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  • Stefan Heck

A bold idea for our time: US sovereign productivity fund


We have a historic opportunity: crumbling US infrastructure, windfall profits, Saudi price cuts undermining our energy security. Pass an asymmetric fuel tax on gasoline users during low prices and windfall oil company profits during high prices to give us security, stability, competitiveness, and productivity. Here is the idea: Reasonable energy prices are good for the economy. Very low oil prices give temporary consumer benefit but undermine energy security: shale gas, renewable fuels, electric vehicles all become less competitive and as we saw in the 1980s set us back decades in foreign dependence as all alternatives get cut back just in time for prices to snap back. Very high oil prices crush our economy - see 2008. Since the 1950s and 60s we’ve cut our transport infrastructure investments (both roads, bridges and transit) in half, resulting in the most crumbling infrastructure of any developed country and a significant competitive disadvantage especially in light of the size/distances in the US. We can fix both these problems with a more sophisticated tax structure: instead of flat gas tax per gallon which is too small to give us stable funding but hits consumers and our economy even when gas prices are $4 a gallon, let’s tax retail gasoline only when prices are low (say below $3.20 a gallon) to bring it up to that level, and tax windfall oil company profits when prices are high - it would only take 1% of oil company profits at peak prices to provide consistent upgrades to make our transport system world class again, and while we're at it let's dedicate more of the investment to urban infrastructure where 70% of economic growth is generated. Historically we have overspent on interstates. Consumers and companies get more stability in fuel prices, better infrastructure, and better security and competitiveness. The time has come to be smart and use our energy boom to create a sovereign productivity fund! If you want an example of how this works look at Norway and Chile and the benefit their oil and copper/mining sovereign funds have had on their economy, both for growth and stability. And if Congress can't agree to get any work done, let's start with a California fund.


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