Romney went so far as to make high gas prices out to be a welcome reality for the foreseeable future, one that people needed to learn to live with. When lieutenant governor Kerry Healey, a fellow Republican, called for suspending the state’s 23.5 cent gas tax during a price spike in May 2006, Romney rejected the idea, saying it would only further drive up gasoline consumption. “I don’t think that now is the time, and I’m not sure there will be the right time, for us to encourage the use of more gasoline,” Romney said, according to the Quincy Patriot Ledger’s report at the time. “I’m very much in favor of people recognizing that these high gasoline prices are probably here to stay.”
That’s problem with politics in the age of searchable online news archives is that it’s the opposite of an Etch a Sketch: Nothing ever disappears. It just gets taken out of context. And that’s what’s happening to both Romney and Obama here.
There’s an argument that fossil fuels currently represent a market failure: They impose a large cost on society in terms of environmental damage, but none of that shows up in the price we pay for them now. So fossil fuels look cheaper than they really are. It’s just that we’re paying for them in installments: Some of the costs will be paid later, when we have to adapt ourselves to a warmer Earth.
Economists and environmental experts on both sides of the aisle have argued that we should thus tax fossil fuels more heavily in order to bring the price into alignment with the costs. Romney now calls some of these Obama advisers the “gas-hike trio,” but one of his economic advisers, Harvard economist Greg Mankiw, has long made the same argument. He even created a club — “the Pigou club” — to build support for a carbon tax.
What no one believes, however, is that it’s good for oil prices to go up because of temporary instability in Libya or Iran. That’s not responding to a market failure. It doesn’t give consumers or energy producers new information they can use to make long-term investment plans. It doesn’t price in the environmental cost of fossil fuels. It’s just painful volatility that holds the economy back and makes oil-producing countries temporarily richer.