Sunday, August 28, 2005

The Oil Situation and One Possible Solution


The Economist magazine cover story this week is about oil. Everyone knows, especially in the Washington DC area (and Los Angeles and everywhere else people spend an average of one plus hours per day commuting to work in their cars) that oil prices are creating a noticable dent in one's budget. The Economist calls for President Bush to wean Americans of their car (oil) habits through the raising of taxes, referring to how George Bush Jr weaned himself of alcohol.

This is, philosohpically, wrong. Bush chose to drink, and stop, personally, effecting only himself. American culture is a car culture, a rise in gas taxes would effect everyone else.

However, there is an option. I don't know, like most Americans never having been in the great cooridors of DC political-military power, whether there is indeed some grand conspiracy linking our military presence in the oil-producing Middle East to a conscious decision to boost the profits of American oil companies. But I think in a alot of people's minds there is this link.

So the solution, a naive one, is simple. Let's tax retail gasoline prices to cover our military presence in the Middle East. A one-to-one relationship. For every dollar we spend having troops stationed anywhere east of Turkey and west of China, let's recover that money through the national sales tax on gas prices, and of course, correspondingly reduce the income tax by the same amount. Afterall, why should those that dont drive cars or drive less than others subsidize those that do? And why, if we believe our military in the Middle East is about oil, should those that dont want to pay for it (both in the financial context and the shame of having an Imperalist government) cover those that do?

Or if we think only 50% of our presence in the Middle East is gas related, then lets cover 50% of the costs through a retail gas tax, again with the important corresponding reduction in income tax for a fiscally-neutral effect. Buying gasoline is voluntary, the income tax is not, so this is better tax policy anyway.

This will directly effect American car culture and allow a rationalzation of our domestic transportation and energy policies with our foreign interventionalist policy. I know this is simplistic - unless of course the 'war on terror' is itself a State-Capitalist subterfuge to support the oil companies - but am just trying to make a point. People who complain about gas prices should also think in the larger picture of our State-Capitalist system.

Only the State can have a taxpayer-funded military overseas, and can grant tax favors to the large oil and gas companies. Let's rationalize these policies explicity through our citizen's personal budgets.

Lastly in the larger sense, there is no such thing as an American oil company. Capital (money) flows freely - to the tune of more than $1.5 trillion per day - and this includes cross-border investments in companies. Chinese citizens own stock in American companies and everytime Americans buy a "made-in-China" product they are supporting the Chinese State-Capitalist system, the government of which does own (most of) the oil companies and through its monetary policy takes a cut of everything exported from China.

Note: this proposal is a vast oversimplification. Gas is used everywhere in our economy, especially in trucking, which delivers goods to market, goods that the less well-off need to live on. Ideally the proposed gas pump tax rationalization would hit only those whose cars valued, say, over $20,000, or a rebate could be given to those whose income is below average.