As painful as it will be, I think the best thing for America's long-term energy future is an increase in the gasoline tax.
My wife and I have a big Mormon family, so we have a big Mormon wagon--an SUV. We calculated the cost to drive the thing a couple months back, and it shocked us. At least 25 cents per mile. And that's just for gas. So it is with some trepidation that I agree with Jay Evensen of the Deseret News that we need to raise taxes on gasoline.
...increasing [the gasoline tax], with the extra money going to encourage alternative fuels, would be a good way to begin weaning the nation off its dependence on foreign oil and to take power away from oil-rich despots.
As I discussed the article with my wife, she made an interesting observation. If it meant producing our own fuel rather than relying on the unpredictability of world markets, she would be completely in favor of paying four dollars for the alternative fuel equivalent of a gallon of gas instead of three dollars for a gallon of gas from a foreign country.
I've said some disparaging things about ethanol in this space recently, but the one thing that it does have going for it is that it can be produced locally. That probably offsets the fact that it doesn't pack as much punch as gasoline. With research, I'm sure its power can be harnessed more effectively.
I'm not sure if it was true, but I heard recently that as international market oil prices went up, several research and development firms began researching alternative fuels--but then they stopped researching when OPEC glutted the market and the price went down. At any rate, the economics of such an anecdote is clear: as the price of a product increases, the desirability of a substitute for that product also increases.
This is one of the reasons why I support a gasoline tax increase (the other is because those who use the roads should pay for them). Not because it will be easy in the short run, but because it makes sense for America to be energy independent. The way we become energy independent (besides drilling in ANWAR--which I support as well, by the way) is to make it feasible to expend the effort to find alternative sources of fuel. Increasing the cost of gasoline will do just that.