emission rights

[kandrathe]

I agree with most of what you've proposed, but I still don't understand the role of the tariff. You've said the US should use more of its own resources. Why?

Your reason appears to be that the US shouldn't fight wars to keep foreign prices low. But that's the kind of absurd logic you get from half-baked (in both senses) anti-war protesters who don't understand economics. Oil sells at the market price. Unless you want to invade Iraq, Saudi Arabia, Iran, Venezuela, Canada, Norway, Russia, China, Mexico, Brazil, and strongarm US producers into selling at sub-market prices, you can't control oil prices with the military. US interest in oil is not about price, but strategy - in a wartime situation, militaries run on fossil fuels, and control of the supply is critical. But in peacetime? The price you pay is the world price.

One reason, yes. I think you need to re-examine the bigger picture. Our dependence on foreign oil was identified as a threat to national security soon after the end of WWII. US involvement in the middle east parallels the rise in power of OPEC nations (includes, Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, Qatar, Libya, the UAE, Algeria, Nigeria, Gabon and recently Angola). The US has worked arduously to curry favor with about half of them, and has also become equally ardent enemies with the other half. Their dominance of world oil production has waned to a mere 30%, but I believe maintaining price stability is THE strategic reason we must be present there at all. Much of our foreign policy, and military interventionism is directly related to maintaining access to strategic minerals (including oil). In currying favor with the regional despots, we must be intentionally blind, and hypocritical to our principles of human rights, justice, and liberty.

So, what then does an import tariff do? If it is to generate any revenue at all, it must change the price of imported oil upwards.

It would be revenue neutral at the pump, but rather than tax just the consumer, it pushes the taxation back to the importer.

US production would then undercut that price, and shift the US towards depleting local reserves.

If it is important for national security, then the US government should outright buy the oil reserves and then, as the owners, can do with it as they please.

Imports would decline, and therefore so would exports. Someone in the domestic oil industry would get rich, and someone in the export trade would go out of business. (So much for no harm.)

Government action, by definition, is a type of force. When the party acted upon has done nothing to deserve interference, then yes, the action is unjust. However, the commerce, along with proper and necessary clauses seem to apply here, if ever they would. It certainly is within Congresses power to levy a fair tariff on oil for the purposes of paying for the federal costs for transportation systems. I would think that for larger countries, like the US, the terms of trade would be better with a tariff. It would reduce the power of oil exporting nations, and if managed correctly would create incentive for the US to be more innovative now with the vast deposits of fossil fuels it does have (like coal, and oil shale).

Would this decrease consumption of oil? No, since prices would not change. Would this help make the US energy independent? Not really - the US already has plenty of friendly sources of oil, and the power of OPEC is barely a shadow of what it once was. You can buy today at market prices, and you can almost certainly buy tomorrow at market prices. So, I ask again: what is the point of this?

Again, you need to look at the greater scheme. We don't need to jack up the price of energy (fossil fuels in this case). The result would be a shock to the economy, as energy affects the entire supply chain, and the real wealth of the consumer (more money per gas fill means less disposable income). What I propose is to leave oil as it is, but drastically reduce the price for the energy production we do want to move toward. Over time, consumers will favor cars like the GM Volt, since the operation costs will be much, much less, and the supply of "fuel" will be freely available.