The Gas Tax and Our Energy Future

In my opinion it is pandering. Tell the American Public what it wants to hear and offer them peanuts. We need real solutions to our energy woes. It is time for Detroit to make fuel efficient vehicles and time for us to continue to develop alternative fuel sources. It is time to break the oil companies grasp on our pocket books.

In my opinion, 18 Cents won't do much to us.

Totally pandering...besides, with the rate of increase of fuel cost, the initial "savings" will be spent making up for the difference in price in a matter of a few days, or weeks.

I'm in the process of moving back to the US, having lived in the UK for about 2 years now. Prices over here are around £1.00/ltr - I'll leave it up to you to do the math, but in the end, the US consumer already pays far less for fuel than their European cousins. One would assume these prices will surely spurn new technology development into higher-mileage cars. Can you imagine a fleet of cars owned by the US Govt. that meets European fuel consumption standards? I wonder how much $ that would save...

The politicians offering us eighteen cents know that they're full of $h!t

Of course it is pandering for easy votes from stupid people who have no concept of reality. The gas tax pays for our nation's infrastructure. Where exactly is the money suppose to come from to rebuild and restore highways and city streets if we institute this tax holiday? The General Fund? We've already in debt up to our great great grandchildren's eyeballs. People need to grow up and accept that we as a nation need to completely change our oil consumption habits and stop looking for quick fixes.

I don't like short term band-aids to longer term problems. To me, it is like getting a temporary 0% interest rate on debt or even a mortage where people pay "interest only" but don't pay down the principal.

After the gas "holiday" someone still has to pay the piper and the problem isn't fixed, just delayed before it hits again - and perhaps much harder next time around! Just ask all those people who got a "holiday" from paying their principal down on their home mortages while paying interest only. When home prices were booming, that worked out okay, for those who could sell the house at a huge profit.

But what about all those now stuck with homes worth less? If they sell the house now (and may be forced to once those no interest loans expire), they might end up with less than the original loan amount and be deeper in debt than ever.

Temporary fixes are not solutions.

Usually.

The proposal is an empty gesture.

From David B., the McCain supporter.
Any Clinton supporter or McCain think 18 cents a gallon is the energy solution we needed?

While it may be pandering, I'll take the 18cents a gallon! Is it any more stupid than the rebate checks. What will people do with the rebate checks? Pay their oil and gas bills so the money goesr ight back to the oil companies that have posted enormous profits. Allpoliticians pander, does this prevent them from making serious improvements in the energy policy? NO! It just gives people like me a few more dollars to pay for essentials like bread and milk. Obama voted for the Bush/Cheney energy bill, he is one person who should not talk about real change. He lives in the city where there is public transportation, he just doesn't undestand some of us live out in the countryside and we have to drive to get to the store, the bank and to work. It is just another example of him not truly appreciating what hard working people who live rural areas live like.

Linda, I appreciate your frustration, but many economists understand that when people have to pay so much for energy, if you reduce the taxes, the producers will up their prices to fill it in because the market has stated that people can pay $4 for a gallon of gas. The profit will go to the oil companies anyway, in other words we will be shorting our infrastructure.

If 18 cents/gallon is no big deal to Barak Obama, let's see him propose raising gasoline taxes another 18 cents. Why not?, it's no big deal.

Greg, stick to the argument, dump the hyperbole.

Sorry Bruce,I don't believe that the producers will up the price 18 cents to makeup the different if we have a break for 8 weeks. What I do think is that they are coming to the point wherethey know they can't soak us on gasoline much further and plan to get us on oil andnatural gas come fall. We do need a comprehensive energy bill, but this economy is serious danger and without soem sort ofbreak it will mean a deeper recession. In Massachusetts they have a free sale tax weekend every August and gues what? Teh stores drop the price sto get people in the door, not raise them. We need to focus on alternative fuels, wind, solar, water, etc, but people who live in rural areas and depend on cars to get to work and everywhere else could use a break. Obama lives in Chicago, let him take the train, there is no train within miles of where I live. Once again, he does not have any sense of how working people are living on the edge of poverty. I am not bitter, I just believe the government already taxes me too much and the 18 cents might mean the diffrence between buying an extra grocery order this summer.

How about they stop double and triple taxing us on everything we do and own. That might make a difference in our lives. Is anyone else tired of paying taxes or is it just me? Scraps here and there help to a small degree but they will get it back with raising the cost of something else we need. The unfortunate reality is that talking about it dose little, until we as a people stand up a take a real stance together we will still be "talking" about it years down the road.

I'd actually like to know how much total tax money the government will lose from the $0.18 per gallon tax cut over the summer and what program will be underfunded as a result. Is there a school program that will not be funded? Is the senate foregoing their summer salary? Would it go to alternative fuel research? Please tell us what sacrifice will need to be made and then ask us if the $0.18 per gallon is worth it.

