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<< This is an extreme example, but imagine if gas cost $5/gallon and the Government mailed each household (whether they have 5 cars or 0 cars) a $100 monthly rebate check. Smart people would find a way to minimize their gas consumption. Bye, bye 10mpg land barges >>
That's the dumbest idea I've ever heard of. >>
Why?
Even conservative economists will argue for taxing products whose use create indirect costs to society. If gas were free, people would probably dramatically increase their fuel consumption. However, such increased use would impose additional environmental damage. Therefore, gas could not be considered "free" if it didn't require money to acquire. Taxation is a method of discouraging undesirable behavior. Technically, the burning of fossil fuels is considered undesirable behavior.
"But we NEED fuel to run the economy." Indeed, no argument there. This is why I said that we wouldn't want to injure consumers and the money collected in new fuel taxes would get returned back to the taxpayers in the form of tax cuts. If consumers paid $100 billion in new fuel taxes, the government would cut income taxes by $100 billion. That's the idea.
<< The whole of our economy is based on cheap energy. Oil is presently the king here. The less we pay for energy the more rapid the advance of technology and the better our economy the better the individual can purchase newer more efficient cars. We do not need more Government Regulation! >>
In the short-term, yes, cheap fuel is very good for the US economy. However, I fail to understand your association of cheap fuel and the advancement of (fuel-efficiency) technology. That rather goes against rational market action. When the price of oil rises, oil companies invest money in exploration, in order to find new sources of supply. If fuel is really, really cheap, what incentive is there to increase fuel economy? There really isn't. If gas became very expensive, then you would see fairly impressive gains (through research) in fuel efficiency...because consumers would demand it. But if gas is cheap, consumers don't have to care so much....even though excessive fuel consumption is bad for many reasons.
Pointless Government Regulation is a vice, but there are realms of the economy where intervention is prudent. The fuel market is one of these.