A recent Congressional Research Service report titled “Rising Gasoline Prices 2012” states that Congress has “limited short term options … to address gasoline prices.”

The report identifies six short-run policy options – a Strategic Petroleum Reserve release, a gasoline tax holiday, relaxed fuel specifications, limits on refined gasoline exports, limits on commodities speculation, and diplomatic measures – and concludes that it is unclear “what the price impact of these short term options would be” and that they would involve policy tradeoffs which may include “national security, fiscal, and health priorities.”

The report briefly addresses longer-term policy options, i.e. “measures that encourage efficiency, oil production, and alternative fuels. Pursuit of long-term measures in the absence of short-term measures, to the degree short-term measures may (or may not) be effective, may make it more likely that consumers will suffer from high gasoline prices for the time being. However, higher prices may also provide additional market based-incentive for investments by consumers and firms in efficiency, energy production, and alternative fuels.”

What do you make of the report’s findings? Is it true that the U.S.’s short-term policy options are limited? Do you expect higher prices to “provide additional market based-incentive” to develop cost-effective gasoline alternatives?

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