Harvard's Election 2008 Blog

Well, it looks like Barack Obama has finally cracked under the pressure:

 "My interest is in making sure we've got the kind of comprehensive energy policy that can bring down gas prices," Obama said in an interview with The Palm Beach Post.

"If, in order to get that passed, we have to compromise in terms of a careful, well thought-out drilling strategy that was carefully circumscribed to avoid significant environmental damage - I don't want to be so rigid that we can't get something done," Obama said.  

 

 This is disappointing, to say the least, and makes me wonder what sort of policies Obama intends to implement in order to lower gas prices without compromising his energy policy.  If Al Gore and other experts are to be believed, we need to act fast to ween ourselves off of carbon energy dependence, not encourage it by making it cheaper.  See Al Gore's landmark speech to We Can Solve It:

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This is especially problematic when you consider all of the reasons to raise the tax on gas on Pigouvian grounds, due to the externalities involved in burning gas.  Check out this article detailing some of these externalities, which comes to the conclusion that:

Combining all these numbers, along with the other reasons why we should tax gas (e.g. wear and tear on roads), it seems easy to justify raising the tax on gas by at least $1 per gallon. In 2002 (the year I could easily find data for), the average tax was 42 cents per gallon, or maybe only one-third of what it should be. 

 

Without a magic hat filled with new supply, or without lowering taxes, I don't know what Obama could do to lower gas prices, with the exception of stabilizing the trading situation (say, by bringing more stability to the Middle East and thus lowering oil risks and oil futures).   "Change" and "hope" will involve spending the time, money, energy, and investment in capital replacement, research, and lifestyle changes, not illusory hopes for cheaper oil in 30 years.