The Benefit of $7 Gas?

The only reliable way to cut oil use — to reduce the flow of money to Iran, Russia and Saudi Arabia, to reduce the odds that the planet just keeps getting hotter — is to make oil more expensive.

This, of course, is precisely the specter that has been raised by opponents of new carbon rules. Gas costs way too much already! Yet that argument gets cause and effect almost perfectly backward.

Oil has become so expensive mainly because the world is using so much of it. Yes, making it more expensive — about 40 cents a gallon more expensive by 2030, according to two analyses of the current bill — will bring some medium-term economic pain. But the pain can be greatly reduced through broad-based tax cuts, financed with the revenue raised by a good cap-and-trade system (or, as many economists prefer, a carbon tax).

More important, raising the cost of energy could bring enormous long-term benefits. It could make the country more secure, strategically and economically.

“The real concern,” said Nathaniel Keohane, the head of economic policy and analysis at the Environmental Defense Fund, “should be our vulnerability to $7-a-gallon gasoline that is a function of global demand and stagnant supply.” Goldman Sachs recently suggested that $7-a-gallon gas was conceivable.

The New York Times