Wednesday, April 23, 2008

Gas Hassle

John McCain has suggested that the United States should deal with spiraling gas prices by suspending all taxes on gasoline during the summer. Seriously: do Republicans ever have a Plan B to use after cutting taxes? A whopping 5% of the price of gas in the US is owing to taxes, which is why I generally fill up on the southern side of the border, as opposed to Canada where it’s something like 20-30% of the price! In other words, as gas prices peak, cutting out the taxes won’t make much difference for American consumers, and it’ll just mean that the states won’t have funds to spend on fixing potholes and crumbling bridges and such. Now, do I even have to ask whether the news media in the US is calling McCain on putting forth such a transparently asinine plan?

Update: Apparently, Hillary Clinton is making the same offer. It’s just such transparent pandering. They might as well say, “I have no idea what to do; but I’ll pay you if you vote for me.” Sure, I know this crap works with people (“No taxes? Great! I hate taxes!”), but I really do hope Obama doesn’t jump on this lame bandwagon. What seems to be needed here is an effort like the space race, but dedicated to getting off petrol. I just don’t get the sense that gas prices are going to drop significantly in the coming years. Seriously: the first politician to say, “Look, access to a finite natural resource is not an innate human right, okay?” will get my vote immediately.

Update Update: Brian corrected me on the gas taxes. It's more like 14 percent of the price. About half of it is federal tax, which is what they want to suspend, so it's better than I said it is, but still not a substantive answer. But, the states will be able to fix potholes.

Update 3: Are gas prices expected to drop again? I've said I doubt it, but I'm cynical. I've now read that it's likely. Again, I'm pretty skeptical.

7 comments:

narrator said...

I really could not vote in a McCain-Clinton election. I suppose that my vote for Obama (if possible - in Michigan we didn't get the chance) would be based on the hope that new people would arrive in the White House. And new rhetoric might emerge from it. Otherwise, I won't participate in rerunning any part of the past 20 or so years.

Rufus said...

It's interesting. Reading about it from over here (on the net, so taken with a grain of salt), it sounds like everyone's frustrated over there with the delegate race. But, it looks to me like Obama's pretty much the candidate now and by the time he faces McCain, that he'll be ready to beat him. So, I'm happy with him.

I definitely don't think he's going to change the world or save America, but I'm sick to death of the old guard too, so he could pretty much make funny faces for the TV cameras for four years and it would be an improvement.

Brian Dunbar said...

A whopping 5% of the price of gas in the US is owing to taxes,

That's a bit misleading - 'how stuff works' claims 14% ..

Federal excise taxes are 18.4 cents per gallon, and state excise taxes average 18.2 cents per gallon. There may also be some additional taxes, such as applicable state sales taxes, gross receipts taxes, oil inspection fees, underground storage tank fees and other miscellaneous environmental fees. Add that to the state excise taxes, and it can average 27.4 cents.

From http://auto.howstuffworks.com/gas-price1.htm

I note that the state o' Wisconsin currently taxes 32 cents on a gallon of gas - http://www.gaspricewatch.com/usgastaxes.asp

A Federal tax holiday would only save, true, 18 cents a gallon, but that's not chicken feed.

narrator said...

What is needed though Brian is a much higher tax which funds affordable mass transit everywhere and Amtrak. That's not just an environmental decision, its an economic/innovation decision. When in Ireland I drive a 60 mpg gasoline engine Nissan Micra. Available there because of taxes on petrol. Not available in the US because of the lack of taxes on gasoline.

Brian Dunbar said...

What is needed though Brian is a much higher tax

You're talking to the wrong person about taxes. My wife shut down a reasonably profitable retail store last year (just not profitable enough to be run by a lady who had a heart attack) and we're still fooling around with the Department of Revenue about it.

Even if we didn't have the store - my property taxes are already absurdly high. My state gas taxes are among the highest in the nation. I don't need more taxes, I need less government.

There is this as well - I've only lived in one place where mass transit works; Washington D.C. The rest of my life has been spent in medium-sized sprawling mid-western and southern towns where it's impractical to expect it to operate with any kind of efficiency.

Brian Dunbar said...

Available there because of taxes on petrol. Not available in the US because of the lack of taxes on gasoline.

I'm trying to understand this: how do taxes on petrol lead to the availability of a particular brand of car?

Rufus said...

Brian:
It's a bit misleading because I was a bit mistaken. I think they're talking about eliminating the federal tax for the summer and I said all the taxes, which indeed adds up to more than 5 percent. On the other hand, the last time I filled up in upstate NY, it was 3.18, so 18 cents is about 5.6 percent. If my math is wrong this time, our resident math worker Greg can correct me. Anyway, I think it would therefore be more than 18 cents here, which is good, and the states would still be able to fix potholes, which is also good.

But, again, I don't think this is a substantive solution to the problem. As I understand it, we have a finite resource here, increased demand, and decreasing supply. So, it's not getting better any time soon, as far as I can tell. I think the trend is increasing prices, with periodic and temporary drops in price. In other words, I don't get the feeling that waiting it out will work.

However, I wasn't really arguing for more taxes; just for a more substantive solution. It may be that the market pressure is good because high gas prices will spur innovation. Clearly, there's going to be a Bill Gates who will invent a car that runs on urine, or something, and get rich. But, until that happens, I still don't get the feeling that McCain's tax holiday is going to solve very much, especially if gas really does hit 4 dollars a gallon.