The drop in gas prices has been as precipitous as a drop from a roller coaster. As the gas prices have dropped precipitously, there has been a slow rebound in sales of gas guzzling trucks and SUV's. According to research by Edmunds, low gas prices and fat discounts on trucks and SUV's are reigniting sales.
The US government just bailed out the auto industry to the tune of $17 billion in emergency loans so that they can re-tool to make more fuel efficient vehicles. But if demand for these fuel efficient cars continues to go down with the gas price, what is the incentive for the car manufactures to produce more fuel efficient cars?
In addition, the low price of gas also ups the demand for gasoline which means more gasoline imports and additional money into the pockets of petro-dictators like Hugo Chavez and Mahmoud Ahmadinejad. Not to mention the impact additional demand on global warming.
So what is the solution. Keep the demand for gasoline as low as possible and the price as high as possible. Currently the only way to keep the demand low is to raise the price of gasoline by adding additional tax to every gallon of gasoline consumed.
Think about this; the additional tax dollars could be used on infrastructure related projects, invested in research and development for alternative fuels, developing more fuel efficient cars or for that matter just curb demand for gasoline to reduce the green house gas emissions. These alternatives much better then throwing money on Middle Eastern oil.
Granted that in a recessionary environment, new taxes are a no-no. But, during the campaign, Obama had the guts to speak out against the Federal Gax Tax Holiday proposed by Hillary Clinton and John McCain. Now that he has been elected president he must show the courage and seriously consider this and make it one of his top priorities, as it is a win win solution.
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