Tax fuel at the pump, balance the budget, and save the planet
In this time of huge deficits in Europe and USA a possible solution that I see that could address deficits, CO2 emissions and energy independence is the following one:
Each country should publicly announce that whatever the price of oil per barrel is in the next decade, consumers will pay for gasoline/diesel what they now pay plus a 10% annual increase that will go to the government to pay down the deficit.
This measure will bring down the price of oil as consumers will prepare for higher prices year by year and buy cars with smaller engines and consume less. As an investor in the alternative energy sector (Eolia, one of the largest alternative companies in Spain, was started at my holding company), I know that what kills alternative energy is confusing pricing scenarios. A measure that gives clarity to the cost of fuel will also give clarity to other forms of energy.
And in this way governments would not only make the extra 10% per year in taxes, but they will make a huge gain on the difference between the gasoline prices and the depressed oil prices. And no, this will not be inflationary, it will force engine makers and consumers alike to be more efficient. Already this is the case when you compare the GDPs of Japan and USA and the amount of energy that is required per unit of GDP among these countries. Or among say Denmark and USA. Or Europe in general and USA.
A measure like this can pave the way for the electric car, a development that will not leave the laboratories of this world unless we can all plan ahead in terms of energy costs.And the world will be a better place!
