Reader Posts

« previous | TPM CAFÉ READER POSTS HOME | next »

Gas Tax Ballyhoo

I don't like to simply post articles here, but I think that this blog by Robert Reich concisely makes the proper points about the proposed gas tax "holiday":

When asked this morning by ABC News' George Stephanopoulos if she could name a single economist who backs her call for a gas tax holiday this summer, HRC said "I'm not going to put my lot in with economists.”

I know several of the economists who have been advising Senator Clinton, so I phoned them right after I heard this. I reached two of them. One hadn’t heard her remark and said he couldn’t believe she’d say it. The other had heard it and shrugged it off as “politics as usual.”

That’s the problem: Politics as usual.

The gas tax holiday is small potatoes relative to everything else. But it’s so economically stupid (it would increase demand for gas and cause prices to rise, eliminating any benefit to consumers while costing the Treasury more than $9 billion, and generate more pollution) and silly (even if she won, HRC won’t be president this summer) as to be worrisome. That HRC now says she doesn’t care that what economists think is even more troubling.

In case you’ve missed it, we now have a president who doesn’t care what most economists think. George W. Bush doesn’t even care what scientists think. He rejects all experts who disagree with his politics. This has led to some extraordinarily stupid policies.

I’m not saying HRC is George Bush. And I'm not suggesting economists have all the answers. But when economists tell a president or a presidential candidate that his or her idea is dumb – and when all respectable economists around America agree that it’s a dumb idea – it’s probably wise for the president or presidential candidate to listen. When the president or candidate doesn’t, and proudly defends the policy by saying she's "not going to put my lot in with economists,” we’ve got a problem, folks.

Even though the summer gas tax holiday is pure hokum, it polls well, which is why HRC and John McCain are pushing it. That Barack Obama is not in favor of it despite its positive polling numbers speaks volumes about the kind of president he’ll be – and the kind of president we’d otherwise get from McCain and HRC.

Haven’t we had enough of politicians who reject facts in favor of short-term poll-driven politics?

That's just it.  Either Clinton doesn't really understand that this policy don't work or she's basically saying that she's committed to pandering in spite of the facts.  Personally, I don't happen to believe that Clinton doesn't understand why her proposal can't work.  I'm forced to conclude that the latter proposition is the most likely.

I'm also forced to wonder just who a President that refuses to put her lot in with economists would appoint chairman of the Fed.


Comments (151)

Either Clinton doesn't really understand that this policy don't work or she's basically saying that she's committed to pandering in spite of the facts.

Argh. Should say:

Either Clinton doesn't really understand that this policy won't work or she's basically saying that she's committed to pandering in spite of the facts.
avatar

It sure beats talking about Jeremiah Wright though, doesn't it?

Zing!

I fear our favorite troll Otto may have suffered some sort of brain damage. He just keeps repeating "Jeremiah Wright" all the time.

I think it's because this is the last day before the last significant election in the primary. He wants to get it in while he can.

IT'S VOODO ECONOMICS !

If this scam actually works who know's what she'll pull next! We must stop any form of economic relief before it catches on!!!!


VOTE YOUR CONSCIENCE
NOT YOUR WHITE GUILTY CONSCIENCE

avatar

Trailer Trash Otto, the Inbred Springer Reject, is afraid htat President Obama will not emancipate all we long opressed white men.

Tell it brother!

I, too have been oppressed by the white woman.

Meheheheh.

Don't you know? Economists are elitists! Nobel prize-winning economists are super-elititists! Therefore, the fact that 221 economists--including 4 Nobel prizewinners--agree with Obama proves that Obama hates white people:

http://gastax08.blogspot.com/2008/05/open-letter-from-economists-opposing.html

(Or, see Otto's comment for a more succinct version.)

Yeah, but Hillary has run the math. The votes of Nobel prize winning economists are not gonna push her over the top. She needs the vote of the educationally challenged.

I certainly don't think that Hillary Clinton is stupid, so I must conclude that she it just straight up pandering. She has to know that this policy won't work and is stupid but is happy to push it like crazy since she believes it is a means to an end.

Not stupid: devoid of integrity.

avatar

Hillary has promised to spend the Windfall profits tax revenues on clean renewable energy development. Now she is promising to spend on a Tax Holiday for Imbeciles.
Billionaires get to save the same amount as blue collar workers. Hillary feels the paint of struggling Billionaires.

