by Denny » Mon 26 May 2008, 01:29:37
$this->bbcode_second_pass_quote('lawnchair', 'B')yron above mentioned one thing a government can do. That is to invest in non-oil transit modes. If nothing else, improved transit increases price elasticity. That is, more people will say "$4 is too much" and reduce demand if there is another option available. The breaking point between "I'll drive or I'll deal with reasonably inconvenient bus/train schedules" is a whole lot lower than the threshold between "I'll drive or I'll have to bike 25 miles".
They could also offer tax subsidies in the transport sector... perhaps incentives to maintain branch-line and double-track main line freight railroads. It would reduce demand (some), but it would also help rising oil prices not have quite as heavy an impact on every other sector of the economy.
This is a good stuff. Likely the smartest thing the government can do. Since the U.S. imports so much, and competes on the world market with other countries' consumers, Congress is only a paper tiger when it pretends to be able to have any regulatory force over prices.
A big question is how will the government pay for it? Well they could start by freezing existing interstate expansion projects and redeploy that money. Putting billions of tax dollars into more interstates is just money being flushed down the drain.