Saturday, May 03, 2008

Gas tax holiday

Other bloggers (local as well as national) have already written about this, but I feel compelled to add my voice to the chorus: the summer "gas tax holiday" being promoted by presidential candidates John McCain and Hillary Clinton is a stupid idea and is little more than cynical, transparent political pandering of the worst variety.

The average national gas price is currently hovering right above the $3.60 per gallon mark. The federal excise tax is 18.4 cents a gallon. Do the math, and you'll see that the savings realized by eliminating the gas tax are marginal. And that's only if the expected savings materialize at all; removing the gas tax could have the paradoxical effect of encouraging people to drive more, thereby increasing demand and making prices higher.

The only real effect the elimination of the gas tax is going to have, in fact, is to deny the nation's crumbling transportation infrastructure several billion dollars in needed funding for construction and maintenance.

Americans have historically paid less for gasoline than people in many of the world's other developed nations, and that's why the run-up in fuel prices over the last few years has felt so painful to us. But the fact is this: high gas prices are here to stay. Regardless of how one feels about the "peak oil" theory (and I personally think there's at least some truth to it), the simple fact is increasing demand from rapidly-growing economies in places like India and China, continuing instability in oil-producing regions such as Iraq and Nigeria, a continually-weakening dollar and the gradual depletion of older, easily accessible and cheaper-to-produce oil fields (thereby requiring the shift towards more expensive fuel sources such as deep-water fields, tar sands and, unfortunately, the ecologically-destructive and famine-inducing biofuels scam) are all market forces that are forcing the price of petroleum ever higher. Shaving a few cents off the cost of each gallon of gas by eliminating the gas tax is not going to have much of an effect on these myriad market forces: it's not going to increase the supply of gasoline, and it's not going to decrease demand.

Fortunately, there's little Congressional support for the summer gas tax holiday, so this idea is unlikely to go anywhere. But this isn't the last time we'll see politicans float ineffective "solutions" to the problem of high gas prices: it is an election year, after all, and nobody has the guts to tell Americans a fact they don't want to hear: that the only true solution to expensive gasoline is to use less of it.

1 comment:

M1EK said...

Whenever I'd argue with people who would blithely assume that the market would take care of fuel efficiency for us, I'd remind them that the most likely scenario when gas prices finally went up was that first we'd see people arguing to remove what little gas tax we have (far too little to pay for the road costs we incur as it is), and second, we'd see demands to subsidize gasoline via the federal and state general funds.

1 down, 1 to go.

This is why CAFE, as sucky as it is, was necessary anyways.