Hillary embraces Fuzzy Math!

There's fuzzy science also since her plans do not provide for energy security.

Oh, I think they do. And the oil and gas companies know it.

Really?

I have to side with CT on this - no one has a good sense of how to secure our energy (other than by gun).

I do not think it is due to lack of good science, but rather the problem is the complexity of the equation. No one wants to be on the wrong side of the energy security math, and we are boxed in by climate change concerns.

Secure means what?

My apologies - I pivoted off of the term Energy Security.

In short, I am talking about a way in which we can secure a supply (any supply) to maintain our economy and lifestyle within some semblance of today's standards. For those like clearthinker - I am talking about the high-tech life we lead chatting on the web and such.

Energy Security is likely a medium term pipe dream and the whole caboodle may collapse.

Definitions of secure on the Web:

* procure: get by special effort;
* free from fear or doubt;
* free from danger or risk;
* fasten: cause to be firmly attached;
* protected: kept safe or defended from danger or injury or loss;
* guarantee: make certain of;

Well, if we're talking about getting all we need, that era seems to be coming to an end. I'd argue that the role of government in that case is to ease the transition and make sure that the oil companies don't realize windfall or excess profits as the supply runs out.

I wonder where we would be if FDR had listened to the most respected economists when he took office. I wonder what the conventional wisdom was about something like the TVA. I think Clinton is right on this one. Roll up your sleeves and find a solution. As John Dewey, that pragmatist, showed, the first step in solving a problem is to understand it. The solution of the problem is contained in the problem. Clinton has taken a giant step forward by identifying some of the players for the general public. OPEC, speculators, the oil and gas industry, the government, the media. Let's give her a chance to identify some solutions, beginning with government oversight and an excess profits tax.

Billy - anyone can name names. Somehow you left off the list "available supply" and "available technology".

Suspending a $0.18 gas tax is NOT rolling up your sleeves - it is pandering. Solving the energy issue will INCREASE energy prices. From heating and electricity to vehicle energy - it will rise as we seek the solution(s). It will rise if we do not seek solutions.

All this "Hillary is a fighter for the common Joe" is smoke up your worshiping ass while the world's energy difficulties will grow.

See this is my problem with this overarching debate. She simplifies it too much. Like this recent attack on OPEC. First of all, all this talk of suing OPEC and obliterating Iran does nothing to lower gas prices. And it does have an effect on political stability in oil-producing areas, which in turn has an effect on the price of crude oil.

What gets left out of all this OPEC talk is that 40% of our crude oil is domestic. Of the other 60%, roughly half of that comes from OPEC nations. Canada is our top oil importer. Not to mention that if she plans on using WTO to attack OPEC, 4 of the OPEC nations (including Iran and Iraq) are not members of WTO.

And what irks me about Senator Clinton's new gas tax idea is that gas prices have been high. For quite awhile now. And her proposal isn't something she's proposing to do as President, but as Senator. Well, she doesn't have to wait to get into that office. Why didn't she put out this legislation months ago? Now, 25 days from when it's supposed to go into effect? As it stands now, she's doing exactly what she's criticized Obama for: Just words, no action.

But, I return to my new stance on this: Senator Clinton is a tough and gritty fighter. If anyone can get this legislation, windfall tax and all, though in 25 days, it's her.

25 days and counting...

avatar

edit:

feel the pain.

avatar

Contessa and John just had Gail Collins on and it was hysterical. John read the quotes below from her piece.

The New York Times

Indiana Holiday

“Our question for today is: What does the debate over that cheesy plan for a gas tax holiday mean to the American voting public?”

“Hillary Clinton, who jumped on the gas-tax holiday bandwagon posthaste, wants to pay for it with a windfall profits tax on oil companies. This makes her plan much more fiscally responsible. Not only does she balance the books, she turns a proposal that was unlikely to ever get passed into one that could not make it through the Senate if Ronald Reagan and John F. Kennedy both rose from the dead and hand-carried it there.”

“There are few things more satisfying than taking a strong stand in favor of something that is never going to happen. Free pander!”

http://www.nytimes.com/2008/05/03/opinion/03collins.html

Something else that it means for the voting public is that no one is telling them the truth about what we're really facing in terms of increasing scarcity of petroleum resources. The federal tax on gasoline doesn't even begin to scratch the surface and as a result this proposal is a distraction. I will say that Obama is only marginally better than her on this point. I'd like to hear a lot more honesty from all three candidates on energy issues, but at this point it seems pretty fair to say that it's not at all reasonable to expect this from Clinton or McCain. At the very least, Obama has been willing to call this proposal the ruse that it is. He's also begun to talk about biofuels being a possible dead end. I'm hoping that these comments mark the beginning of a trend for him.

