The real cost? You mean $4/barrel instead of $70?

 

What, isn't that the real cost?

The real cost? You mean $4/barrel instead of $70?

 

What' date=' isn't that the real cost?[/quote']

 

$70 is the market price. Add to that the first Gulf War, all the military in Saudi Arabia, possibly this Iraq war, and other expenses we pay to insure the area is stable. Instead, it is added to the deficit to be taxed from everyone, eventually.

 

An alternative would be to increase tax breaks for fuel efficient cars, etc. But, that doesn't guarantee lower consumption necessarily.

I don't know, I think we may already be "there". It takes time for the industrial machine to respond to fundamental changes like we've seen in the price of gas. A little patience here may go a long way. We've already seen SUV sales affected (to what degree is debatable, but I think "affected" is a reasonable word). Hybrid sales are through the roof. The public awareness of MPG is obviously much higher. People just don't have a lot of options right now for responding to their new level of awareness through purchases.

 

I'd say wait a year and let's see how Detroit (for example) responds with the 2007 models. That will be a telling indicator.

 

We also need to keep a wary eye on the deficit at the moment. If we give a tax incentive for fuel-efficient cars, we may need to follow-up on that with a general increase in the federal gas tax to make up for the loss. This kind of fiddling makes me nervous -- I'd be very cautious here. The gas tax is about as fundamental to the economy as the Federal Reserve rate.

We also need to keep a wary eye on the deficit at the moment. If we give a tax incentive for fuel-efficient cars, we may need to follow-up on that with a general increase in the federal gas tax to make up for the loss. This kind of fiddling makes me nervous -- I'd be very cautious here. The gas tax is about as fundamental to the economy as the Federal Reserve rate.

 

I agree, the price of gas probably has more to do with inflation than the money supply. I hope the gurus realize that and leave things alone going forward, but I doubt it.

 

If gas gets back down to 1.50 and Americans shun hybrids, it will be costly for us in the future though.