Global Warming: A Real Solution

According to Terry Tamminen, former director of the California EPA, the true costs of our oil dependence run as high as $807 billion a year ? or $2,700 for every U.S. citizen. If all the hidden costs that Americans currently pay for oil were reflected in the price at the pump, gasoline would cost more than $13 a gallon. In short, taxpayers and consumers are essentially giving the oil industry a subsidy of $10 for every gallon of gas sold in America. If we simply eliminated those subsidies and created a truly free market, renewable sources of energy would beat oil ? as well as nuclear power and coal, which receive equally grotesque subsidies. It is only through these giant subsidies that gasoline has a prayer of competing with alternative sources such as biofuels and wind, which produce energy far more cleanly and efficiently, at far less cost.

Back in the 1970s, President Jimmy Carter attempted to level the playing field by creating incentives and minimal subsidies to jump-start clean fuels in the marketplace. But then Ronald Reagan took office and ordered the solar panels that Carter had installed on the White House roof torn off. He rolled back fuel standards for automobiles, killed federal incentives that had given America a commanding lead in wind and solar power, and doubled our oil imports. Reagan's efforts fueled the current oil addiction that has us acting like a crack-house junkie rolling old ladies for drug money. Our jones for petrodrugs has not only superheated the planet, it has embroiled us in the Mesopotamian quagmire and made America a pariah among civilized nations, damaging the cause of democracy across the globe.

Our deadly carbon dependence is the result not just of subsidies, but of a deliberate criminal effort by the oil companies and auto manufacturers to subvert the free market and rig the system in favor of their products. Between 1920 and 1955, General Motors, Standard Oil, Firestone and others financed a front company that systematically bought up and destroyed electric streetcars in forty-five American cities, including New York, Philadelphia, St. Louis and Los Angeles. In an illegal conspiracy to eliminate mass transit, they tore up the rail lines or buried them beneath asphalt tarmac from oil refineries, replacing clean, efficient streetcars with more costly and filthy diesel buses. During the Truman administration, the Justice Department successfully prosecuted GM and the oil companies for antitrust conspiracy, but following their convictions a friendly judge allowed them to walk, slapping one executive with a $1 fine. The crime was done.

In 2003, the Justice Department didn't even bother to investigate automobile manufacturers who maneuvered to kill the electric car. After suing California to repeal a rule mandating the production of cleaner vehicles, GM recalled every one of its EV-1s, its popular all-electric car, and sent them to a demolition yard to be crushed. GM also sold its stake in the car's nickel battery system to none other than Texaco ? a company with a vested interest in keeping the innovative technology under lock and key.

The truth is, we have designed a perverted market system that rewards oil companies, carmakers and other polluters for bad behavior, allowing them to dispose of their wastes into the publicly owned air for free. But new technologies and materials and the mounting anxiety over global warming give more cause for hope than ever before. With a little tinkering we can reconfigure and rationalize the market so that it punishes bad behavior (releasing carbon dioxide and other greenhouse gases into the atmosphere) and rewards good behavior (reducing pollution and conserving energy). Such a move would unleash the extraordinary entrepreneurial energies of our nation so that every American could profit by devising and implementing their own solutions to global warming. With a rational marketplace, new materials and technologies would allow us to rapidly rerun the playbook strategies that nearly liberated us from oil in the 1980s. Within two decades we could get off imported oil completely ? this time for good.

If we really want free markets in America, all direct subsidies to the fossil-fuel industry should be eliminated. In addition, indirect subsidies or "externalities" ? the hidden costs of global warming ? should be accounted for through a carbon tax. By taxing pollution instead of productivity, America could spur a wave of technological and commercial innovation that would rival the Industrial Revolution, harnessing the power of the profit motive to solve the greatest crisis facing our planet.