Greg, stick to the argument, dump the hyperbole.

My point was spot on. If Mr. Obama does not feel that the public is sensitive to gasoline taxes, let him propose raising them.

Is there a school program that will not be funded? Is the senate foregoing their summer salary?

Wendy, gasoline taxes are a dedicated tax limited solely to transportation funding. Schools programs and congressional salaries are paid for from the general fund.

The tax break won't do "much", but it will do "something". A penny saved is a penny saved.

Well it sounds good right now, but it is just a short fix. It will not really solve anything.

The temporary gas tax cut is nonsense. It's not going to encourage American's to change their driving behavior and therefore is not going to move us any closer to cutting our dependence on fossil fuels. I don't like the high gas prices any more than anybody else but a temporary tax cut is pointless.

I'd rather have our government cut the big tax breaks and subsidies for the oil companies. Perhaps they need to start paying the windfall taxes.

In an economy where every other sector is slow right now the oil industry is enjoying record profits at our expense. Cutting the gas tax doesn't do anything to them, they get to keep enjoying their record profits at our expense and it gives them little motivation to invest in non-fossil fuel technologies.

"...gasoline taxes are a dedicated tax limited solely to transportation funding. Schools programs and congressional salaries are paid for from the general fund."

That may be true, Greg, but what's the downstream effect? Less tax money in the US DOT coffers means less money for things like public transportation programs, road repair, even airport security. That money has to come from somewhere. I can easily see a situation where budget deficits for individual administrations could lead to higher local income taxes, tolls, and airline tickets (less security means longer lines at the airport which means more airline staff required, plus delays and cancellations which increase airport fees to airlines which in turn get passed on to the consumer...). When you start looking at the cumulative effect, reducing the gas tax only increases costs down the line for the individual consumer.

Cheaper gas will be great for the SUV's.

We really don't need to maintain the roads or fix the bridges till a few more years.

It's a dumb idea, just like this one. Yes, today is the 5 year anniversary. These guys could not figure out that 18 cents would result into savings of 10-15 bucks a month. Hello? The data is out there. We use 1200-1400 gallons a year per family on average. Who are you helping? Those who drive Hummer, Yucon, Suburban? And take away the money from fixing potholes? Yeah, we will save you 20 bucks a month, great relief, and you are on your own in 2 years for that 1200 repair due to potholes. Brilliant! What a farce!

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Jeez, Jared! Thanks for wrecking a night's sleep. I won't be able to get that frighteningly ridiculous image out of my head all night! 8-))

As to the gas tax debate, it is pointless, silly pandering. Worse, it is diverting attention from the desperate state we are truly in at the moment with regard to hydrocarbon liquid fuels. Our shortsighted, foolish and irresponsible "leaders" in both partes have driven us off a cliff with regard to the 30-year warning we squandered in advance of the global oil peaking that is happening now. If you want to get a sense of what our true energy future will be, read James Howard Kunstler's new novel "World Made by Hand." Not only is it a good read but it is even scarier than the picture Jared posted, if that's possible.

Civilizationally, we are already toast. Pass the butter...

Mark S.

May I add that hearing the embarrassing ignorance and stupidity of the McCain advisor frightens me of a McCain presidency even more. Just what we need -- four more years of fools. We wouldn't see eight years, at least not the USA as we know it. We can't withstand much more Bushism as functioning society. ANYBODY BUT MCSAME!

The tax holiday is dangerously trivial. Robert Pindyck had the correct idea to use "tax shifting" as described by Lester Brown in Plan B 2.0 to encourage conservation of our dwindling petroleum resource while not increasing net taxes. As the professor suggests, the revenue could be used for reductions in payroll taxes. Obama's proposal to offer a tax rebate is the closest to this policy. The most damaging tax is spending about 1 million$/minute on imported oil. Along with this shift in tax, it is necessary to stabilize the minimum cost of oil with a floor price (perhaps $100/barrel) as proposed by H Kissinger after the last oil crisis in order to assure a return on long term investment in alternatives and conservation and to promote life style changes.

Glenn, good points.

The problem with a floor price is that it would have to be worldwide.
It would also not work because there is no ceiling price. A floor price
I'm assuming would mean that if oil fell below its floor price that the
cost would be the same, but the money would go somewhere else,
like to the world's governments, or the UN, or whatever.

I think it is non-workable, but a good idea. I also do not believe
anything that comes out of Kissinger's mouth, after all he is the
one who is lobbying for so many unnamed Middle Eastern interests
that he had to withdraw from the 911 Commision instead of making
his client list public.

Either a floor price, or a carbon tax.

