How To Solve The Gas Price Crisis

The solution to gas prices is almost right under the noses of those looking for solutions. A fourteen hour plane ride to India or China will do it.

The retail price of gas in China is about $2.60. In a month or two, the price of a gallon in the US could be twice that.

The reason for low gas prices in China is simple. The government takes care of it by giving financial aid to oil companies in the country. They buy crude at $130 a barrel and sell the by-products well below the rate at which they can make a profit. The national treasury underwrites the rest.

In the United States, gas is taxed at both the federal and state level. A big part of the $4 a gallon goes into the pockets of the government. That is not a bad idea. The cash probably does a lot of good for a lot of people. It also lets some state senators buy a new Cadillac every year. Dishonestly is always part of the system.

The American government has an extremely difficult choice now. It can let the economy run into a deep and prolonged recession, one driven to a very large extent by rising commodities prices, or it can make an investment that may run into the hundreds of billions of dollars to cut gas, diesel, and heating oil prices. This cannot be done thought tax credits. It would take too long. The help has to go directly to refiners so that prices can be cut immediately and across the board.

Congress and state officials have to ask what it will cost them if their tax bases are riven by job losses, lower property values, and business failures.

Billionaire Eli Broad recently said the economy is the worst it has been since WW II. That may be true. The price of oil is above $140, and the head of OPEC says to look for that to move to $170.

In the US, the devastation has already begun.

The government has to ask itself a simple question. Why does China write a check to keep energy costs low? And, why is its GDP rising at 9%. They are related. Bring down the price of gas is a form of socialism, but so is Social Security.

Douglas A. McIntyre