Drill, baby, drill? Spill, baby, spill? How about tax, baby, tax?
Why did five million barrels of oil spill into the Gulf of Mexico last summer? "Complex systems almost always fail in complex ways," the report out today from the National Oil Spill Commission argues. And the blame in this case is exceptionally dispersed.
Why was a corporation drilling for oil in mile-deep water 49 miles off the Louisiana coast? To begin, Americans today consume vast amounts of petroleum products -- some 18.7 million barrels per day -- to fuel our economy.
You can't even get past the preface before having to confront this essential truth, which ridicules anyone who claims there's a simple solution to America's energy quandary.
Advocating that we drill nowhere, or heavily curtail offshore exploration, ignores the fact that we have built an economy on petroleum, and if we don't source that domestically, we'll get it from rigs in Nigeria, Azerbaijan and other countries that are, particularly now, more likely to have safety problems than America. Why not just stop using oil, and fast? Even under some of the most aggressive anti-petroleum policies, a Harvard study last year reported, America will demand massive amounts for decades. Kicking addiction isn't easy.
But addiction isn't cheap, either. "Drill, baby, drill" ignores the fact that there are huge, hidden costs associated with our reliance on crude. We are so desperate for it that we sink drilling bits under 5,000 feet of water and dig another 13,000 feet under the ocean floor to reach it, as BP did at the Macondo well. Some of the costs -- exploration, transportation, etc. -- are more or less reflected in the price of gasoline that we see at gas stations. Others -- dependence on unsavory regimes, climate change, air pollution, massive accidents such as the BP blowout -- essentially aren't. This distorts Americans' preferences and disguises how dangerous America's habit really is -- to our environment, health, security and national wealth.
The efficient -- and obvious -- solution is to keep drilling with better oversight, but to make some of those hidden costs more explicit in the price of oil. That is, a gas tax. The money derived can improve our roads, rails, bridges, ports and alternative fuel research. Or pay down the debt. Or even simply be rebated back to households. As the Harvard study last year explained, the most important thing is that Americans start thinking more rationally about the fuel they use. Other options, such as tax credits for buying electric cars, are actually more expensive and less effective.
Cue the comments section accusing me of being part of some sort of communist conspiracy to socially engineer their rights away. (You're totally right, by the way -- the United Nations is forcing me to write this. Go.) Or members of the GOP House reminding me that there isn't the slightest chance that anything resembling an energy tax will pass with them in charge. Fine. So we're not doing the rational thing right now. But at least consider this: Smart social policies such as the gas tax doesn't have anything to do with socialism or some plot to infringe constitutional rights; they rely on the insight of the capitalist that people respond rationally to economic incentives, and that the government should work with the market instead of attempting to mandate it away. Even better -- in this case, government would simply be correcting a market distortion. Perhaps that's why Charles Krauthammer has favored a gas tax for decades.
If Republicans continue to claim immunity from such good sense, they must come up with a reasonable alternative. And, no, not just drill, baby, drill.
| January 11, 2011; 6:13 PM ET
Categories: Stromberg | Tags: Stephen Stromberg
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