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Gas Tax

Apr 29th, 2008 at 1:23 pm by Susie

I think Obama’s right on this one.

Posted in Politics As Usual

15 Responses to “Gas Tax”

on 29 Apr 2008 at 2:01 pm1memyself

http://blog.washingtonpost.com/fact-checker/?hpid=news-col-blog

“The advocates of a “gas tax holiday” are exaggerating the benefits to consumers from their proposal. If the Illinois experience is a guide, there is likely to be some reduction in the price of gas, but it would fall well short of the size of the tax reduction. In order to pay for the tax cut, the government would have to cut back on highway construction and maintenance or find some other way of plugging the shortfall in revenues to the Highway Trust Fund.”
on 29 Apr 2008 at 3:12 pm2"Fair and Balanced" Dave

The fact that the “gas tax holiday” proposal is the brainchild of John McCain, a man totally ignorant of economics, should have been the first tip off that it was a horrible idea.

Dean Baker:

Actually, almost all economists would agree that the tax cut proposed by Senators Clinton and McCain would save consumers nothing. With the supply of gas largely fixed by the capacity of the oil industry (they claim to be running their refineries at full capacity), the price will not change in response to the elimination of the tax. The only difference will be that money that used to go to the government in tax revenues will instead go to the oil industry as higher profits. (My emphasis)

As is typical of any conservative policy proposal, the people who benefit are the people who are the least in need of help.
on 29 Apr 2008 at 4:04 pm3UncloudyDay

It’s pandering, but that’s what she does. It’s an election so everything is fair game. You’ve got to go after those real voters, why people vote for people for all types of reasons and far be it for Hillary to say something like this:
you’re considering not voting for Senator because she’s a woman or Senator Obama because he’s black, you shouldn’t vote for me/i>
That kind of talk is for pansies.
on 29 Apr 2008 at 4:45 pm4Wendy Whinner

The gas tax holdiday would temporarily eliminate the federal gas tax which is about $18-20 cents per gallon. It would mean very little savings to the average driver IMHO BUT it would not increase nor decrease nor have an effect on an oil company’s profits - don’t you people know anything? Jeez- talk about low information voters!
on 29 Apr 2008 at 7:07 pm5memyself

Wendy - Apparently you didn’t read the story I linked to. here’s part of what you missed:

‘Some economists say that a nationwide “gas tax holiday” would have even less impact on gas prices than temporary state moratoriums, such as the one passed by Illinois in 2000. “It’s basic economics,” said Leonard Burman, director of the Tax Policy Center, a non-partisan thinktank. “Gas is always in very short supply during the summer, which is why prices go up. In order to reduce the price, you would have to increase supply, but that is difficult over the short term, because the refineries cannot add capacity.”

James Hamilton, professor of Economics at the University of California-San Diego, said that most of the benefits from a temporary tax moratorium would likely go to producers rather than consumers. He said that states that suspend gas taxes are able to respond to rising demand more efficiently than the country as a whole, because gasoline supplies can be easily moved from one state to another.

“Prices would certainly rise to the market-clearing level,” said Hamilton. “I would expect the price [of gas] to go back to very close to where it was before [the tax cut], in which case consumers would not see any benefit.” ‘
on 29 Apr 2008 at 9:01 pm6Wendy Whinner

Mmyself:

I generally skip over your comments with all due respect. And I have my doubts the Tax Policy Institute is “non-partisan”. And the UCSD prof is wrong too. FYI - I just got my 24th credit in economics I am proud to report.

In fact, I was simply responding to the hand-wringer who wrongly assumed a gas tax holiday would increase the oil company’s profits.
on 29 Apr 2008 at 11:00 pm7memyself

Wendy, while your immense pride in your 24 credits in economics is kinda cute, it doesn’t begin to compete with the experts. I assume you meant that as a joke?