There's something else that really bothers me about this issue. It also goes to the larger meme of 'elitism' that's been bandied about recently. It seems to me that there's a certain anti-intellectualism in our culture. It most certainly exists in the media. I'm referring here to charges of "ivory tower academics" and "liberal college professors". It's a common theme to treat the educated as anathema. This seems counter-intuitive when it is observed that most members of the media are wealthy and college educated. However, it is also true that power finds a way of maintaining itself. By keeping people convinced that being educated is undesirable you can better control what they know and think.

To me, this says something very significant about Hillary Clinton's campaign of late. If you want to gain and maintain power, then I would expect you to say the sort of things she is saying. However, no one who really cares about what happens to the people in this country would perpetuate the awful premise that being educated is somehow diametrically opposed to be an ordinary person.

avatar

The last thing I'd want to do is defend Hillary on this. But I'm not sure the choices are quite as binary as you present them.

Hillary and Obama have fundamentally different theories of political rhetoric. Obama believes in wrapping his proposals in inspirational and uplifting language; that's been noted so widely, it's become a cliche. But Clinton's every bit as much a showman as Obama; it's just that she's committed to the theater of substance. Her gas tax plan is simply the most blatant example of something that's been generally true of her policy proposals this spring - very few of them have any connection to reality. She's proposed a smorgasboard of discrete (and often costly) initiatives, and liberally sprinkled them through her speeches. Every time she addresses a different constituency, she rolls out another initiative, complete with focus-group tested title and three- or ten-point plans. And the media treats them seriously, as vague or impractical as they might be. Because they, like the voters, understand that there's little chance that Hillary will actually do any of this were she to be elected. Rather, her endless succession of policy proposals is simply intended to illustrate her seriousness, diligence, and concern.

That, I think, is why she unveiled such a ridiculous proposal, and why she and her staff were so clearly unprepared for the ensuing backlash. They didn't expect anyone to treat this as anything other than what it was intended to be - a piece of political theater. They didn't expect it to be subjected to serious analysis, or to have its flaws exposed. That wasn't an unreasonable expectation; it had held true until now. But two things changed - Obama, desperate to change the subject, engaged her directly on the substance of her proposal; and this particular initiative was so patently absurd that the absurdity was easy for the media to grasp and to explain to voters.

So you could call it a pander; but I'd call it a symptom of a broader problem. Hillary rolls out these initiatives to underscore her seriousness and her engagement. It's her way of saying, "I hear you, and I'll do something to help." What frustrates me is that the media has often mistaken this for substantive expertise, when it's simply a rhetorical posture, no different from Obama's embrace of hope. And that's what's happened here - her rhetoric has finally been exposed as deeply unserious. Too bad it took this long.

That's certainly a compelling perspective. It seems to stand at odds with her complaints of being treated unfairly by the media if this is indeed merely the first instance where she's been examined in this manner.

Thanks for that perspective. You put to words the sense I got from reading her web site.

Pages upon pages of supposed policy that actually say nothing and point to regurgitated versions of the same thing. It looks like a lot of information, enough to bore the average reader, but there is actually nothing there.

Brilliant political theater.

Elliot -- you had to include the rock as well?

I take it you do not like it... I thought the stone really topped it off although I wanted to change the color.

Well, it's a tad close to avatars I've used and am using now. Certainly in them.

Now, you give yours a bunch of flashing shirt collars and I'll be happy.

Hey! That's a cute picture of your(?) son!

Fly,

I'll go even further. If you look at the position papers of the 3 major candidates, you will find very little true innovation in attacking these problems. In other words, they are simply feeding back to us what we (and the MSM) have determined to be the "issues".

So the debate becomes nearly pointless.

The stereotypical right in this country assume we can act unilaterally about anything. The stereotypical left in this country assume we have to feel guilty.

In fact, neither view is decent and both prevents us from actually solving problems. Our POTUS should be protecting the rights/values of the US on the world stage and using our leadership position (rapidly shrinking) to get our way.

