Now I’m depressed, I paid $1.99 for gas this morning
On my drive into work, I stopped in a filled up my tank, paying $1.99 per gallon. This represents a 46.2% decline in the per-gallon gas price since the end of the month in September. Thats enough to make one depressed. The U.S. consumers had been responding to this too. How come I wasn’t just thrilled to death?
Cheap gas makes for complacent consumers. Behaviors will drift back towards pre-price-spike habits. Going back to old behaviors is whats going to hurt us when the global economy starts rolling again, demand for gas will spike back up and prices will rise in lock step. We need to make some long term changes and we need to enact them while we have the breathing room to do it.
Now is not the time to get complacent or timid in the wake of a failing economy, now is the time to take a deep breathe and put all of our chips on the table. If you are a poker player, when would you want to raise the stakes? When everyone else is feeling good and the game is rolling along? Or when the game has gotten down to 9 players and 8 make it to the final table? Everyone gets conservative, just trying to make it in. You seize that moment and take advantage of their weakness.
The cheap gas we are experiencing right now gives us enough wiggle room to squeak in a gas tax. Putting that in motion will line up the incentives for moving towards alternative sources. We have this incredible workhorse called the market, lets put it to work. It will do the heavy lifting for us.
Next, as yet another economist is calling for, we force GM into Chapter 11 and we pair it down until its a lean machine. In a radical twist though, I say after GM goes bankrupt and reorganizes, we give them the loan with no other strings attached but repayment. The incentives to produce the ”right” cars will already be there with the tax we put on gas. If they fail to heed the market’s call this time, sink ‘em. We don’t want this get in this game of public-private again ala Freddie/Fannie, lets just be a bank and make a loan, set some repayment schedule and let ‘em operate. It would be tempting to give GM a mandate about what to do with that money, but just as their legacy costs are strangling their neck now, so too would undue legislation.
For the economy as a whole, lets get the fiscal stimulus going. Start by aiding the states with their budget shortfalls. Pumping the money there will keep them afloat and not contracting. This is an immediate measure. State governments would love to be the ones to get credit for saving their constituents during this mess. Lets help them do that. Anything left after that, we get some infrastructure repairing gigs going because we may have some issues there, and, oh wait, there too.
That’s a full court press if I ever saw one. I’m all in.
Tags: bailout, gasoline, GM, taxes, toyota
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November 24, 2008 at 11:34 am
[...] up today here. Eric A. Morris makes the case for a gas tax, he covers issues I didn’t cover here or here. His reasoning is different than mine. I must say he makes a better case than I did, [...]