Interesting Proposal on gasoline Markets

Everyone who isn't sleepwalking dreaming of an endless future of cheap gas... Which is is pretty much everyone I guess... *Ahem!* A clued in minority of people agree that the nation and the world need to find a way to use less petroleum and gasoline, especially at the consumer and transport levels. The main sticking point is over what method to use to convince people who are not willing or able to cut back on their use to do so. Most everyone who has given any thought to the matter agrees that raising the price somehow is the trick. Both conservatives and many liberals will not brook higher gasoline taxes. The former on general principle and fear of "big government" and the latter on the principle that higher gas taxes hit hardest those least able to pay. Never mind that ANY resource use tax is going to hit people hardest least able to pay. It is kind of the point of use taxes. Anyway, from the venerable Environmental Economist comes this modest proposal for tradeable gas rights.

In a system of tradeable gasoline rights, the government would give each adult a tradeable gas rights (TGR) debit card. The gasoline pumps at service stations ... would be modified to read these new TGR debit cards... Buying a gallon of gasoline would require using up one tradeable gasoline right as well as paying money.

The government would decide how many gallons of gasoline should be consumed per year and would give out that total number of TGRs. In 2006, Americans will buy about 110 billion gallons of gasoline. To keep that total unchanged in 2007, the government would distribute 110 billion TGRs. To reduce total gasoline consumption by 5%, it would cut the number of TGRs to 104.5 billion.

The government could distribute TGRs to reflect geographic differences in driving patterns. ... Businesses that use trucks would also get TGRs.

A key feature of these gasoline rights is that they are tradeable. Individuals with more TGRs than they need could sell the excess, while those who want to use more gallons than their allocation would have to buy extra TGRs. The gasoline companies could act as clearing houses for these trades, using their gasoline pumps to sell TGRs in the same way that they sell gasoline or to buy TGRs in exchange for the cash needed to purchase gasoline. Other institutions like banks could also trade TGRs for cash. And individuals could of course buy and sell TGRs among themselves by letting others use their card.

The market price of a TGR would depend on the number of TGRs that the government distributed relative to the number of gallons that households would buy if there were no TGR system. The smaller the number of TGRs, the greater would be the price per TGR... The money price of gasoline would continue to reflect the world price of oil and the local cost of refining and distribution.

Note that for this to work, the government doesn't have to "give every adult a TGR debit card," for this to work. That can be handled by banks, gas companies and the like. No, in order for it to work all the government has to do is set the benchmarks, gross total TGR's for the country and net TGR's per person/company and fire the starter's pistol. The market will take care of the rest.

Is it complicated? Yes, but that's not a good argument against it. Why must we assume it is a public good for people to remain ignorant of how much gas they consume, the true cost of same and the inner workings of commodities markets? The argument against by complexity is elitist.

If we remain true to the premise that some sort of mechanism pushed down by the government should be used to strongly encourage people to use less gas, then look at the alternatives to TGR's: higher CAFE standards or gasoline taxes. Even if gas tax money were used to offset social security premiums as has been proposed here PDF link, which solution has lightest government hand? Which has the greatest effect on demand?