Should U.S. offer tax rebates to offset oil costs?

Good post, Doug. The issue I have with your proposal is that it essentially equates to a subsidy on fuel, which in turn keep demand for energy artificially high. In a situation where prices were artificially high due to a supply disruption (a war, embargo, etc) this would have some merit, as one would expect such a condition to be temporary. In this case, 'smoothing over' an artificial shortfall with a rebate of some sort or a release of oil from the SPR would have merit, as it would prevent damage to the economy from the shock of a temporary shortage. However, in this case, high energy prices are here to stay. Based on the most recent supply forecasts by the EIA, we can expect supply to continue to fall short of demand for the foreseeable future, which will drive up prices (naturally, not artificially; everyone grab their Econ 101 textbooks). The subsidy will only serve to postpone the inevitable, at great cost to the gov't. I would suggest that market entities are better at handling their fuel costs than the gov't could ever hope to be; in that spirit, lowering taxes, and putting more money in the pockets of businesses and individuals to spend as they please (be it on more energy, improvements in efficiency, or whatever choice betters their bottom line the most) is the most responsible choice. Make no mistake, the policy of subsidized energy is a failed one, and a highly shortsighted one at that. It takes only one look at the countries who practice such subsidies (Indonesia, India) to determine this.

Doug: Andy got here before I did and I echo his sentiment. In our present case, fuel subsidies will be next to worthless. As Andy points out, places like India, Malaysia and even Iran have used this practice to build their domestic economy, but it is now being reduced or stopped due to the increased cost of oil.
If the U.S. government released from the "teapot" and all taxes were removed (Fed,State & local) from the pump price, there would be no more than an avg. .60 reduction - and they could not keep it there very long.
The real culprit is the sub prime finance mess as it resulted in Fed intervention and the devaluation of the dollar. At least 30% of pump price is the result of this and the speculation that it fired. This fire is now spreading to the rest of the world. I am not at all concerned about a recession as we are already here, it is what may be coming that has me worried.
It will take many months before all the cost increases are fully realized. Time to think ahead and imagine what 4.00 gal heating oil is going to bring?

I thought the country elected democrats to lower gas prices? Congress makes laws not the president. Now everyone is looking at a Puppet junior senator running for president with A DEMOCRAT congress that will raise taxes in a slowing economy. Wake up America before we find ourselves without adequate jobs, and unnecessarily rationing gas, water, food, and electricity.

Oh boohoo, the Democrats are coming. Lol.

The universal antidote - 4 more years of anything resembling Bush. The thought of it will make one vomit on the spot.

Oh yes. lets us all simply rejoice ,.in the mire of higher taxes,..if we elect a Dem for president,. much less exploration of direly needed of our own domesticated oil,. how many realize that at this very moment China is drilling oil out 40 miles from the Cuban shores?With Cuba's permission of course. Problem is if we get bombed by a Democratic president namely Obama,.. then you can kiss president Bush's tax cut bye bye,and totally forget drilling our own oil.,.especially if we keep our beloved narrow minded Democratic congress,,and reat assuredly there will be higher taxes immediately.,As if we need that duh!MccAIN,..ONLY SOLUTION.

Yes, As a small busness owner on the coast of Florida,I am now at risk of loosing my buisness and my home, due to this entire economic crunch.
But, does anyone really care what we need anymore?

PLEASE...! We actually need gas to cost $ 5.00 a gallon. This price will force about 20-30% of cars off the roads. It will solve a lot of freeway congestion problems. It will also force the Post Office to stop Saturday mail delivery, which we do not really need anyway. This would save billions of gallons of gas, just by doing this one thing. Of course postal rates would drop because the post office driver will work 5 days a week instead of 6 days a week. STOP buying water in bottles. It takes 14,000,000 barrels of oil per year, to make the plastic bottles, to put tap water in and the savings of not buying water like this, could drop 25-35% of your monthly gas costs. Wake up and drive 55-60 miles an hour in your car. You will get 45-65 miles more driving, per tank fillup. We are already paying billions to buy millions of gallons of gas to fight the wars in Iraq and Afganistan. The people in these two countries have been fighting each other for THOUSANDS of years and they are NOT going to stop just because we are there. We need to bring ALL the troops home to protect our own country...

People are fools Bush never cut takes he gave us the cowardly "not on my watch" tax called a deficit to the tune of trillions of dollars of taxs to be paid back on someone elses watch. Every man women and child in ths country owes over $30,000 in Back taxes half thanks to Bush. 60 % of the population cannot afford to pay back any so guess what the other 40% owes over $250,000 IN BACK TAXES for a family of four. How dare the moron Bush talk about Dems increasing taxes, AT least they will be honest. Bush is the owrst thing to ever happen to the USA, Period.