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June 05, 2006
Put a TGR in Your Tank
Here's a guest item from Peter Coy, the economics editor here at BW who writes a lot on energy:
Martin Feldstein probably lost a lot of friends this morning. The conservative economist from Harvard University, who was Ronald Reagan’s chief economic adviser in the Reagan Revolution days, came out in today’s Wall Street Journal with a proposal to save gasoline using “tradable gasoline rights,” aka TGRs.
The plan has Ivy League economist written all over it. Theoretically elegant, TGRs would most likely be bewildering and maddening in practice. It’s hard to imagine even a Democratic president signing on to a system that smells a lot like wartime rationing coupons. As for George Bush and Dick Cheney, they must be wondering what’s got into Marty lately.
Feldstein says, reasonably enough, that reducing gasoline consumption would be good for the environment and for national security. And the conventional ways of doing that, such as raising gasoline taxes and requiring more fuel-efficient vehicles, are admittedly inefficient. His idea, which has the merit of being really, really different, is to issue TGR debit cards that would be swiped at the gas station like credit cards. Every gallon of gasoline you bought would cost you one TGR unit, in addition to whatever you spent for the gas.
The beauty, of course, is that people who didn’t need lots of gasoline could sell their excess TGRs to people who drive a lot and need extra TGRs. The sellers of TGRs could actually raise their income, which can’t happen if consumption is suppressed through a gasoline tax.
How would all this trading happen? Feldstein says the oil companies could rig their pumps and cash registers so people who needed TGRs could buy them on the spot, while others could sell TGRs at the pump. Banks, he says, would buy drivers’ excess TGRs for cash. Neighbors could trade TGRs amongst themselves.
It sounds a little kooky. On the other hand, you have to give credit to Feldstein for injecting fresh thinking into a stale debate. He just might have a TGR by the tail.
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TGR, "Gresham’s Law" would turn this novel idea into a Black Market. Why not purchase Gasoline exclusively from Canada, Mexico, Kuwait, Iraq, and Saudi Arabia?
If we let other countries dictate the price of Oil to Venezuela and Iran, I guarantee you the Oil Markets would be turned upside down.
Time to think differently.
I do like Martin Feldstein. Didn't he recommend?
removing the cap on the price of Oil and eliminating the draft?
Yes, defending the USA is now voluntary and yet citizens are willing to risk life and limb.
TGR's are a bad idea which even the Russians wouldn't endorse.
Posted by: Paco at June 5, 2006 09:56 PM
Actually it sounds like a good idea in part.
It wouldn't only help suppress the consumption but also help reduce greenhouse gas emissions..
Along with the fact the trading would also help raise income's of people who are not driving as much, and would stop the fed govt taking more money out of pockets. The second option of a tax surcharge is lets see just another way of Bush trying to increase revenue to pay for his stupidity excess namely IRAQ
Posted by: strikernzl at August 5, 2006 07:42 AM