About two weeks ago I commented here on the whole issue of John McCain proposing a temporary suspension of the federal gasoline tax. In that post I pointed out the market and economic realities of cutting the gasoline tax, and how it would send exactly the wrong signal.

Judging by the editorial in my local paper this morning, it seems my work here isn’t done.

The missive in question, Suspend gas taxes is a textbook example of myopia and good intentions leading to a train wreck of a policy.

I will quote the entire editorial here, and insert my comments like this.

The current spike in gas prices is like the first nudge of the rain-swollen creek over its banks. It tells us something is happening and gives us time to react sensibly.

OK, poor choice of imagery aside, yes, we should react, and sensibly to this situation.

First, deal with the nudge. Congress and the state Legislature should move immediately to suspend all or some portion of current gas taxes. State Sen. Joe Robach says a summer-long hold on state tax collection would save consumers 33 cents per gallon.

If Congress dropped the 18.4-cents-a-gallon excise tax, again for the summer traveling season, consumers at least would have something to balance the rising costs and demand.

Tax suspension is a risky Band-Aid if it gives consumers license to guzzle again without conscience. But high gas prices, along with rising food costs and credit woes, are hitting poor and middle-class families hard, upstate ones especially.

Sadly, the author reaches for the obvious, easy, and wrong solution. As I pointed out in my post about McCain, sending the wrong market signal is never a good idea. And cutting prices, just when people are moving in the right direction (finally!) in terms of the types of vehicles they’re buying and how they’re making transportation decisions, is about the purest example of the Bush mindset–run up immense deficits now and let someone else deal with the problem down the road–that one can imagine. Note that I’m not talking about fiscal deficits here, but the burden placed on all of us by having the wrong mix of vehicles on the road in just a few years when oil and gasoline prices get truly “interesting”.

The claim here that it’s worth the “risk” of higher consumption now to ease the (real) financial burden on drivers is laughable. Current consumption is only part of the issue; we should be worried about the changes in behavior and the rolling stock of vehicles. But make no mistake–lower prices will result in higher consumption.

Yes, lower tax receipts, even for a summer, would depress state and federal treasuries in a time of rising debt and budget deficits. But the answer there is spending discipline. The recession could worsen for families in coming weeks unless the state and federal governments provide relief.

Here we have one of my all-time favorite talking points, and a staple of editorial writers everywhere: Spend money the way I want, but never talk about where that money will come from. If pressed, wave the magic “spending restraint” wand. What, exactly, would the author or anyone who makes such a proposal suggest we cut? Cancer research? School funding? Road and bridge inspection and repair? Military spending? Or what should we do to raise money to offset that lack of revenue from gasoline taxes? Impose a windfall profits tax on oil companies, perhaps?

The OPEC oil-producing nations historically have curtailed production to keep prices high. Additionally, non-OPEC producers such as Russia aren’t putting more in the pipeline.

President Bush must use his leverage as a military supplier and global economic engine to push these countries to increase production.

Yes, this is the point where I involuntarily turned a mouthful of Cheerios into cerealnauts. What leverage does the author possibly think that George W. Bush has with oil producers? Seriously. The man responsible for all but destroying an oil- and natural gas-rich country of 28 million people, based on fabricated claims about weapons of mass destruction is to be believed… why exactly? What good will or even threat does he have left to get oil exporters, even assuming they have sufficient spare capacity, to pump more oil and intentionally lower world prices? At this point in his presidency, why should any country in the Persian Gulf or Russia or Venezuela or Nigeria want to do anything but get the most for every barrel of their non-renewable oil supplies and put as much economic restraint on the US as possible? There comes a time when even the biggest bully in the playground gives the other kids enough incentive to act as a group and take him down; the world oil situation looks increasingly like that day has arrived.

Demand for gas must decline and investment in alternative fuels and energy independence mustn’t flag.

And how does one reduce the demand for a good or service? By raising the price relative to alternatives. And reducing or eliminating the tax on gasoline does that… how, exactly?

Of course, the author reaches for the “energy independence” canard. When will that inane notion die? I know–never. It will be with us as long as it’s useful to politicians and editorialists who don’t want to talk about the realities of the oil market and That Which Must Not Be Spoken, peak oil.

Government finally is pushing higher vehicle fuel efficiency standards. But efforts to create a new generation of cars and trucks that run on biomass energy or fuel cells are moving too slowly. Attention to the immediate crisis ought not remove focus from long-term solutions, many of which could be found by Rochester area researchers.

Those efforts are moving “too slowly”? Fine: Show us how to make them happen much faster. And while you’re at it, magic wand-waving-editorial writer, please tell us how we’ll solve the numerous hydrogen fuel cell issues, which I’ve written about here until my fingers bled.

Don’t mistake my snark for complete disagreement. Yes, we need a focus on long-term solutions, but they have to be the right long-term solutions. Hydrogen is a bust, starch ethanol is train wreck of visible-from-space proportions, and cellulosic ethanol technology is so close to being ready for prime time that it will be “finished” on its own, leaving public policy little to do there except to provide incentives to accelerate its spread once the technology has scaled up sufficiently. Our federal and state government should be looking for more creative (compared to their current pathetic efforts) ways to speed our transition away from oil. A car feebate system, to strongly encourage the purchase of more efficient vehicle, a higher gasoline tax with a payroll tax reduction to offset it, incentives to help the electrification of private transportation, better public transportation and bike paths, would all be worthwhile efforts.

This is a global conundrum. Gas prices in Germany are at $8 a gallon. At the least, in America, taxes should be suspended and pressure applied to producing countries. And plans for a future free of oil enslavement must proceed.

Alert the non sequitur police, we have a felony in progress. Someone please tell me what in the world Germany’s gasoline prices have to do with the suspension of gasoline taxes in the US or the appropriateness of the US applying pressure to producing countries. Anyone. I’m begging you.

And finally we have the breathtaking “enslavement” line. I imagine the author starting at his or her keyboard for minutes on end, trying to one-up Bush’s “addicted to oil” line, and coming up with an even more startling and borderline offensive piece of imagery. Too bad the most immediate remedy the author proposes would only prolong the enslavement of us and our children.

Let me make something so clear that even the people who read this site looking for things they can intentionally misunderstand (and then e-mail me about, as they wallow in false indignation): I really do understand that gasoline prices are a very significant burden on many US drivers. I’m not one of those mythical economists who see the world solely in terms of statistics and lines on graphs, and ignore the impact of policies and prices on real people. But I also recognize that the most effective way, by far, to get a significant portion of the consumers in any country to move in a given direction, even if they don’t realize that it’s in their own best interest and that of their children to do so, is to push them with higher prices. In other words, the economic equivalent of pain avoidance not only works, but it’s one of the very few things that will ever work. (One notable success not induced by price is the way the US turned its production capacity on a dime and made genuine sacrifices out of patriotism to fight Word War II. Until we have another leader of FDR’s stature, we’re stuck with the pain of higher prices as our primary, and some would say only, lever that can move a sufficient people quickly enough.)

So, yes, we must respond “sensibly” to our current situation. That requires us to see the breadth and depth and, most important of all, the time component of the challenges we face, and then be adult enough to accept more pain than we’d like in the short run to avoid a far worse situation five or ten years from now.

Update: It seems that Thomas Friedman has a similar view of this evolving nonsense.