Barack Obama’s plan to reduce the economic burden of gasoline prices is to tax the oil companies, and give $1,000 “rebate” checks to consumers. Which, of course, will result in oil companies raising the price of their product to make up for the additional cost of the tax, erasing any benefit (and raising the price of everything that uses oil to get to its destination). Consumers lose, as oil prices and the price of everything goes up. The oil companies lose a little, as the increased price somewhat mutes demand (gasoline is inelastic, but not completely so), and the government gains more power.
Hooray for big government solutions. Hat tip to Rob Port. (One benefit of the seemingly inevitable Obama administration, I’m back in good standing with my old Conservative friends!)