I've been playing this out in my head for a while now, and I've posted various pieces of it over the years--indeed, long before gas prices took off.
Here's what I would like to see done as a comprehensive energy policy:
1) Standardize gasoline formulations. Right now there are several different sets of gasoline formulations throughout the US, all designed to help meet EPA Clean Air standards. The problem is, given our limited refinery capacity, oil companies have to make guesses about regional demand--and the cost to revamp the refineries to produce different formulations impacts our prices at the pump. Congress should immediately standardize US gasoline formulations.
2) We haven't built any new refineries in the US since Carter was President. We have to authorize the immediate construction of at least 2 new refineries, preferably in areas away from the existing ones, so that the next hurricane doesn't send us into an economic tailspin.
3) We have to immediately fast-track the siting and construction of nuclear power plants-- at least the 45 that McCain is calling for, probably many more. (France gets 70% of its power from nuclear.) If we are going to shift transportation and home heating away from oil, then we will need the additional electric capacity that only nuclear can provide us.
4) We need to use solar power, our modern day manna from heaven, to break away from carbon based fuels. If we could "find" $165 billion for a BS tax refund, we can find similar funds to finance solar fields and solar panels for residences and businesses. The more units we install, the faster the costs will come down, and the more efficient they will be made--that's the way American technology and business works. Start spending $165 billion per year on solar installations and see what our minds will create.
5) We should set a standard for miles-per-gallon for new vehicles--say 100 mpg. Any new vehicle sold below that standard will be taxed $X per mpg, increasing as you go below 50 mpg, then again below 25 mpg. We can phase the tax in over 3 years or so, to give manufacturers a chance to alter their production. But the point is that if you are driving a vehicle getting 15 mpg, you are hurting the nation far beyond the cost of the gas. We need to be energy independent.
Taxing new vehicles is better than adding a tax to the gas itself--which only hurts businesses and individuals. And by taxing only new vehicles, we avoid any huge impact on the working poor.
6) We need to drill for more oil here in the short run, and expand credits for new production. You can't make the oil companies the villains, penalize them for providing us the product on which we are addicted, and expect them to continue to produce it. Life doesn't work that way.
7) We need to subsidize the electric companies to help them retrofit their plants that use oil, as opposed to coal, to generate electricity (about 1 1/2% of our capacity) and to upgrade their delivery system. If more cars turn to electricity for power, we are gong to need more power generated through the electric grid--and that needs to be upgraded badly.
8) All new construction needs to have a renewable energy component, and a significant increase in energy-saving technology--both active and passive-- installed. Solar panels, energy efficient appliances, insulation, windows, motion-sensitive lighting, CFL fixtures-- and more. We may need to have national building code requirements.
9) We need a cluster of smaller projects as well--things like converting all stop lights to energy saving LEDs instead of bulbs, re-insulation of homes and businesses, design of TV's and computers so that they don't draw energy even when they are "off". More recycling. Better traffic controls and patterns.
Shifting away from oil gives us several benefits-- it should lower our carbon emissions, which should please the global warming crowd. It will lessen our dependence on foreign sources, decreasing the likelihood we will need to send our armed services into harm's way to protect our energy suppliers--which should have the support of military families and their supporters. It will require massive use of our technological know-how and resources, which is great news to Silicon Valley,and the next generation of scientists and venture capitalists.
We can substantially reduce our dependence on fossil fuels, and especially on foreign oil, but it will take a concerted effort involving pieces that not everyone would like. If there was a simple answer, we'd have found it. But do we have the political will to get it done? I hope so. I've sat on gas lines in my lifetime, and I'm watching now how we cater to petty dictators, and allow nations like Iran to develop nuclear weapons, all because we need their oil. I hope my grandchildren won't have to.
Unfortunately, the way modern American politics works, instead of looking at a comprehensive package as a whole, individual constituencies will attack the portion they detest, and something like this would likely never pass. Still, I don't know how else we shift this economy onto more solid ground then we are on--at least until a depression strikes us down.