1) Yes , maybe the politicians wouldn’t give the rebates to lower income people, but thats how I would set up the law. If the politicians decided to do something else, well then, thats not my plan and there is nothing I could do about it.

2) There is no saying that the government only has to give the rebates weekly. They could give every1 a gas card (or debit card) that they put money on every week or so. That way the poor don’t have to eat it. Since all the money goes back to the poor and middle class, it isn’t possible for the poor to suffer(as they are getting back all the money). The rich probably don’t suffer b/c they are rich but they are paying for it.

3) Your way doesn’t work. Well not fast enough. You said eliminate the tax on “preferred methods”. Well news flash, they are GIVING money to people who make these products and technology to make it more competitive but it still IS NOT! Eventually prices will go down on these new technologies but I feel it is happening too slow.

Also, the claim that only rich people will suffer (or that they will suffer the most) is ridiculous. Lower and middle-class people will suffer more, since they will have to turn higher-paying jobs that are a little further away because the higher price of gas will make it not worthwhile. Even if they do get “rebates,” lower and middle class people will have to eat the higher cost until they get their checks, which is likely to mean they’ll have to use credit cards or other unsavory means, garnering interest.

The best way to solve the crisis is to lower taxes on gas to help people immediately, and then eliminate taxes on ALL forms of alternative energy research and development (not just the “preferred” methods like ethanol) so that entrepreneurs can innovate without hassle.

Taxes and government intervention are inferior to supply/demand.

I read somewhere that it takes about 2 years for changed consumer behavior to influence the price of a barrel of oil, so we won’t know how people react to $4/gallon gas until then.

If they did raise the gas tax, the rebate is a bad idea.

A gas tax affects lower income people more than wealthier people, so they should make it revenue neutral by cutting other taxes that also hurt lower income people more (such as sales taxes).

In the case of the federal government, there is no sales tax, but they could increase the standard deduction and child credits – since these affect lower income people more.

Also, local governments will then have to allow cab drivers to raise their rates – or charge a fuel surcharge when gas is above a certain price.

This is nut! The price of crude up 39 percent this year. This is the biggest volatility I’ve seen. A lot of people don’t have the right picture. This is driven by demand globally. although there is a lowered demand in the US. There are other places in the the East. This Earthquake is demanding a ton of oil. Increasing Deman even more in a very tight market! Geopolitical have cut down OPIC and non OPIC producation. We are seeing Demand exceeding Supply, that is going to get wider and wider. Its that simple. We have seen prices to the perception of what will continue to happen. The perception that the world will have a supply problem with oil.

The days of cheap oil are over! Seeing 150 a barrell is completely possible in my mind. Three billion consumer are in the market place competing for oil. The US not the engine that we see has driven demand. If US slows down, other countries seem to take up the slack!

Respectfully,
Tony Tovar

But lets not blaim the price shock, blame the dollar inflation. If Government should be doing anything is to try and stop diluting the dollar! The Fed started off bad by trying to help with the “recession.” They should have left it like it was. Americans need a good spankin from their poor spending/expenditure habits! I know if anyone, you could agree to this…That America has become a nation of cosumers and also the leading nation in consumerism!

The assuming that rebates to the public would halt production makes sense and that is where your Classic Thoery thought comes into affect. You assume that people will expacte prices to go up and hence buy fuel efficient cars to meet the hikes. People are doing that now and I belive that what you say is partially true. Not everyone in the economy will then buy a fuel efficiet car. You can see this in the break up of CPI. The Biggest expenses in a house are First (Housing), Secondly (Food and Beverages) and thirdly (Transportation).

Now if you think people are looking to save the rebates, then you are mistaken. The current Savings rate in America for the last few years has been, guess…. A BIG FAT ZERO Percent.

Keynsian thought would suggest that Giving money to the people will do what?
Push out Demand, raise prices and cause inflation.

The Fed lowering the rate and the Gov sending out the stimulus pack has caused exactly this. They have saved us from Recession, i think, but at a cost of inflation.

I wasn’t disagreeing with you, but a lot more has to happen the a raise in gas tax and hence gas prices to get the results you are looking for ultimately. Reducation in Demand for Gas is unlikely as you mentioned in your comment reply, Things still have to be shipped, people still have to drive, but we the people are but a small part of the economy, especially when it comes to oil.

I think i wrote a lot more again … sorry.