An import tax is my preferred solution too. The extreme volatility of oil and gas prices combined with the politicle hatred of the Majors and the foreign national oil companies makes it more difficult for independents to raise money,and makes the investors take a short-sighted view of investments in solar and wind.

I'd like to suggest that the tax be revenue nuetral, and that the proceeds be invested in renewable energy, mass transit, buying out the mid-eastern ownership of our national debt and subsidies for energy conservation measures like hybrid vehicles. We're importing 14 million barrels every day and thats a phenominal drain on our economy, as is the horrendous cost of resource wars. Every penny we pay in interest to the Saudies and Kuwaities is going to support monarchies that hate us.

And as long as I'm king of the United Siates, I'd mandate that all cars and light trucks sold in the US must be diesel
-electric hybrids with a plug in capacity, or straight electric cars and scooters. Instead of widening roads, how about mandating all cars need to be 18" narrower, and include a congestion tax with electric scooters, autos exempt in all cities. Make all people who can't prove a business use for their light trucks wear a bumper sticker saying "I drive this because I have a small penis"

of course shortly after the bumper sticker law I'd expect to be asasinated...

the trick is to specifically tie the tax to a benefit that the taxpayer can recognise.

In the case of a carbon tax, the trick is to rebate all of the revenues either by lowering social security contributions (both employer and employee), which are highly regressive, or by rebating the revenue as an annual dividend to each citizen (as they do with oil and gas revenues in Alaska).

Either way, citizens who spend less than the average on energy, benefit, regardless of their income level.

(this is less true in the SS case but:

- most citizens work
- most citizens pay SS
- SS is a regressive tax, that discourages employment and lowers wages (true of all payroll taxes) and therefore reducing it should increase employment and drive wages up

For those who do not work (eg the retired) to the extent that the CPI rises, their indexed benefits will also be increased. There may, however, be some groups that need specific compensation).

There is an economic loss associated with any tax (arising from the change in consumption of a commodity that it spurs) but if the income is directly rebated (as above):

- the distortion is minimised (because incomes haven't been changed much)

- in the case of the payroll tax, the problems with that tax are sufficiently large that a reduction in that will have its own positive benefits, which offset the cost of the commodity tax

An import tax on oil, with no equivalent taxes on any other fossil fuels, could be counterproductive. To the extent that this encouraged the use of ethanol, it will also increase the use of natural gas and coal, to wit, there are many ethanol plants in the works that plan to use coal to fire the plants. All fossil fuels needs to be taxed in accordance with their carbon content. Now, if ethanol is truly green and ethanol is truly green and has a really great EROEI, the proponents of said fuel have nothing to worry about, do they. He He.