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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