YESTERDAY WAS just another normal day: Congress voted against a tax intended to lower oil imports, while Saudi Arabia announced a price increase of $2 per barrel for its oil. So, in essence, Wednesday was just like the 2,000 days that preceded it. Congress congratulated itself on having prevented "cruel" and "excessive" increases in the price of gasoline, while the oil-producing countries continued to take advantage of this country's single-minded dedication to preventing any slack in the international oil market.
In the seven years since the oil embargo, Congress has insisted that the price of gasoline -- at any given time -- was absolutely as high as it should or could be, that a tax would signal to the oil producers this country's willingness to pay more for its oil and gasoline, that a tax would be regressive and/or inflationary and, above all, that popular sentiment would not tolerate a tax. Every one of these arguments -- except perhaps the last -- is wrong.
Whenever there are no gas lines (so the argument often goes), there is "enough" gasoline, and hence no need for a tax or other conservation measures. The result is that U.S. oil demand stays just even with OPEC production. That keeps the market tight, and in a tight market small shortages trigger large price increases. It does not require an advanced degree in economics to know that the only way to forestall large price increases is to lower demand below supply.
Thus a tax big enough to significantly reduce consumption -- not the 10 cents a gallon the president has proposed, but 50 cents rising rapidly to $2 a gallon -- not only would lower imports and save billions in foreign payments; it would also be an investment in lower future oil prices. Rather than signaling the country's willingness to pay more for its oil, a serious tax would do just the opposite. It would signal its determination not to swallow price increases indefinitely.
The argument that a gas tax is unfair to the poor is easily met: the tax revenues should be rebated on a per capita basis to every adult American. Because car ownership and miles driven increase with income, that will shift income to those at the lower end of the spectrum. And except for a paper effect on the Consumer Price Index (which could be eliminated through legislation), a fully rebated tax would not increase inflation.
Few other measures would have as beneficial an effect on U.S. relations with its European allies. France's gas tax is $1.62 a gallon, Italy's $1.83 and West Germany's $1.14, yet our friends watch the U.S. tax sit at 14 cents while our cars and trucks consume an astounding one out of nine barrels of all the oil burned in the non-communist world.
What then prevents Congress from seeing and doing what it obviously should? Apparently it is fear of public reaction and a disinclination to exercise the necessary leadership. At this point it shouldn't take much: the American public has watched the country's non-policy on energy not work for seven years, and it is likely to be much more receptive than Congress expects to a real change of direction.
If Congress feels that the president's proposed import fee is an abuse of his authority -- fine. It can defeat the president's proposal -- just as it has defeated virtually every one of his previous efforts to lower oil imports. But this time let Congress find a way that it likes to do the same thing. This country's security has been damaged by Congress' refusal to face reality for far too long already.