Absolutely. What with all the taxes imposed on both the demand and supply sides, not to mention frivolous regulations supported by fees and frivolous favors supported by subsidies, God only knows what the price of gas really ought to be. Frankly, it’s surprising that it isn’t more fucked up than Soviet toilet paper.
One liberal economist, at any rate, is sure the gas tax cut would not result in lower prices at the pump.
You’re probably quite right- I haven’t been a regular (or even infrequent) passenger since I packed up and left in '96.
Gonzomax, is that you? Are we reading the same article? Seriously, Dean Baker’s little blurb is saying the same thing that others (except Quartz, apparently) is saying: “Repudiation of the gas tax will not save consumers any money.”
I agree with John Mace that this is just election talk pandering, though I’m woeful of McCain’s admission of knowing nothing about economics (please make Mitt Romney your VP). I also agree with Sam Stone that HRC is doubly stupid for calling for a windfall tax as well.
He didn’t say he knew nothing about economics. He said it wasn’t his strongest area of expertise. There’s a big difference.
Wait, I don’t get this, can one of you smart people please explain it to me? HRC (and McCain) is calling for the suspension of the federal excise tax on gasoline in order to lower the price of gas at the pump. To offset the lost revenue from this tax, she proposes to…institute a new tax on gas companies??? Am I reading this right? Does that make ANY sense at all? Are we to believe that the boards of Exxon-Mobil, Shell, BP, Chevron, etc… are going to decide “Well, a federal excise tax on gasoline, that we can pass on to the consumers, but a windfall tax?? My God, we’ll have to eat that one!” 
To be precise, he said “I know a lot less about economics than I do about military and foreign policy issues. I still need to be educated.”
Of course he then went on to deny that he had ever said such a thing and when presented with proof that he said it not once but twice, backpedaled by saying, “I spent 22 years in the military. I spent 20 years on the Senate Armed Services Committee. I’ve been involved in national security issues all my life. I attended the National War College. Of course I know more about national security than any other issue. That’s been my entire life.” and claiming that his time as the head of the Commerce Committee showed he was “smart on economics.”
Textbook theory, but it misses the nuance.
Gasoline is inelastic in general. High demand for gasoline in the summer is driven by leisure travel, which is demonstrably quite elastic. The final price might be cheaper, but arguably the social welfare cost of the government losing $10B in revenue exceeds the benefit of incrementally cheaper gas.
Sure, taxes cause deadweight loss. But this experiment was done in IL years ago, and interestingly, it was heavily supported by Obama. The dip in gas prices was tiny, and it cost the government of IL $175M.
It would be hard for me to believe that HRC in particular is all that interested in eliminating deadweight loss, as she clearly favors “windfall” taxes for the oil majors. Removing a market distortion might be a fringe benefit that is clearly not in the spirit of this proposal.
Probably why he’s against it now.
Yeah, and he’s right. If any of the candidates says he/she does not need any further education in economics, then they are fools.
Well, that’s strange denial in that it’s just another way of saying what he originally said.
I agree. The thing that bugs me most about this is that Hillary is implying that Obama doesn’t understand that “the American people need relief.”, when maybe he is the only one that understands that 18.4 cents aint gonna make a bit of difference.
Election year rhetoric…even better than mid-term pandering. I’m putting this checkmark in the Sen. Barrack column.
He’s doomed.
Thank god we have two candidates for president that are willing to show that they have the long term thinking that the Bush administration has become famous for!
The tax holiday really doesn’t amount to much savings, a couple of bucks on fill ups for most drivers. I’ve read the soaring oil and food prices are a commodities bubble which HRC alluded to in one of her stump speeches today.
Correct.
This is simply not true. For many people, it’s simply not possible to use mass transit (bus, rail, etc). Even where there is mass transit available, it is often at inconvenient hours. Forget about working late. And heaven forfend that there should be a strike or too many drivers ill. Personal transport gives you freedom and flexibility. I’m relatively lucky in that I can walk to the train station. It’s a 20 minute walk, mind. But let’s take a simple example: a journey to my aunt’s. By car it’s 45 miles, 75 minutes, absent traffic problems; by train, ironically a more direct route, it takes two and a half hours (including walking).
Another example: I used to live in Aylesbury and work in Stanmore. 25 miles and an hour by car. At the time it was simply not possible in any reasonable time by train due to bad connections, or by train and bus from a nearby train station, and I lived a stone’s throw from the station. That 25 miles (each way) took roughly a gallon of petrol. Today that’d be roughly £10 per day, £50 / US$100 per week, £2500 / US$5000 per year, just for the privilege of working. Most of that being fuel duty. And that’s paid out of net income; the gross equivalent would have been double that. Talk about a stealth tax!
To expand on Martiju’s point, I recently wanted - at short notice - to attend an event in Birmingham for the day. 86 miles. Rather than brave the rush-hour traffic, I opted to travel by train. They wanted over US$200 for the ticket. I walked away. It was too expensive.
And here-in lies part of the problem. People think that the government has to step in to create a car-pooling database.
The cynic in me thinks Clinton and McCain (Clinton anyway) want the electorate to think they’re saving them some money and each can appear to be somewhat anti-corporate, not business as usual, by asking oil companies to make up for the suspended sales tax.
As has been said upthread, reality is consumption will go up, not down and the oil companies will use the opportunity to raise prices permanently. They’ll know full well that this ploy of taxing the conglomerates is just that, and will laugh their way to higher and higher profits.
The appearances they want to project will work, even the tax is not suspended.
True, but even full year demand is a bit elastic. California has had high gas prices relative to the rest of the country, and this has resulted in a decrease in absolute (not just per capita) consumption. The Prius got real popular real fast here. If people stop buying SUVs and start buying the better hybrids, consumption will ease.
Anyone remember when gas was $2.00 a gallon and calls for increasing the tax to maybe reduce consumption and fund decent research was met with gasps of horror. How they said the economy would tank and people would suffer with gas at $2.25?
Not to agree with Quartz, who is an idiot, but I think Seattle counts as “a major metropolitan area”.
I work in Pearl, MS (a suburb of Jackson, MS) and live 6 miles from my office. I’m the closest to my office of all the employees. I’m the only one who lives in Brandon. The rest live at the Reservoir (about 10 miles in a different direction), Byram (15 miles in another direction), Clinton (20 miles in another direction).
Public transportation in Jackson is a joke, and there’s nothing that goes out to Pearl, Brandon, or Clinton.
So, what to do?
-Joe