http://samsthoughts.disqus.com/Random thoughts from a random mindenMon, 29 Dec 2008 12:48:22 -0000http://sam.abuelsamid.com/2008/12/27/will-the-environment-fall-victim-to-the-economy/#comment-4989759<p>Chuck, I'm well aware that a gas tax is a market distortion. All taxes distort the market in one way or another. However, there is a problem that most people overlook with the efficient markets argument. Free markets are actually only efficient when there are enough players on both the supply and demand side to prevent anyone from manipulating the market price. The problem is that in an era of huge corporations and relatively few suppliers, the market is fairly easily manipulated.</p><p>As for the real incentives arriving gradually over decades, the aforementioned argument about artificial markets, was quite clearly demonstrated over the course of the past 12 months. The rapid runup and decline of oil prices showed that this is not likely to be a gradual process on its own.</p><p>Finally on the subject of global warming/climate change/whatever, that may be argued. However, there are other good reasons including national security and economic stability that provide perhaps an even better rationale for increased efficiency.</p><p>The problem is the auto industry is so capital intensive and has such long lead times, that as we've seen it's hard to adapt quickly enough to the kinds of fluctuations that we've seen recently. Providing a tax based mechanism to filter out some of the volatility would provide some breathing room to manufacturers allowing them to adjust and produce products that meet the desired goals of improved efficiency and reduced emissions of all kinds, both noxious and greenhouse gas.</p>SamMon, 29 Dec 2008 12:48:22 -0000