Since today’s high prices will inevitably drop, as high commodity prices always do, institute now a standby tax on oil. The federal government should tax all oil extracted or imported into the U.S. on the difference between the market price and the standby price of, say, $80. That will create an “umbrella” price so that Persian Gulf or Venezuelan oil never again prices North American oil out of the market. And it will incentivize the demand-side changes necessary to reduce consumption.
The federal government will need new revenues anyway in the years ahead. Better to tax oil than work, saving, and investment.
Frum saying something I’ve yet to hear the president say. Energy security wil require higher prices. The sources of fuel (oil, biofuels, etc) that can be produced in friendly countries just aren’t as cheap as in the Persian Gulf.
Your move, every presidential candidate (Barack included)
You know why the presidential candidates haven’t been saying this? Because it can’t be done. Setting aside other oil exporters like Colombia with whom the US has signed free-trade agreements, this is almost certainly an illegal measure under World Trade Organization guidelines. You can’t just impose a new tariff like this for the sake of domestic protection. Other countries would certainly obtain authorization to retaliate, and you had better believe that big Latin American oil exporters would take the opportunity from the WTO tribunal to impose countervailing duties on US imports. (Just a couple days ago the President of Brazil expressed concern regarding the US-Brazil trade balance, and Brazil would certainly have a grievance as they sell the US 163,000 barrels per day of oil.
So in conclusion, tariffs are an inefficient and illegal means of promoting energy diversification. If you want to tax oil, do what BC has done and tax its consumption - regardless of where it was produced.