There are a few interesting theoretical points here that make me chew on this issue.

One issue is called ‘market failure’ by neoclassical scholars or ‘local optimum’ in optimization algorithms. And what to do to get to a more global optimum. This is where your tax proposal comes effective.

Another issue is the ‘we’ vs. ‘I’. I’m quite afraid that the way the ‘we’ gets more important won’t make the world more secure. The people in OECD countries probably won’t have enough fuel to drive, but we could afford the investment in bsses or trains. In third world countries oil is the only portable fuel, not only for cars, but also for off-grid generation, cooking and light. The impact of exploding oil prices will be more heavy there.

And excuse me for the ‘not that interested’ part. I don’t want to suggest, that you as a person are not interested in the underprivileged, but that this aspect was not a part of your argumentation.

I don’t know, but maybe we could use the huge taxes on energy use also to help the underprivileged to get rid of energy spoiling appliances.

By the way: we should not forget about the power of regulatory law. The japanese are successfull with that in getting nergy efficient appliences to market. The IEA study ‘Mind the Gap’ discusses many strategies to resolve principal agent problems, but none is so successfull as this simple japanese law. And law comes next to market when we shift the focus from ‘I’ to ‘we’.

Yes, the market will sort this out if WE don’t start making changes in our energy consumption – both the sources and the usage. The forces of supply and demand will dictate that prices will continue to escalate to the point that instead of just worrying about how to afford a family vacation; more and more people will begin to worry about how to afford food when they can’t travel to work because of the cost of fuel.

As a guy with a somewhat “conservative” view of things, I believe that individuals have a responsibility to make, and seek to influence, the changes necessary in order to ensure their own well being. And really, that’s my point with this rant – people better make the necessary changes and sacrifices in their lifestyles now, as painful as they may be, or the market is going to make them for us in a much more painful manner. People need to understand there is no boogie man that can be slain to make all the bad stuff go away.

Of course, raising taxes in order to influence behaviors is a topic fraught with contradictions for both you and me. If your push to raise taxes in Germany were successful, the people most impacted would be the underprivileged, just as they would be here if we raise the gas tax. I don’t know what to do about that. I don’t like tax increases in any form, especially when they are intended to influence behavior. But I have to acknowledge that we continue to waste time and dollars trying to maintain an un-maintainable lifestyle built around cheap energy – we are the “frog in the sauce pan” and heat is being turned up. If we don’t do something to change our behaviors, the outcome will not be pretty.

Sorry for my bad html

Still, your train of thought starts with a rather sarcastic neo-classical analyses, but then you switch to some community-type viewpoint. ‘we’ve lost control of our own destiny’ You now, in the Adam Smith world, the ‘we’ is not that important. The ‘we’ is taken care of by the wonderful miracle called market.

This ‘we’ perspective is getting more and more important. I recently heard , and she is very much occupied with energy security from national points of view. A very interesting woman. In Germany we have the discussions on please not becoming dependend on russian gas.

And regarding the taxes: the green party in Germany once lost elections because they proposed a 5DM/Liter price for gasoline. Every now and then I find myself arguing with someone, that does not want to say that we need higer energy prices. I’m member of an organisation of green businesses, Unternehmensgrün, and I want that organisation to spread a view that energy is not expensive enough. And they don’t want to, they are still traumatised by that election results. And now, the right wing comes with this brilliant idea