Raising Retail Taxes on Oil is a Bad Idea

An article by Thomas Friedman in the NY Times today calls for the US government to raise retail taxes on oil. In the past I have discussed why imposing European oil tax regimes in the US is not appropriate.

Even if such a tax could be imposed in the US, Mr. Friedman suggests paying down deficits and funding other non-transportation goals. This would be a bad idea. To avoid negative externalities to the economy, any money raised should be spent improving mass transit, freight rail, and shipping. Otherwise it would be a hugely negative tax on trade and commerce.

There needs to be a US solution which meets the particular challenges of US transportation patterns. and which is politically tenable.  Such a a politically acceptable solution could be a Vehicle Efficiency Market.