Phasing in sounds like a good idea...

Hub Blog posts an article regarding an easier way to reduce our dependence on foreign oil.

The idea is to add a carbon tax of $300 a ton, or about $2.60 per gallon of gasoline.

I like it, but not for reasons of the psuedo-religion of environmentalism.

No - slapping a high premium on oil and gasoline would certainly discourage the excessive speculation going on in Wall Street.  Put a $2.60 tax on a gallon of gasoline, and you will find a LOT of investors who should have no business in Wall Street leaving the energy futures market quicker than you can say "perp walk" and "margin call."

The reason?  People who find themselves grumbling of paying $5 a gallon for gas will reduce demand even further.  The demand on crude oil has been quite low since the stock market crash of 2009, even though we pay an average of $2.60 in Massachusetts.  People like cheap gas (I do, even though I don't drive) but when gas is sky-high, people reduce a lot of their car driving.  When gas went from $4.11 a gallon in June 2008 to $1.59 in December 2008, certainly it put money back in their pockets.

The reason why gasoline prices are high now is because Wall Street thinks that once the economy improves, people will return to their bad old driving habits and hence increase demand, and hence line their portfolios with monster profits.  A $2.60 per gallon tax will not only cool off demand, it will all but freeze it.  The crude oil traders in the NYMEX pits would drive the wholesale price to under a dollar because no one wants to drive when gas is over $5 a gallon.  The floor, then, for a gallon of gas would be around $3.25-$3.50.

The other benefit will be that hostile foreign countries who feel the US will always be dependent on them for cheap oil won't be so accomodating when they go into their little diatribes against America.  The Great Satan/imperialists/warmongers would finally tell these countries that, yeah, your imports are nice, but we've got cars that are more fuel efficient anyway.  So, take your tankers back from whence they came and your fevered conspiracy theories and mumbo-jumbo too.

A better way to implement this gas tax would be to add this tax in 2011 at the end of every quarter.  Adding 65 cents a quarter to the price of gasoline is less painful and won't cause as much panic as doing it all at once.  Or, increasing the tax 10 cents every other week would cause far less panic as long as the public is notified beforehand.

The only problem I would forsee is a few activists screaming (as they're wont to do) "This tax is regressive towards the poor."  Really?  Everyone who drives will pay this tax, but in return for this high tax, innovation would explode exponentially - cars with better fuel mileage, substantial improvements to public transportation, and other developments.  For example, Bermuda has a minimum gas price of $2.00 per liter - or $7.56 per gallon - yet their cars are much smaller and fuel efficient.  So a 20 liter tank of gas that has a fuel efficiency of 5L/100km gives a Bermudian a 400km range - and the island itself is only 52 square kilometers.  Conversely, Bermudians use scooters and public transportation to get around the islands.  The same would happen if the US implements a this tax and the 30 gallon tanks of gas giving only 15 miles per gallon shrink to 10 gallon tanks giving 45 miles to the gallon.  Same distance, but better fuel efficiency.

And I do like the aspect that control freaks who use the environment as an excuse to implement wild schemes like this will not like this kind of tax either because with it, they can't impose their ideals on us.  Environmentalism, along with socialism and communism, is a false religion to begin with - they are religions worshipped by the elite who missed the memo that the United States isn't ruled by a monarchy or a dictator with military fatigues and bushy facial hair.  If you want to worship trees and plants and pray that one day, animals can hold a reasonable conversation with you, go right ahead - but trying to control behavior because your morality must be followed without question harbors resentment and revolt.  Americans don't like to be ruled.

Finally, if the benefits of this high tax outweigh the skepticism, indeed it will be a small cost to pay.  The true scientific proof for global warming has not been established yet, and may take many years to establish, but if we can stave off at least the bad parts, it will be a boon for many people, not a curse.