To accomplish this goal of reducing the nation's need for foreign oil, the tax system should encourage tax credits for research and development of alternative fuels. Oil did not become a critical factor in the nation's success overnight, and the development of alternative fuels will not be a short-term process. Indeed, the process is likely to take several decades before a realistic and effective solution is found. The United States as a nation has a difficult time planning that far into the future, but a short-term approach to this situation is not acceptable.Also within the automobile vein was the legislative mandate that the average miles per gallon of any automobile manufacturer's line should be increased significantly. This resulted in an increase in smaller, lighter cars that superseded the previous "gas guzzlers" that populated the American highways. This also gave increased market opportunities to Japanese automakers who already produced smaller cars that were more fuel efficient than American cars. 2e. Incentive regulation is one way that regulators seek to make utilities more competitive in a free market. As currently implemented, incentive regulations set price caps and provide disincentives for exceeding those price caps. As a result, firms are reluctant to invest in new technologies that might bring greater efficiency and higher earnings. Long-term oriented investment that might yield alternative technologies for delivery utility services are discouraged under incentive regulation, which some analysts believe should be reserved for true monopolies. Market forces should be used in order to align prices for services that are more readily available, and rate payers should be more involved in the development of incentive regulations. 1e. The oil producing countries in the Middle East are a remarkably politically unstable lot. Iran, once heralded as an island of stability, suffered first internal revolution and then extended external war. I |
