We came up with this chart by combining two sets of data: the constant dollar price of gasoline and transportation intensity. The first metric is easily understood. Transportation intensity is the total energy consumed in all types of transportation. Since 1949, the amount of energy used in America for transportation has been steadily declining when measured per dollar of GDP output.

If high prices were a big cost to the economy, we should see slowing demand. But according to the Energy Information Administration, March 2006 gasoline sales were nearly 375 million gallons per day. That’s the second-highest March consumption figure in the EIA database. (The highest figure was March 2005.) Indeed, gasoline consumption numbers throughout 2005 were at or near record highs every month – even with the devastating effects of the two hurricanes.

If George W. Bush and Congress really want to reduce consumption, and do so in a way that will cause minimal disruption, then making fuel more expensive is the fastest, easiest way to achieve that goal. And while they are hiking the fuel tax, they should take another simple but very important step: override state and local motor fuel regs and have a single gasoline blend for the entire country.

I am not in favor of higher taxation. The fiscal recklessness that prevails in Congress – particularly the scandalous use of budgetary earmarks – provides no assurance that Washington will use its money wisely. But raising the gasoline tax a dime per gallon annually over the next ten years – a proposal first considered by the Nixon Administration after the 1973 oil embargo – will have a number of beneficial effects. And it will put America’s fuel costs more in line with those of other developed countries and spur migration toward more fuel-efficient vehicles.

However, there are serious downsides to higher fuel taxes. First and foremost, they’re regressive. Poor drivers would get hit harder by the fuel tax than rich drivers. To offset those higher fuel costs, gasoline credits, similar to food stamps, could be made available to families and individuals below certain income levels.

Now, I’m not holding my breath waiting for Congress to increase fuel taxes, particularly when gasoline prices are near their all-time high. Americans generally believe the rights to life, liberty, and cheap fuel were spelled out in the Declaration of Independence. But Americans still pay far less for a gallon of motor fuel than most other citizens in the developed world and America’s motor fuel taxes (which account for about 15 percent of the total cost) are the lowest of any industrial nation. So, while you’re pumping that $3-per-gallon fuel into your Chevy Suburban, remember to tell yourself: gasoline is cheap.