It seems we're at the mercy of Big Oil and OPEC. As energy and commodity prices bounce all over the map, it greatly impacts our policy responses. Wouldn't our energy plans for the future be much more realistic if they were based on some dependable financial considerations? It's difficult to make a case for alternative, non-polluting energy sources when the price of oil bounces from $30 to $150 per barrel and back again. Suggestion: Set a fixed price for energy, indexed for inflation, that is high enough to encourage conservation AND justify alternative energy research and development.
If we were to set a fixed price at, say, $140 per barrel of oil and the equivalent, carbon-content-wise, for coal, natural gas, and other fuels, the difference between the fixed price and the market price could be rebated in equal shares to all Americans. This could be called the Green Credit, or maybe something a bit more catchy. This credit could be in the form of a monthly check or direct deposit, perhaps administered by the Social Security Administration. All Americans of driving age would receive a full share, with a family's first two natural children and all adopted children under 16 getting a half share each. (Do we want to encourage baby production just for the sake of earning more credits?)
In our current situation, using a $140 fixed price and $80/barrel market price, our 20M Bbl/Day usage adds up to 600M Bbl/Month, yielding $36B in revenue (600M x $60/bbl difference). If we had, say, 250M full shares (I'm not sure of the age brackets of our population, so it's a rough guess), that would provide a rebate of $144/share. A typical family of four would receive $432 per month (2 full shares @ $144 plus 2 half shares @ $72), just for the petroleum component.
To keep the USA competitive, there would need to be a Tariff applied to imported goods from non-carbon fuel-taxing countries to cover the carbon fuels used during their production and transport.
People could use their Green Credit as they see fit - using it to offset the increased cost of fuel and fuel-intensive products, or to buy more energy-efficient vehicles, move closer to where they work, pay for public transportation, etc. As carbon-based fuel demand destruction set in (such as happened post-Katrina and recently when oil was $147/barrel), fuel suppliers would lower their prices, keeping even more dollars in Americans' pockets. Demand would increase for alternatives, which would stimulate research and development.
Developers would be much more willing to invest in efficient products, knowing that they would not be undercut by a sudden weakening of demand for their wares caused by lower fuel prices. Fleet MPG would go up, while VMT would decrease.
As we become more energy-independent, we would be less reliant on our military to protect our fuel supply, thus justifying a lower DOD budget. By having fewer carbon fuel-related pollutants, our medical bills would decrease. There would be less incentive to 'Drill, Baby, Drill'. As our economy became more efficient, our growing variety of green products would be more competitive in the world market.
This proposal would provide a simple, non-regressive, market-based solution that would not involve the political and practical complexities of Cap and Trade or vehicle MPG limits. We should also do away with ALL energy subsidies (such as those for ethanol, nuclear, clean coal, etc.), and let the markets determine the appropriate solutions. This is something that we can do right now. Win, win, win - lower federal budgets, less pollution, more competitive economy. What's not to like?!!
Update Changed 'Patriot' to 'Green'