David Hoppe

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:: 3 bucks a gallon

Get used to it
By David Hoppe

A lot of politicians have managed to get elected over the past 25 years or so by arguing that government is better at creating problems than solving them. This argument didn't keep these folks from wanting government jobs, but never mind. They blamed government for just about everything. The less government, they say, the better off we'd be.

And so we see the kind of government we have today.

You might recall how, shortly after taking power, Vice President Dick Cheney convened a closed-door summit of tycoons from the energy industry to help put together an energy policy. What exactly went on in those meetings has never been fully revealed. We do know, however, that, at one point, Mr. Cheney showed everyone a map of Iraq 's oil fields showing a projection of how those fields might be divided up among oil companies following an Iraq war that had yet to take place.

Anyway, not much in the way of actual "energy policy" ever came out of those meetings. So little, in fact, that President Bush felt the need to address energy policy in his State of the Union speech earlier this year. He said we needed one.

Meanwhile, a funny thing was happening at gas pumps across the nation: The price of a gallon of gas was going up. This summer, that price has hovered around $3. It doesn't appear to be going down any time soon and many experts are saying that it may actually increase by another dollar or more.

While this hasn't appeared to change anyone's driving habits yet, it has made people upset. Some blame the oil companies that, by the way, have been raking in record profits. Many others blame President Bush - they want him to do something to bring the prices down.

But the people pointing their fingers at the oil companies, the president, or both fail to see that today's high pump prices have, in effect, become our country's energy policy. We have reached that point where not having a policy finally becomes policy.

The truth of the matter is that Americans have gone for years, merrily hopping in the car and driving round the corner for a pack of cigarettes or a lottery ticket, without ever having to pay the true cost for a gallon of gas. In the late 1990's researchers at the International Center for Technology Assessment figured out that if you combed out government subsidies and external costs, a gallon of gas in the United States should actually cost between $5.60 and, get this, $15.14.

The ICTA's study identified five categories of subsidies and external costs. Tax subsidies to oil companies, like the depletion allowance, amounted to between $9.1 billion and $17.8 billion per year.

Then there are government program subsidies, which come to between $38 billion and $114.6 billion per year. These subsidies support the use of gasoline-powered vehicles and the infrastructure they require, like highway construction programs, plus the costs of environmental clean-up related to leaking underground gasoline tanks and oil spills.

The costs of securing oil production, including military deployments and the support of regimes in "unstable" parts of the world where oil comes from, were factored in at between $88.5 billion and $140.8 billion a year - and this was before the current occupation in Iraq , which is costing approximately $100 billion a year.

Health and social costs came to between $231.7 billion and $942.9 billion due to health problems caused by air, water and soil pollution, particularly in urban areas.

Finally, there were other related costs, including traffic delays, traffic accidents and subsidized parking, which came to somewhere between $191.4 billion and $474.1 billion a year.

However you cut these numbers, it is clear we don't pay at the pump anywhere near what gasoline actually costs us. This has created habits of consumption that bear scant resemblance to real world conditions. The United States has a little more than four percent of the world's population; we consume about a quarter of the world's oil.

In Western Europe and Japan , government policies have successfully reduced oil consumption. They responded to the OPEC oil embargo of 1974 by enacting high taxes to curb oil use and to pay for its various costs. Since the mid-'70s, oil consumption in Western Europe and Japan has remained flat, whereas our consumption has more than doubled.

But imposing a gasoline tax is the third rail of American politics. Ask Mitch Daniels. He leased our toll way rather than ask us to pay for highway improvements with a gasoline tax. Whether Daniels considers this a kind of government policy or a sweet business deal is unclear. We'll have to live with it, in any event.

Just as we'll have to live with spiraling gas prices. That's what happens when the leadership necessary to form and persuasively articulate government policy is out to lunch. Rather than believe in its own capacity to solve problems, what's left of our government says the cost of a gallon of gas is like a force of nature. The irony is that, this time, they may be right.