So, for example, when we talk of global warming, you find very little being said about how China and India (say) are trying to maneuver to increase their greenhouse gas production (to allow for rapid industrialization) by talking in terms of per capita output. Naturally, they have a lot more citizens, so it puts them to an advantage. But what do you find in the national debate?

Righty says: no one can tell us what we can do. A dumb attitude if ever there was one.

Lefty says: we are the worse country in the world and we need to make deep cuts. Of course, they aren't willing to live their lifestyle based on those deep cuts because then they would have to seriously limit, if not eliminate, consumerism in their lives (and this includes, for example, clothing, electronics, and even a variety of exotic foods).

Similarly, our debate of "alternative energy" never gets at the core issues: the lifestyle of our children will be worse than ours and there is no escaping that fact. Instead, people have a myth in their head that we can simply replace oil.

Even on this thread we hear about the age-old conspiracies of corporations "sitting on" enabling technology. This, of course, is nonsense and no evidence is ever presented for it.

Here, for example, is a car that runs "on air":
http://www.nextenergynews.com/news1/next-energy-news1.7c.html

No one is sitting on this technology. But you will note most obese Americans probably wouldn't even fit in this vehicle, it won't be good for racing around long distances, and it's not even clear what the ultimate cost of manufacturing will be (because you use oil to make things, of course!).

But we never hear about this type of technology in the national debate because the painful truth ("Say goodbye to your SUV") is something that no one wants to hear. So we keep dreaming that the utopia we imagine (current lifestyle) can go on indefinitely when no exponential growth has ever been allowed to continue indefinitely (it ultimately uses up finite resources).

It's a common theme to treat the educated as anathema.

Correct as usual, DF.

While I wouldn't want the pendulum to swing back to the days of the "best and brightest" -- brought to you by the JFK administration by the way, it's amazing how few PhD we elect to office. Compared to most Western countries, we fall way behind in electing people who know something besides law -- or who are real estate magnates.

Instead we get dogmatic views trying to control the political debate -- none of which has helped in the past and is therefore likely to help in the future!

If she feels so strongly about it, she's a Senator, and can get to work writing up a bill.

How can she credibly support a policy position that must be implemented immediately ("summer holiday") if she's not actually utilizing her legislative powers for its speedy realization?

Even if she's too busy with the campaign to do it, many of her supers are congresspersons, and they could be collaborating on it for her. If she ends up squawking about the gas tax holiday through another news cycle without some legislative action from her camp, then even more people will start calling her out to put her money where her mouth is.

She has NO defense to the accusation of pandering. A smart questioner on the campaign trail could reveal this in a truly devastating way.

Hillary may spell relief "P..A..N..D..E..R", but Obama's got Stevie Wonder appearing with him in Indianapolis tonight!

http://www.chicagotribune.com/news/local/wire/chi-ap-in-obama-wonder,0,2543608.story

Don't you worry 'bout a thing, pretty 'bama.

Stevie Wonder is a genius. And genius follows genius. So grow up.

Has anyone else here had enough of politicians who don't take the advice of those who know what they're talking about and go blindly ahead with their own foolhardy ideas?

Oh--right--my fellow Obama supporters!

I don't give a hoot how fat Hillary's Rolodex is--she's just proven again that she doesn't know how to use the thing!

So Obama should have listened to Colin Powell back in 2002? Good to know. Think he'll admit that in a speech?

A)Did you see that power point slide?
B)Your claim is that Powel is an expert on mobile biological weapons labs?
C)Specious

What did Colin Powell know he was talking about back in 2002?

Hillary is attacking economists and pushing this issue because the money-grubbing elites are supposed to see that she is just playing the political game and exploiting the working man who believes the gas tax holiday will do them any good.

So she disparages the elites with a knowing wink, as they're maxed out donations wise where the internet support for Hillary has barely scratched the surface. Extreme Populous Hillary is out of political necessity. Her track record is catering to the elites and the lobbyists, her populous talk is just words. Of course desperate times call for desperate measures and the ends justify the means.

avatar

How can this increase the demand for gas? the lowest three income quintiles pay 5.1% of their income for gas - the highest quintile pays 3.5% of their income. The lowest three quintiles are not seeing their income keeping pace with prices, in fact they're seeing it fall behind the increase in prices. Gasoline inventories were built to record high levels in the beginning of the year, and gasoline use has decreased by .08%. So what has happened to cause this spike in prices? The price of crude oil has gone up, the refineries sold their surplus at unusually low margins and the refineries are switching from winter grade to summer grade, so the oil companies claim - and yet, gasoline inventories remain in the upper half of the average range of inventories at this time of year and refinery margins have increased.

