Sunday, January 28, 2007

Bush and ethanol nonesense.

Charles Krauthammer gets it right:

The President's SOTU energy segment (mainly about ethanol) was nonesense. Bush probably knows it (Cheney sure does), and why he beleives that talking nonesense is good politics is beyond me.

Krauthammer proposes 3 steps:
1. Drill in ANWAR.
2. Nuclear power.
3. A gas tax.

The first two will be adopted sooner or later, as there is no way around them. But - from adoption (implausible, politically impossible at the moment) to maturing - that is to bearing fruits - there is a 10-20 years gap. They won't help reduce oil imports or consumption in the next 20-30 years. Nevertheless - they need to be done - the energy problem won't go away until then, and there won't be better solutions.

As to the gas tax - it will have an immediate impact - but what impact?
It will reduce consumption some - how much is not clear - I guess a few percentage points. Not that much. And it will have a negative impact on economic growth; how much is not clear - maybe not catastrophic.
It might be worth giving it a try, though I doubt it.

One thing is obvious to me - we must not increase the overall tax burden, so if a gas tax is adopted, it must be offset by reductions in other taxes. Fat chance for that !

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