The two I quoted here are not the only ones making this projection by any means. It is a fairly well studied and reported phenomenon.
on 29 Apr 2008 at 11:38 pm8Wendy Whinner

No not being funny- suggest you learn to think for yourself. To do a takeoff on the cable commercial, 90% of the time I don’t believe 50% of what I read in the MSM. Got it?
on 30 Apr 2008 at 5:43 am9memyself

Wow - you really do hold your 24 credit hours (8 whole courses) in high esteem. You have a great deal to learn. Many of us with far greater academic achievement do not believe our studies have made us so superior that our judgment automatically supersedes those of experts in the field.

By your comments, you do not appear to be really interested in learning for yourself. Your opinion is preset to the degree that you scorn the concept of reading opinions of those with much, much more experience and education than yourself. Any professors looking for any real in depth thinking rather than just memorizing and knee jerk reactions must find you quite the challenge.
on 30 Apr 2008 at 9:05 am10Wendy Whinner

Far greater academic achievements?? What makes you so sure your “so-called achievements” surpass mine? I hope you are not trying to count your advanced degree in some psuedo-science like sociology or philosophy.
on 30 Apr 2008 at 9:13 am11Bob

no one who checks here regularly will confuse me with a wendy whiner supporter but I do respect and admire her determination to learn for herself. That’s nothing to knock.
Now ww - on to the issue at hand. It’s a bit complex and roundabout, but many mainstream economists do argue a tax holiday will lead to increased profits for oil companies:
http://firedoglake.com/2008/04/18/mccains-gas-tax-holiday-hurts-us-helps-oil-producers/
http://thecaucus.blogs.nytimes.com/2008/04/15/economists-weigh-mccains-gas-tax-plan/
And one simple argument: The public has already proven it will buy gas at level x – for the sake of argument we’ll say that’s $4.00 a gallon. Today the gas tax is suspended so next week you go fill up and gas now costs $3.82 a gallon - $.18 savings shows at pump. The next week it’s $3.86, the next $3.90, the next $3.93, etc. We have already proven a willingness to pay $4.00 a gallon for gas – the companies are aware of that and will use the opportunity to increase their profits.
on 30 Apr 2008 at 10:33 am12Snarki, child of Loki

The price is fixed by supply and demand. No gas rationing or price controls are on offer, nor would they be desirable.

The supply is limited by refinery capacity, already running at maximum, so supply isn’ t going up. That’s a hard constraint; perhaps refinery capacity can be increased, but it takes years (a decade?) to build a new refinery, so over the next few years SUPPLY IS FIXED.

How exactly is a gas tax holiday going to REDUCE demand? Because the only way that prices are going down is if the demand decreases or the supply goes up. If you didn’t learn THAT in 24 credits of econ, you should demand your money back.

With prices staying the same (what the consumer pays), supply staying the same (for which the producer pays), and the producer’s income = (price at pump) - (tax). The producer’s profit is (income)-(cost).

Reducing the tax without increasing the supply simply increases the producer’s income without changing the consumer’s cost or the producer’s cost, ergo it goes directly into profit.

I expect more disengenuous quibbling from WW, but the problem is that the facts and the economic theory (simple Chicago-style microeconomics, at that) are on the other side.
on 30 Apr 2008 at 11:07 am13k

Yes, and nobody’s building any more refineries. Why? Because then they wouldn’t be able to say, “Oh, gee, we can’t make any more gas!”
Even on the face of it, the tax holiday is crap.
And no ad hominem attacks, please. And I apologize if I’ve ever done that myself.
on 30 Apr 2008 at 10:45 pm14memyself

“I hope you are not trying to count your advanced degree in some psuedo-science like sociology or philosophy”

Nope BS in Physics and a Masters in Business/ Engineering Management. I couldn’t even take my graduate level Econometrics class without the 24 credit hours of calculus, differential equations and partial differential equations I had completed.

… oh yeah and several professional certifications including two in finance.
on 01 May 2008 at 2:02 pm15Wendy Whinner

Memyself:

Why do I think you are full of soup?

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