The best solution would be to demand that the oil producing
countries, and the oil companies maintain supply and auto
companies to continually upgrade their economy standards.

After all, there is no shortage of oil nor is there likely to be
one at prices like these. The only reason we have these kinds
of prices is because the volatility is bad anyone who wants to
promote alternative energy is scared to death of losing
their shirt when the price inevitably goes back down.

There are several good things that could be done to ameliorate
prices ... one would be to mandate that all cars be flex-fuel
capable, allowing methanol and ethanol producers to make money
and offset oil supplies.

The other would be to start making electric cars in the form of
the pluggable-hybrid-electrics which would use cheaper electricity
that can be produced from other sources, leaving gasoline to fill
only long distance and trucker fuel demand.

Hi Bruce:

A floor price is easy to implement as a variable rate tax on imported and domestically produced petroleum. Similar to a carbon tax, it promotes efficiency, conservation and alternatives while allowing complete innovation flexibility to adjust to the higher price. There is no reason that it be worldwide. A guaranteed minimum price for oil is the only way our economy can adjust permanently. Oil prices plummeted after the last two spikes and investment and interest followed. It is healthier for our country to reduce oil consumption and therefore imported oil with a tax which stays within our country than with high prices and billions of dollars of trade deficits.

Glenn, that just puts a drag on Americans and American businesses that everyone else in the world would not have to pay - reulting in increased prices for American products and services ... in other words it is doubtful that it would accomplish a good purpose, unless it was international.

The Short Story: Will it give Hillary Clinton the 5 extra percentage points she needs in Indiana ? Because that is what this is all about... not the well being of the American public. Of course, since you are all intelligent human beings belonging to a demographic not so easily bamboozled, you know this already. Right ?
Here's what happens when you drop the federal portion of the gas tax for the summer:
(1) the price goes down - probably about half that amount. 9 cents.
(2) consumption goes up (see supply and demand market economics 101)
Albert and Maureen decide that since gas is under $4.00 maybe they will go and see cousin Jolleen in Tulsa.... load up the Durango kids !
(3) Price goes up to compensate for that consumption - probably about 9 cents.
(4) On way back from Tulsa Albert sulks after gassing up at $4.02 in Tulsa suburb - Maureen sits stoically enjoying the quiet (she's been stuck with Albert for 9 days now and cant wait to get home!)
(5) After labor day U.S. government coffers are in the hole for over one hundred million dollars - money that would have went to bridge and highway repairs.
(6) the Oil refineries made a KILLING over the summer - consumption UP - quarterly profits through the roof ! Yeay ! for Exxon ! Hurray !

But hey - as long as it gets Hillary Clinton her 5 points in Indiana so that we can have a split decision next Tuesday and prolong the inevitable just long enough to elect George W. Bush to a third term ! And - so what - if we have to hold our breath as we cross each and every crumbling bridge across this great land - it just makes it more exciting !
And it strokes Hillary Clinton's ego for just a little longer ! Hurray ! Hip Hip Hurray !


^%$%#$&%^&%^$%^$
(I elected her into her senate seat ... "Fool me once... ")
never - ever again.

ever !

Joshua, you seem skeptical that the answer to every problem is a tax cut? I am sure that is right, right now I am trying hard to lose weight by eating gallons of ice cream under the logic, and to get in shape by completely cutting out any exercise. ;-)

Kirk, we already have all the fuels we are ever going to have to run cars on. They all cost a lot. The solution might involve making cars that run on many fuels ... for instance a pluggable hybrid that can intake energy in the form of any flex-fuel and also plug into the grid to store electricity.

Then we have all these energy source competing with each other for our money, and having to up their supply instead of choking the hell out of us to extort more money from us.

Minor correction:
I missed a decimal point. That will be more like one billion dollars missing from the coffers to rebuild bridges and roads.

