Here is how it would work. Say the government fixed the base price of gasoline at $4 per gallon. Currently, the difference in price (about a dollar) would be put towards research and development of alternative fuels. If the price goes higher (as it did not too long ago) then there would be no additional cost but just the actual cost.
What this would do is create a competitive market for alternative fuel sources and stimulate the production of high-mileage vehicles. Companies developing new fuel technologies can’t compete with the fluctuating price of gas. But if they know it will not be below $4 per gallon, they can get the funding they need and not have to worry about a dramatic decrease in gas prices that could force them out of business.
This is what happened in the fake gas crisis in 1976. Gas prices skyrocketed and gas became short in supply. American ingenuity stepped in and new sources of energy started to be developed. The oil barons saw the writing on the wall and increased supply and dropped the price, putting an end to new fuel alternatives at that time. With a $4 price floor, that won’t happen.
With a price floor, new jobs will be created in America with the increase in new technologies for fuel. We all know we need more domestic jobs to make up for the ones that have gone overseas. It would also help make America a leader in new technologies and we would keep our dominant economic position in the world.
Right now China is poised to become the new world power. The Chinese are polluting themselves to death so their dictatorial government has mandated the implementation of new green technology. Not only will they use a lot of green technology themselves but they will be able to export it all over the world. We should not just sit by and let this happen.
We can be the leaders in new fuel technologies and export them to other countries. But we have to set the market up to allow this to happen. Right now, the market is controlled by the oil companies that want to maintain the status quo. Exxon Mobil Corp. made billions last year but paid no taxes and even got government subsidies. This has to change. Doing nothing at this time will only lead to our downfall as a world leader and will not stop the global climate change.
The biggest boost we got in air quality was when the federal government set high air quality standards for automobiles in the 1970s. The car companies screamed and moaned about how they couldn’t meet the standards and they would go out of business, but it didn’t happen. Instead they developed less-polluting engines and higher-mileage vehicles. We need that type of innovation and creativity again.
With a $4 floor on gas prices, people will want high-mileage vehicles and the car company that makes them will take over the market. If your car gets 20 miles per gallon and gas costs $4 a gallon, it doesn’t take a math wizard to see that if your car got 40 miles per gallon you actually are spending less on gas, even with the set price.
Without government intervention and regulation the market won’t allow for the innovation we need in a timely manner. Our government has always manipulated the market and needs to do so again. We are stuck in a downward spiral. Setting the gas price at a fixed level would go a long way in helping our economy and our planet.
Jeff Blanck is an attorney in private practice in Reno. He can be reached at email@example.com.