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From one of the links Leannan posted...
This is quite interesting because, IIRC, there were a few people on here advocating exactly this kind of thing for the US. That is, to have some sort of price rationing at different levels controlled by some sort of account that kept track of your purchases. i.e. 1 - 500 gallons will cost you $X and 500 - 1000 will cost you $Y. and so forth.
This brings me back to a comment that someone made. We will eventually have rationing - it is only a question of what kind of rationing.
If we do nothing, then we will have rationing by price. The price will climb until it forces demand down - by breaking the back of the economy if need be.
We can have rationing by availability, but prices could be held down. Meaning that people will have a hard time finding enough gas - it will be affordable when they find it, but it could be hard to find.
And then you can have rationing using ration books like we had in World War II.
What you describe is interesting though - it is sort of a combination of all 3 options. You could have a fixed allotment that you could buy at a reasonable price, and then you could buy anything more than that on the open market.
If crude prices climb, it isn't clear to me how you would be able to maintain a low fixed price at the pump for people.
We'll have a whole new innovative way of rationing: by economic collapse.
Price is a rationing mechanism. It isn't that we will have rationing; we do have rationing. The only question is what kind of rationing we want to have or what is the most desirable.
If you cap the amount of gas that can be sold and then you issue gas credits in order to purchase that gas, both the gas at the pump at the credits will have a price determined by the market. I don't know if the basic price will be "reaonable" because the definition of reasonable depends upon one's point of view. However, it is clear that one will be paying extra on the margin if one decides to exceed one's ration as defined by the number of gas credits issued. In any event, those staying within the basic ration will be paying less per gallon than those who are not. On top of that, those who consume less than the ration or no gas at all can actually reduce their effective price by selling their ration credits on the open market.
By the way, if there is a cap place on the amount of gas sold by way of gas credits, it seems likely that the basic price would go down given the fact that overall demand is being decreased.
What you do is you have two tax rates. A low rate on the rationed amount, and a very high rate on the free-market amount. If deemed appropriate, the lower tax rate could be negative, i.e. the rationed price would be subsidised by the free market rate.
And of course rations should be negotiable. If I can get by with half my ration, or no gas at all, then I can sell my credit to a big user.
No... The point of rationing and taxing automobile fuel is not to set up profit opportunities for urban dwellers and such. They already get subsidized transport via bus and subway systems. And it is not to provide subsistence to retirees either.
Allowing a secondary market in "rations" defeats the goal which is reducing fuel use. Let's keep it simple.
Yes, when gasoline gets to $3.50/gallon; let us add an extra $1.50 gallon tax and use the money for such things as:
1) Higher food stamps and rental assistance for the working poor (take $ out of one pocket but put it back into the other)
2) Reduced Medicare premiums (likewise for retirees)
3) Reduced Payroll taxes (likewise for workers)
4) Building out Urban Rail
5) Reduced (Federal $ to local jurisdictions) property taxes for low energy TOD areas.
6) Eliminate property taxes on railroads that electricify
7) Renewable energy generation subsidies such as wind, geothermal, solar, hydro.
$5/gallon at the pump will change some behaviors (and is impossible politically). But it is simple and will work.
Best Hopes,
Alan
Economists will tell you that the most efficient form of rationing, the one that does the least harm to the economy, is by price. Letting the price rise will automatically cause those uses which can be avoided or substituted most easily and cheaply to be cut back. Uses that have no effective substitutes will be the last to be cut. This is the ideal goal of an economy responding to shortages, and trying to achieve it via centralized planning and a rationing system is virtually impossible.