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Achieving Gasoline Price Stability in the U.S.: A Modest Proposal

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  • Mark S. LeClair

Abstract

The recent volatility of short-run gasoline prices in the United States has resulted in calls for the government to intervene. This paper details a simple means of reducing that variability, utilizing federal tax policies, without eliminating the signaling role of prices in the medium- to long-term. If properly implemented, the gyrations in gas prices could be largely removed, with little impact on the revenue that the federal government generates through taxation. If applied to the markets in nations that have significantly higher gasoline taxes, essentially all price volatility could be removed.

Suggested Citation

  • Mark S. LeClair, 2006. "Achieving Gasoline Price Stability in the U.S.: A Modest Proposal," The Energy Journal, , vol. 27(2), pages 41-54, April.
    • Handle: RePEc:sae:enejou:v:27:y:2006:i:2:p:41-54
    DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No2-3
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    References listed on IDEAS

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    1. Tommasi, Mariano, 1994. "The Consequences of Price Instability on Search Markets: Toward Understanding the Effects of Inflation," American Economic Review, American Economic Association, vol. 84(5), pages 1385-1396, December.
    2. Paul A. Samuelson, 1972. "The Consumer Does Benefit from Feasible Price Stability," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 86(3), pages 476-493.
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