What could be worse than the problem of high priced gasoline?
How about politicians and special interest groups trying to solve it?
The past few days have been filled with bad ideas floating around.
Worst among these (and it’s a close call) is a bill sponsored by a trio of House Democrats in Washington that would send every American a monthly check when gas averages over $4 a gallon at the course of the month.
The Gas Rebate Act of 2022, sponsored by Mike Thompson, D-Calif., John Larson, D-Conn., and Lauren Underwood, D-Ill., would give each adult $100, plus $100 for each dependent, per month.
As the Wall Street Journal ironically noted this week, that’s not really a discount of anything. “It’s a check from the government to pay for the hike in gasoline prices caused largely by the government.”
Many factors are likely contributing to high gasoline prices. Supply and demand are the main factor, however, with the recent Russian oil boycott adding to the problem. Biden administration policies have frozen new leases for oil drilling on public land, and while most drilling takes place on private land, anything would help. But it takes time to increase the supply.
Yet Washington had a lot to do with inflation in general, while trying to solve other problems.
It may help to remember that last fall the Federal Reserve Bank of San Francisco released research suggesting that inflation could be attributed in part to the $1.9 trillion coronavirus relief package that the Biden administration had signed into law in early 2021.
The Biden-era stimulus money, of course, came on the heels of stimulus bills passed under the Donald Trump administration at the start of the pandemic. Together they have poured trillions into the economy.
Dr Joshua Robinson, professor of economics at the University of Alabama at Birmingham, told the WBMA in Birmingham that he believed the stimulus money was needed during an unusually difficult time, but that with everything the extra money circulating, prices had risen.
The Rebate Act would add even more money to the economy, though it would lead to some delicious ironies. As the Wall Street Journal put it, “The sight of climate change warriors suddenly trying to subsidize fossil fuel consumption is almost worth it.”
The second terrible idea is to take us all back to 1975.
The International Energy Agency has proposed a 10-point plan to reduce global crude oil consumption, softening the shock of inflation at the gas pump while improving the health of the planet.
The main one of his proposals is to reduce speed limits.
Specifically, it calls for a reduction of at least 6 mph on highways. But, since not all highways are displayed equally, an average reduction of 6 mph might look more like a 55 mph drop back on the highways.
You may be too young to remember this, but we’ve been down this (very slow) route before and it didn’t work. Spurred by the oil crisis of the early 1970s, Congress decided to withhold federal funds for highways from any state that did not impose an upper limit of 55 mph. The idea was to save gas, but it quickly turned into a way to make highways safer. Neither worked well.
It’s not that gas mileage science was wrong, it’s that Americans generally don’t obey slow speed limits unless they know a cop is nearby.
For the first seven years, the death rate barely budged. It began to decline in the 1980s due to other factors, primarily safety features and better constructed roads, and this downward trend continued long after Congress let speed limits increase to new.
Highway experts tell me that the biggest contributing factor to road accidents is speed variability, that is, people driving at very different speeds on the same road. Given how many people are currently driving over 100 mph, slower speed limits would make freeways less safe.
And if history is any guide, it would make people angrier too.
I should mention that the International Energy Agency also suggests that major cities impose “car-free Sundays”. Yeah, people will love that.
The third bad idea of the last few days is the one I’ve written about before: temporarily removing the state gas tax. Some Utah politicians have talked about it. Other states have already done so. Like I said earlier, you can’t cheat supply and demand. Prices won’t drop much just because you remove taxes.
The hard truth is that there is no quick fix to rising gas prices. The supply must somehow exceed the demand. The war must end. Inflation must be brought under control. These are difficult things.
That’s not what politicians like to hear. It’s not what ordinary people want to hear when they fill up their car. But quick fixes usually only make things worse.