For people who are spending 50.00 a week on gasoline, 18 cents per gallon discount sounds pretty damned good. When Obama was in the state senate, he voted for a state tax holiday on fuel sales three times. Why was that a good plan, but this is a bad plan?

You are assuming that the tax break will be passed along. First it is paid by the oil company, second, the tightest margin in the oil food chain is at the pump. Gas Stations make pennies on the gasoline sold and hope that people shop in their convenience stores.

If the $0.18 off $3.60 ($3.42) really makes a dent - in a 20 gallon tank that is a whopping one gallon discount - how big of a dent? What percentage of those low income people you list actually drive?

Do you actually get a result where the biggest recipient of the tax break are the people who can already afford to drive?

As for increased demand - should $0.18 actually get chopped off the price, there would be minimal bump in consumption. Not really enough to write a story about.

As for Obama and Illinois Tax Holiday - if I am not mistaken a)the tax is a %, not flat, and b)Obama has already said he feels that those votes ended up with little impact. But I could be wrong.

The dramatic thing about Clinton's proposal is that a windfall or excess profits tax will mean that the oil companies have to open their books to the public, justify their profit margin and submit to government regulation of their profits as the oil runs out. That is a very big deal. It's too bad that aspect of her proposal isn't getting more attention.

By the way, Magister has a real post on the gas tax as opposed to a link to something we've already seen on the front page here.

http://tpmcafe.talkingpointsmemo.com/talk/2008/05/the-gas-tax-before-the-wind-to.php

Naturally, Magister's informative post won't make the recommended list while this one already has.

has has has

Gas tax relief will not offset rising prices.

Goldman Sachs:

May 6 (Bloomberg) -- Crude oil may rise to between $150 and $200 a barrel within two years as growth in supply fails to keep pace with increased demand from developing nations, Goldman Sachs Group Inc. analysts led by Arjun N. Murti said in a report.

or OPEC's version:

ALGIERS (Reuters) - OPEC President Chakib Khelil does not rule out oil prices reaching $200 a barrel, even though supply is adequate, because the market is driven by the dollar's slide, Algerian government newspaper El Moudjahid reported on Monday.

And the sliding dollar is an intentional plan on behalf of the current Administration as far as I can tell.

That $0.18 will disappear as fast as you can say summer driving

Maybe, and maybe not. But what won't disappear is the board that decides whether or not the oil and gas industry is making excess profits. And that's what they -- and apparently you -- are fighting so hard. Since when are Progressives on the side of big oil?

As a "progressive" I am for finding a solution, but as a business person, I am not sure that government oversight of company profits will do that - either nationalize, or stay out of the mix. This is a very complex issue and the biofuels/food production conundrum is a microexample of how interconnected everything is.

Ask Mexico how nationalizing has gone.

Since the nationalization of the oil industry in 1938, the state-owned Pemex has monopolized the production and marketing of hydrocarbons. For decades the government tolerated Pemex's waste and inefficiency because the company produced nearly all public revenues. Problems mounted, however, as a result of Pemex's poor administration, low productivity, overstaffing, and corruption. By the late 1980s, Mexico's economic recovery had come to depend heavily on reform of the state oil sector.

I can see both sides of the coin, but we are talking about a global issue and not simply profits. Regulation of profits is shortsighted and will trigger the law of unintended consequences. The oil/gas industry is one of the most regulated and taxed industries in the US and a lot of the oil comes from outside our boundaries. You push hard enough, and there will no longer be "American Oil Companies".

Calderón is pushing an energy reform proposal that would allow private companies to form partnerships with state-owned oil company Petroleos Mexicanos, or Pemex, to explore deep-water oil fields and boost sagging production.

Pemex's production has been steadily declining, falling 5.3 percent to an average 3.1 million barrels a day in 2007 – primarily due to plunging output at its biggest-yielding field, Cantarell.

