High oil prices brought the reality that our purchases were funding hostile regimes. We sought to be independent of imported energy for the purposes of national security.

The price of oil has fallen dramatically and now we are faced with a dilemma; do we still pursue energy independence or do we slowly revert to our old gas guzzling past. The new lower prices have already caused T Boone Pickens to abandon his plan to harness the wind and natural gas.

It appears that some government involvement is needed to get alternative energy off the ground; the difficulty is in creating a gentle stimulation without creating expensive and long lasting market distortions.

Some of my suggestions:

1. Require all new cars sold in the United States to be flex fuel compatible. This creates a market for alternative fuels such as alcohol blends and liquid natural gas. Create tax credits for fuel distributors to install alternative fuel pumps.
2. Tax imported oil to encourage domestic production. Restrict the export of locally produced oil. Remove barriers to imported alternative fuels such as alcohol especially from developing countries. Developing countries can use the relatively simple development of alcohol to pull themselves out of poverty and reduce the need for foreign aid.
3. Add a gas guzzler tax to low mileage vehicles. Create a tax credit to convert commercial vehicles to natural gas.
4. Encourage more nuclear power plants.
5. Avoid heavy government involvement in selecting and developing the future alternative industries. This action is fraught with favoritism and bureaucratic bungling. It would be best to carefully and gently to stimulate the market demand and then let the market find the best solutions.

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