Bruce -
I'm right with you on the need for lean government - of course, that means using the revenue that is taken in wisely - as we all know. The argument isn't (or shouldn't be) that tax is bad/ tax is good... the argument is how we effectively use that revenue and whether or not that revenue may be more effective in the hands of the individual. We've been acting 'collectively' (libertarians forgive the bad word) for - what - eight thousand years now (I'd argue much longer as hunter-gatherers certainly acted 'collectively').
America's latest energy crisis is no surprise and it will not go away - it will -NOT- go away. PLAN to pay five dollars for gas - and more.
Solutions for the problem have been debated for decades - and solutions have had roadblocks thrown up in front of them by those with a vested interest for decades.
The heart of the matter is that America can go in two directions right now - by one we stay on the same path we've been traveling and achieve even worse results -or- we take another path that involves staking a claim on America's energy independence -by making a national commitment greater that that of the Apollo space race. In my opinion the answer lies in a massive commitment to alternative fuels, a -wise- exploration of ALL the possible alternatives including those not completely palatable by some from EITHER ideological persuasion - I.E. - explore safe nuclear, clean coal, environmentally 'super-friendly' arctic drilling (although I find the 'Gull Island' ruse to be tantamount to 'area 51' rumors.), and thirdly - I know it's painful and a sacrilegious thought - we START 'using are heads for something besides hat-racks' and begin to use energy wisely (this is the most important solution - though not the sexiest). From the opposite perspective - America could use some realistic assessments from the 'right'. As the 'right' is coming lately to understand full well - it's becoming a nonsensical, not to mention - political liability, to throw up roadblocks in the way of energy policy -progress-. Any good ol' boy free market die-hard should understand full-well that that next wave of economic innovation can and should involve 'the green revolution'. Just as America built a generation long economic stimulus on the silicon chip so can we do the same with a thrust into 'green' innovation - that is what we do best - INNOVATE. We always have been innovators in the past and we better start before we miss the boat - in so many ways. The greatest point in this argument is that it is, indeed, a WIN - WIN. Everybody stands to gain from getting this right....

'unless'...


-and it's important that cynical politicians don't throw America under the bus and use make believe tax relief for short term political gains. I stand with the candidate who exhibited some moral character on this issue.

Joshua, I am first for government that works, then we can work on lean. That is the way you do it in industry. Get a product or process, and then improve it based on measurable targets. Those who talk about government and business never seem to apply economics or math, just talk to these problems.

I think you talk about a space program for energy is used a lot to promote visionary-ism by politicians, but the space program was not mean to pay off directly, and energy policy has to. The idea that we can have a national energy policy makes for nice talk, but it is mostly crazy.

The thing we need to do is to look at why are great system is failing. It is failing because we are hamstrung by the same special interests that claim they are free enterprise in a free marketplace. What a joke, there are interests who own this country and have it parked in their own parking lot and nothing is getting done because the system is broken.

America does not do innovation very well, we do not do change very well. We have for the last 50 years been sure that we were perfect, and any attempt to criticize or change anything has been almost criminalized. We did used to do management well, but now we just seem to do war, and not even that well.

We seem to be developing more of an expertise in totalitarianism and artistocracy these days than anything else.

We have lots of products our legal system seems to have them locked down until they profit the right people.

Bruce-
Agreed on many points. I continue to believe that the American public need a crystal clear goal in order to be able to achieve anything meaningful. The Apollo comparison is just meant to draw a comparison as to the importance in beginning to form a national consensus of sorts. Perhaps something like making 2020 goal for making America 'effectively' energy non-reliant and achieving that goal by means that do not lay waste to our posterity's environment - and coming at the problem from 'both' sides... energy stewardship and good economic policy driven toward that goal. "Speaking to the problem" is indeed the problem... it's past time to begin taking concrete steps forward. It's not 'crazy' to think big about the problems we are all facing - it's crazy not too.

let's see if u put in 10 gallons that is 1.80 and u do this ten times at least over the summer.......18.00 won't even feed the family at a decent restaurant or buy me a pair of pants for work, dig deeper politicians and think of something else like drop it down to 1.50 a gallon and i might consider it a good deal

Joshua, my feeling is that when government tries to mandate something they often make so many political compromises they end up creating the exact opposite.

I think mileage requirements would be useful. I think mandating flex-fuel would be the cheapest beginning solution ... about $100 per automobile, and hybrid engines would be even better with pluggable technology.

Sheryl ... good points. I think to be fair for people who travel that this is aimed at, one filllup per week time 3 months is 12 tankfuls, and most tanks are closer to 15-20 gallons now ... so it is a little more saved per person, but a lot more to be lost per country. But on the other side the price will rise more, and the taxes will not flow into the highway infrastructure fund, and this is a feelgood reduce taxes thing that is at the base a pandering bride for votes.

According to a study by the American Road & Transportation Builders Association, the "holiday" will result in 300,000 American lost jobs, cost $9 Billion in Federal Highway Funds,
North Carolina: 7,071 Jobs and $203,319,748 in federal highway funds
Indiana: 6,390 Jobs and $183,722,596 in federal highway funds
150 economists sign letter opposing the gas tax holiday

If somebody has a non-commercial vehicle getting 15mpg and drives 15,000 miles/year, the annual federal gas tax bill is about $180 -- less than 50 cents/day. That won't even pay for most daily newspapers.

It's a stupid idea, as the money to replace the lost tax revenue would have to be borrowed from abroad, at fairly high interest rates, and would have detrimental effects on the value of the dollar.

The current fuel "crisis" is the result of several decades of stupid transportation policy and even more foolish energy policy.