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Higher gas taxes would be a very good thing, and an appropriate way to fund the war on terror.
But an adjustable tax that keeps the pump price fixed would not.
With a target of $3.50, every retailer’s price would be just that, and no tax revenue would result–just a windfall to oil interests.
If that was prevented, you’d have fixed-price gas all over again, albeit at an above-market, conservation-stimulating price.
But the industry would lose the incentive to be more efficient in production, refinement and delivery.
Best would be a fixed excise tax increase of a dollar or two, phased in, but quickly.
