FIRST THINGS FIRST.

TAX GASOLINE MORE, NOW. IT WILL HELP JOBS AND THE ECONOMY.
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(Published by NYT, April 7, an extremely extended version will be published shortly on wordpress.)
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The Obama administration seems obsessed by Carbon Tax and Trade, a European trick to encourage industry to modernize and become more efficient, after, and only after the first order effect, high taxes on energy, did most of the work.

The administration's approach reminds one of a chimp putting a tuxedo on, in the hope that would help him to type intelligently. Instead, the administration should keep things simple, if it is really sincere about implementing change.

A gasoline tax is not subtle, it is nothing difficult to implement. A gasoline tax would support a rejuvenated Detroit. Indeed people would be forced, and could be incited to buy new cars (that could be done right away, as I advocated, and as the Obama administration has enjoined Chrysler to do; an alliance between GM and Renault, and Ford with Peugeot and/or Volkswagen could do the same). The country, overall, and quickly would save energy, a national defense function (and advance its technology and base thereof, another defense function).

A national gasoline (and more generally energy) tax would also decrease the enormous deficits that are piling up as the USA tries to spend a huge amount of energy (hence money) trying to get out of its desperately erroneous trajectory. That is another natioanl defense function.

But, unfortunately, the Bush, sorry, Obama, economic advisers are deeply entranced in Market Mystique, as Paul Krugman puts it cogently. So they are delighted to set up another market, the Carbon Cap Trade. It took years for the French and other Europeans to make it work, sort of (the carbon exchange is based in Paris). So Carbon Cap and Trade will allow to delay treatment of the national carbon disease by years. It was also highly profitable to a chemical company such as the French Rhodia, and other giant corporations. One of the problem is that the carbon pollution prices had been mispriced (and given to companies too generously).

Of course it would be unimaginable that Carbon Cap Trade would allow some of the friends of the administration, the hedge fundists, to make more money, and it would be unimaginable that the reason that some in the administration want to set it up is that, precisely, it will take years to do so, while making it looks as if they were busy doing something.

If the executive could execute, rising energy taxes could be done by executive order. Compensatory payments could be made to the poor as in Europe.

Another even greater pie in the sky is "Carbon Capture", also pushed by the administration. This has been done in a few places, true. But mostly for economic reasons (typically reinjecting CO2 to push natural gas out). Otherwise it would turn out so expensive that it would make coal too expensive. But coal produces more than half of U.S. electricity.

Patrice Ayme
http://patriceayme.wordpress.com/