The rapidly escalating price of gas has elevated the broader topic of energy policy to a top tier campaign issue this year. While it may not become "THE" issue, it may well be the most important topic for GOP candidates to get right this year.

The problem is the optics of the issue. As former WSRP staffer Josh Kahn has noted, Republicans being forced to take tough votes that makes sense economically but are not so sunny politically poses a substantial problem.

The intellectual merits of their positioning are sound. We already have evidence that shows oil companies pay $3 in taxes for every $1 in profits they make. That makes a windfall profits tax dubious on the surface, even before one considers that such onerous taxes on businesses inevitable find a way to be passed on to the consumer.

Yet, even beyond the green-eye shade view of windfall taxes, our historical record with such policies isn't so impressive:

What began as a compromise by the Carter administration to lift ceilings on oil prices grew into a bureaucratic nightmare that Congress in 1984 called the "largest and most complex tax ever levied on a U.S. industry." The law produced nowhere near the revenue it promised, made the country more reliant on foreign oil, and generated reams of red tape, according to a 2006 report by the nonpartisan Congressional Research Service.

Specifically:

-The windfall profits tax raised a total of $40 billion, instead of the $227 billion initially projected, and generated no revenue after 1986, because oil prices fell and domestic production was lower than expected.

- The tax reduced domestic oil production 3 percent to 6 percent because it increased investment risk.

- Imports increased 8 percent to 16 percent because of the competitive advantage the tax gave to foreign oil companies.

It shouldn't take a preeminent economist to figure out reducing domestic supply of energy is in neither our short nor our long-term interest.

Nevertheless, the populist positioning of the bulk of the American electorate on gas prices is clear (latest evidence here). Republicans must respond with full spectrum energy policies.

As such, kudos to Norm Colman for having the political foresight to offer such thinking in a hotly contested campaign, including expanded use of domestic resources and serious efforts to expand usage of nuclear power. Concurrently, one can see him talking about biofuels, green technologies, and energy efficiency.

There isn't one answer to $4 (and rising fast) gasoline. There are short and long-term solutions based on the economics of resource recovery and technology development. Environmentalists and their allies like to howl "we can't drill our way out of this problem." No kidding. You can't tax your way out of it too.**

More importantly, while green technologies like plug-in cars are no doubt the future in many respects, we need a bridge of energy resources to get us to that decades away place without severe economic pain. Die-hards on the left might not think economics matter as much as long as we're doing right by their eyes to Mother Earth, but wouldn't you know, soaring gas prices mean the American public writ large, and even a plurality of self-identified liberals, support increased drilling.

The Democratic response to such challenges seems entirely too focused on the technology of the future, which is years, and many cases decades, away from widespread commercial availability. Their response in the meantime seems to be tax oil companies, drive less, and find other ways to conserve. Talk about the Audacity of Hope...because that's all they're offering.

More importantly, it does indeed look eerily like the return to the Jimmy Carter era that we've tried before and didn't seem to work out so well. McCain laying into Obama with gusto on that theme (as he has done before) is an excellent rhetorical step forward in this debate.

McCain's only policy proposals are not perfect. Conservatives have said and written much about their objections to his position on ANWR as well as cap & trade. Yet, it behooves Republicans of all strips to step forward with full spectrum energy policies that offer near-term solutions on gas prices, long-term solutions on improved energy independence, and that continue to remain environmentally prudent.

Today's thought provoking Robert Samuelson column offers the alternative:

We all know that gasoline is at $4 a gallon and oil is at $135 a barrel. But if you think that's the end of the story, don't talk to economist Jeffrey Rubin of CIBC World Markets. By Rubin's reckoning, we've barely passed the halfway point on a steady march upward that will take gasoline to $7 a gallon and oil to $225 by 2012. Despite fluctuations, the underlying rise, he says, will have pervasive and surprising side effects.

More importantly, perhaps:

The world may have arrived at Peak Oil, when dwindling oil reserves no longer permit much annual increase in production. This may not be literally true; estimates of vast undiscovered oil reservoirs imply that Peak Oil is decades away. But governments that control 75 percent or more of known reserves are behaving as if Peak Oil is already here. They're hoarding a scarce commodity by limiting new exploration projects. Meanwhile, production at some old fields is dropping rapidly. Spare capacity has been depleted, as demand outruns new supply. [emphasis added]

That is exactly why our own national energy policy has to include expanded use of our own domestic resources. Republicans have to run on that given Democratic refusals to embrace the obvious need for expanded and more affordable domestic energy.

**h/t to Michelle Malkin for that line, which she delivered on TV yesterday.