face lower demand and lower market prices; they would, in effect, pay perhaps a quarter of the energy tax, with consumers picking up the balance. Fuel-tax revenue would ease the pressure to raise taxes to plug the budget deficit, so Americans would come out ahead; they would be getting Saudi Arabia's help in rebuilding the nation's finances. Air quality, climatic stability and U.S. foreign policy would all gain, too. And really, as the new Mr. Bush might say, how painful would it be to consume a bit less energy once the initial lifestyle adjustments are made? Is it really so terrible to walk to the bus stop? Or to wear cardigans in the office?