Gasoline prices rise every summer, but this year they are even higher than last year. As if the high prices weren't annoying enough, we can look forward to massive displays of ignorant indignation from many of our countrymen. These theatrics typically come from those who can't be bothered to even read an economics blog, yet still prescribe decisive economic intervention on every issue imaginable.
I am pleased to find some reasonable pundits who appreciate of how markets work even more than corporate apologists do. It's even better when these pundits promote productive conversation about important issues. This stands in stark contrast to the knee-jerk legislation that just passed the House, attempting to start a massive diplomatic and economic dispute with OPEC.
Unfortunately, it's times like this that people call for a decrease in the gasoline tax, even though gasoline taxes may be the best tool that we have to manage our relationship with OPEC. Opponents of the gas-tax also seem to ignore the fact that there soon will be no money to build new highways (which may actually be a good thing), not to mention the gas tax's role in recovering pollution costs. Furthermore, a short-term reduction in the gas tax would transfer a good chunk of those lost tax revenues into oil-company pockets: prices may stay high if suppliers are unable to produce additional gasoline on short notice, and they wouldn't fall the full amount if decreases in prices discourage conservation by consumers.
If any SUV-driving suburbanite whines about the cost of gasoline and tries to make it into a political issue, I have two pieces of advice:
In related news: Iranian motorists start paying 25 percent more for fuel.