Thanks to comparatively inexpensive oil and gas, Americans have a major opportunity to rebuild the nation’s economy and its infrastructure, creating perhaps millions of jobs and a higher standard of living. America’s leadership should seize the opportunity.
The nation’s current energy abundance is due to two factors: the tremendous gains in American oil and gas production due to fracking, and the decision by Saudi Arabia to maintain its own production, causing energy prices to fall.
But fracking’s opponents in the United States could curtail production here, and rising world demand could again push the price of oil from around $60 a barrel to $100 or more.
Public policy in the states and Washington should be able to swiftly reach a reasonable agreement on fracking standards, continue pushing for energy efficiencies, and raise the gasoline tax moderately at a time when consumers are paying 30 to 40 percent less for gasoline than a year or two ago.
That situation certainly applies here in South Carolina, where the gas tax hasn’t been raised in more than a quarter century.
After all, a gas tax is tantamount to a user fee for those who travel on our nation’s roads.
Forging common safety standards for fracking should settle a raging dispute with environmentalists and provide a stable framework for the industry. And improving energy efficiency rewards by reducing demand and stabilizing prices.
Higher gasoline taxes are needed for a number of reasons.
In many cases the old rates are out of date and do not reflect inflation in the cost of road building, maintenance and repair. America’s motor vehicles are becoming more efficient, burning less gasoline and diesel per mile, reducing tax revenues. Stopgap measures to replenish highway trust funds have not kept pace with the growing backlog of highway maintenance. New and better roads haven’t kept up with the demand.
The pay-as-you-go system of highway finance has simply not kept pace and desperately needs overhaul.
Poorly maintained, overcrowded roads aren’t just a threat to human life. They depress economic growth. Politicians who dodge this issue are simply making matters worse for the great majority of Americans who are dependent on good roads.
As a recent study by Harvard Business School professor Michael Porter observes, the current trend in energy supply and prices is “perhaps the single largest opportunity to improve the trajectory of the U.S. economy.”
But we could fritter away this competitive advantage if we fail to take the necessary steps to benefit the nation as a whole.