Quote:
Originally Posted by Schneed10
This is quite possibly the worst idea I've ever heard of from an economic standpoint.
While we're busy "innovating" and "figuring things out", the following would happen:
- Consumer spending would drop significantly as the 100% increase in gas price cuts directly into discretionary spending.
- With lower discretionary spending, cyclical companies will undergo large layoffs and unemployment will rise above 7%.
- An inefficient market will be created, one in which gas will be available for $2 - $3 per gallon in Canada. A black market will be created in an attempt to buy gas cheaper in Canada and smuggle it across the border. Then you immediately have a national security crisis.
- Recognizing that drivers will begin to move away from the roads and towards public transportation and recognizing that demand for their services is increasing, public transportation systems will raise prices.
- Worker productivity will be drastically affected as many low-income workers will find it increasingly difficult to get to work.
- The drop in consumer discretionary spending will lead to lower profitability for our businesses, reducing the amount of taxes the government collects, thereby nullifying whatever they collect by enacting a floor on gas prices.
- Other countries will gain a competitive advantage against us as their citizens will only be expected to pay $3 per gallon for their gas, while we pay $6. This creates a scenario ripe for a bigger federal deficit, further weakening the dollar.
You're possibly talking consequences of epic proportions. Easily the worst idea I've heard in a long time.
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I agree with your analysis of this situation, and with SGG's, and I understand the consequences of such a move. I also understand it's a pipe dream to think that anyone in politics would have the balls to suggest such a bill, and that anyone else would vote for it.
With that said, (worldwide) economic disaster is pretty much where we are headed in terms of an energy crisis. This plan obviously wouldn't prevent that, but I think it would lessen the long term effects, and would ensure that crude oil would be available in the future, should it be needed to heat our homes or something.
I don't pretend to have the answers, but I do think a solution is required to this specific issue.