by Don Boudreaux on August 2, 2008

in Politics, Prices

Here’s a letter that I sent to the Aurora (Illinois) Beacon News:

Barack Obama proposes
to deal with rising gasoline prices by giving a $1,000 "emergency
rebate" to consumers – a rebate to be paid for by taxing the so-called
"windfall profits" of oil producers ("Obama pitches $1,000 energy rebate checks," August 2).

In other words, a critical
part of Sen. Obama’s strategy for reigning in high gasoline prices is
to subsidize gasoline consumption and more heavily tax its production.
This plan – which increases the demand for gasoline and reduces its
supply – makes as much sense as trying to put out a fire by dowsing it
with jet fuel.

Donald J. Boudreaux


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