Hillary Clinton and John McCain have called for a suspension of federal taxes on gasoline, on the well-intentioned presumption that such action would lower prices at the pump and take some of the burden off American drivers. President Bush has chimed in with his own version of the notion. Barack Obama opposes the idea.
Obama's right.
Dropping the taxes for the summer driving season, as proposed, would give consumers a tiny break for a short time. But most of the tax break wouldn't end up in the pockets of drivers. The price of gasoline is driven by demand, not supply, and the price at the pump will rise to the level dictated by that demand, regardless of the portion of the price that taxes represent.
What that means is that a temporary dip in prices would be followed by increased demand, which would drive prices back up to what economists call the "market-clearing rate." And the increase would go to oil companies rather than the federal treasury.
In the meantime, revenues for the federal highway trust fund -- where the federal gas taxes go -- would decline. That means less money for highways, bridges and other parts of the transportation infrastructure. Here's what Len Burman of the Tax Policy Center (affiliated with the Urban Institute and the Brookings Institution) said:
Unless the plan’s aim is to boost short-term profits for petroleum refineries, the proposal makes no sense.
And this, from Market Watch:
"I don't think that a gas-tax cut would result in a really big drop in gasoline prices," said James Hamilton, a professor of economics at the University of California San Diego. It's simple economics: Without a corresponding increase in supply, he added, the price would rise again.
But cutting taxes sounds good, right? Got to burnish those populist credentials, y'all. So we'll keep hearing this bafflegab until the campaign and media attention shift to the next foolishness.
We are missing the point; Prices are high because the government is pandering to the global-warming, eco-wackos, Branch Algorians, who won’t let businesses build refineries, won’t let us drill in the Arctic, off-shore or any other place. Wells are capped in Texas, Oklahoma, Kern County and who knows where else.
There is no short term fix - but if we build and drill NOW, we can have a future 5 years down the road.
Come on people - this is basic economics, not rocket science; More supply (oil) will drive the prices down - if only the eco-freaks will let us drill, drill, drill! Quit pandering to the eco-weirdos!
The era of cheap oil ended decades ago, America’s response to this unwanted news was denial and even bigger vehicles to accommodate suburban sprawl and personal vanity, and as NASCAR became hugely popular, the rest of the world was and remains horrified. The oil executives testifying before congress recently, all said they had no interest in building refineries, they, more than anybody, understand the pointlessness of that. Progressives have been warning for years of the necessity to rethink how we design cities and what must be done to prepare for a future without cars, but analysis of the future has been political suicide in this Reagan era, nostalgia and denial being the dominant themes. We are on the brink of serious calamity and reality has no representation in Congress.
Not only has there not been new refineries built in 25-30 years, but the same holds true for nuclear power plants. Even the cheese-eating, surrender monkey French have gotten it right when it comes to nuclear power.
What eco-hell hath Al Gore wrought?
T.C., gas prices are high all over the world - even in countries that don't have many "eco-wackos." As Swift pointed out, the easy oil is gone. We burned it up. To blame the world oil prices on U.S. environmentalists is just silly.
The oil companies have been raking in record profits. And they've had a friendly administration in the White House for almost 8 years (so friendly its hard to tell where the oil companies stop and the administration starts). If they wanted more refineries, they would have built them. Instead, as you may recall, Shell tried to close a refinery in Bakersfield a few years ago - guess they figured they could make even more money selling less gas for a higher price.
About the only thing you got right is that this is basic economics. Oil demand is growing faster than oil supply. So the price goes up. Economics 101. We don't have enough oil reserves in the tundra or offshore to make a dent in the world demand - that's just a right-wing straw man. It's "supply AND demand." Not just "supply."
If we want to see lower gas prices, we've got to learn to use less. Simple as that.
I haven't read his book or seen his documentary, to me,Al Gore,is a traitor who pretended to run for president, and after he accidently won, did everything he could to roll over and hand it to cheney/bush...eco-hell is merely the starting point.
NO OIL COMPANIES WANT TO BUILD REFINERIES HERE ANYWAY!! They haven't asked for a new refinery in California in decades. They are perfectly happy to manipulate the market with the decaying, clogged refineries they have. They barely will invest in the refineries operating today and constantly drag their feet to upgrade them. Why would they want to increase fuel supplies when they' making bank like crazy by limiting supplies? And, the permafrost is melting so quickly that it may be impossible to design and build the massive infrastructure of roads, production and processing facilities, and pipelines that would be needed to develop ANWR. It just is NOT WORTH IT. Can anyone tellus why we aren't hearing about the oil reserves in North Dakota and Canada - way more than ANWR can offer. Please open your eyes and your minds!