Why A Gas Tax Holiday is a Bad Idea
Perhaps Econ 101 needs to be refreshed for some of our Presidential contenders.
Now I realize that the facts may be irrelevant in this case, and that McCain and Clinton are just pandering for votes. It IS that time of year, after all. But I thought I would lay out a few reasons why the tax holiday is a bad idea.
First, consider the individual impact of lowering gas prices (assuming you realize a full $.18 drop, which is in a subsequent arguement by 18 cents. You are likely one of two type of gas buyers. The Honda Accord variety, that perhaps fills up once a week for an estimated 8-10 gallons. Taking the high number, you're saving $1.80 per week with this gracious tax holiday. That adds up to a whopping $7.20 a month or $36 over a 5 month period. Thirty six bucks. Now, don't get me wrong, that's a movie date with the wife, but I think I'd rather the money stay with Uncle Sam and our roads continue to get worked on. Even assuming you're like me, and has to fill up his Tundra at 20 gallons a week, the savings doubles to $3.60, $14.40, and $72 respectively. That certainly helps a bit but in the grand scheme of things, $3.60 a week just doesn't help me out substantially for anything.
Second, realizing an $.18 savings is likely not going to happen, for two reasons. First, oil companies may seize an opportunity and raise prices a little more to realize a better margin. Second, even assuming BP and Texaco don't act like little devils, we have this little thing called supply and demand to deal with. If you do waive the tax for 5 months, people by perception will continue to buy gas as they would or worse, buy more gas by taking more trips. As demand goes up...you get the idea. Suddenly that $.18 savings disappears. Oh, and when the tax is restored, your price jumps magically. Guess what doesn't happen? Prices go up easily, but are "sticky going down". So don't expect to see the reverse happen so quickly.
Finally, let's please realize this for what it is, pandering for votes in election season. There is only one candidate smart enough to see this and call it out, Barack Obama. Short term fixes aren't going to correct a problem that requires a long term solution. There is only two ways to lower the price of gas in any significant fashion. Either dramatically increase the supply/refining capacity or reduce the demand. The latter can be accomplished in a variety of methods: alternative fuel sources, higher fuel economy standards, getting us off foreign oil altogether, and many more. I look forward to the day when I'm plugging my car in at the end of the day and letting my solar panels charge the car while I sleep. In the meantime, we can be smarter about how often and how far we drive and lower the amount of gasoline we're consuming.
If I were Obama, in my first State of the Union, I would issue a challenge similar to Kennedy's "man on the moon" mission, and challenge this country to get off of Oil as an energy source, period. We have the technology world-wide, what we lack is the political will. The next POTUS can provide that catalyst. In 10 years we can be off of foreign oil completely. Imagine how much easier our foreign policy will be then.
Let Hillary & John ride this wave and pander til the cows come home. People will hopefully see this for what it is, and Obama will shine the truth on it, and he'll win in Indiana and North Carolina because of it.
Now I realize that the facts may be irrelevant in this case, and that McCain and Clinton are just pandering for votes. It IS that time of year, after all. But I thought I would lay out a few reasons why the tax holiday is a bad idea.
First, consider the individual impact of lowering gas prices (assuming you realize a full $.18 drop, which is in a subsequent arguement by 18 cents. You are likely one of two type of gas buyers. The Honda Accord variety, that perhaps fills up once a week for an estimated 8-10 gallons. Taking the high number, you're saving $1.80 per week with this gracious tax holiday. That adds up to a whopping $7.20 a month or $36 over a 5 month period. Thirty six bucks. Now, don't get me wrong, that's a movie date with the wife, but I think I'd rather the money stay with Uncle Sam and our roads continue to get worked on. Even assuming you're like me, and has to fill up his Tundra at 20 gallons a week, the savings doubles to $3.60, $14.40, and $72 respectively. That certainly helps a bit but in the grand scheme of things, $3.60 a week just doesn't help me out substantially for anything.
Second, realizing an $.18 savings is likely not going to happen, for two reasons. First, oil companies may seize an opportunity and raise prices a little more to realize a better margin. Second, even assuming BP and Texaco don't act like little devils, we have this little thing called supply and demand to deal with. If you do waive the tax for 5 months, people by perception will continue to buy gas as they would or worse, buy more gas by taking more trips. As demand goes up...you get the idea. Suddenly that $.18 savings disappears. Oh, and when the tax is restored, your price jumps magically. Guess what doesn't happen? Prices go up easily, but are "sticky going down". So don't expect to see the reverse happen so quickly.
Finally, let's please realize this for what it is, pandering for votes in election season. There is only one candidate smart enough to see this and call it out, Barack Obama. Short term fixes aren't going to correct a problem that requires a long term solution. There is only two ways to lower the price of gas in any significant fashion. Either dramatically increase the supply/refining capacity or reduce the demand. The latter can be accomplished in a variety of methods: alternative fuel sources, higher fuel economy standards, getting us off foreign oil altogether, and many more. I look forward to the day when I'm plugging my car in at the end of the day and letting my solar panels charge the car while I sleep. In the meantime, we can be smarter about how often and how far we drive and lower the amount of gasoline we're consuming.
If I were Obama, in my first State of the Union, I would issue a challenge similar to Kennedy's "man on the moon" mission, and challenge this country to get off of Oil as an energy source, period. We have the technology world-wide, what we lack is the political will. The next POTUS can provide that catalyst. In 10 years we can be off of foreign oil completely. Imagine how much easier our foreign policy will be then.
Let Hillary & John ride this wave and pander til the cows come home. People will hopefully see this for what it is, and Obama will shine the truth on it, and he'll win in Indiana and North Carolina because of it.