Energy Taxation: Principles and Interests

Energy policy is an important subject these days, as Americans become increasingly aware of the costs of what President Bush has called "our addiction to oil" and the environmental costs of growing world consumption of fossil fuels. Although some foreign oil comes from friendly and politically stable countries, the world price of oil depends heavily on output in potentially hostile, war-torn, and politically unstable regions. Policy changes can help us adjust over time to an economy that uses less oil and generates less greenhouse gas emissions. This article discusses some tax policies, including energy taxes and energy tax incentives, that can be crucial components of an energy policy that addresses global warming and energy security concerns.