Ah. Well, I guess my short answer is I think we need more government, not less. We've already elected one President recently who was interested in getting elected by not in governing. I'm not interested in doing that again. Bush has shown that just about anyone can get elected. But once you're elected, unless what you're up to is destroying the government, you have to be willing and able to govern. When I talked about the Revolution, this is what I had in mind. Government of by for not perish. The social fabric. A government that understands that science has established that that human being pumping gas needs calories, sunshine, challenging work, healthcare, good air to be a human being.

If you haven't yet, I recommend Atlas Shrugged by Ayn Rand

The government is only part of the equation. Which is why a number of us are attracted to the concept that change will take all of us, not just one fighter in the White House.

Every single citizen.

Ah. Well, I guess my short answer is I think we need more government, not less.

Then you should be voting the GOP who all have increased government for the past 30 years.

It was the Clintons who reduced the size of government.

avatar

Look, 18 cents isn't going to make a difference to me, but to many people, 18 cents a gallon does mean a lot. When I hear these kids talk about buying text books at 50, 60 bucks a pop, art supplies at 100/200 bucks a quarter, paying tuition, driving to work and to school and back again, yes, I'd like to see them get a break. We've bailed out the auto industry twice, the savings and loan industry, the airline industry and investment bankers, but when it comes to giving the little guy a break, Christ, you'd think it was the end of capitalism as we know it.

Did you see this one? Courtesy of Disedero.

http://www.correntewire.com/who_you_gonna_believe_econ_101_or_your_lyin_eyes

It works in fact, but will it work in theory?

That paper is about tax incidence between two states, one with the tax and one without. Retailers in Illinois lowered their prices to attract more customers and thus more profits from drivers in Indiana. They still didn't realize the full savings they shot for even with incidence being what it was. Also they don't discuss the costs of the program and future costs in lost revenues, that's where the conversation should focus. The incidence experienced in Illinois won't be the case with a National gas tax moratorium.

Whatever you say. Don't let facts get in the way. But hell. Tell me this. What exactly did Obama learn from the Illinois experience that convinced him it was a bad idea? Until a few minutes ago, that was the received doctrine in the echo chamber. So what info did Obama have that showed it was a bad idea? Prices in Illinois went down. I think your friend just got caught talking out of his ass again.

Oh yeah, probably. Not saying he never talks out his ass every so often, just saying the two situations aren't the same and the outcome can't be predicted in the same way. Des was writing as if the tax worked the way it was planned, it didn't, and although there was 2 percent savings in Illinois, the taxpayers had a lot of revenues to make up for, plus interest.

However, I think his qualm was about the loss of revenues. Which is a legitimate concern even with windfall profit taxes.

You convinced yet? Maybe even just a little bit? Hehe.

avatar

What it will do is provide immediate relief to lower income workers. No, it's not a long term solution, but Clinton isn't claiming that it is.

avatar

The gas tax isn't passed along to the consumer, the consumer pays the tax in the first place - the tax is collected at the pump, not at the refinery.

Most low income people don't live in cities, they live in rural/suburban areas. They drive quite a distance to work, because they have to. I don't think people get what's going on here in Ohio, Indiana, Kentucky and Michigan - factory jobs are far and few between, and factories that do exist are moving farther and farther out - not everyone works in an office. People who clean other peoples' houses have to drive to those houses, they have to drive to those construction sites, they have to drive to the health clinic - they can't take a bus, they can't take a cab, they can't jump on a train, they can't get on the subway, so 18 cents a gallon is a godsend to many people.

Bev, most of us are in the same boat. Most everyone gets it, but if a policy won't work...it won't work, why push for something we all will have to pay more for in the future and more than likely do nothing to curb gas prices?

On a side note, I'm glad this discussion is going on, I think it's good thing for people to get to know this issue better. I know I've learned a bit on the issue.

avatar

In my opinion, the worst transgressors in this gouging are the credit card companies who are charging 7.5% fees on all transactions. That is passed along to consumers in higher prices for gas.

That we agree on.

This is an awesome post, drosz. I'm tired of a few people here constantly bringing up some notion of the "workers" when we all are in the same boat.

Often the people driving the long distances were those trying to find a house that was affordable. Part of the cost of that house is the commute. And I wonder what cars they drove to/from work on that long commute. Something tells me most of them weren't getting 25 mpg or more.


avatar

We're not all in the same boat. That's my point.

This statement fails to grasp the extent of the situation. Right now it may appear that we are not in the same boat. As the energy supply gets tighter, the boat will get smaller.

I suppose this version of that analogy means you are right - none of us are in the boat and some point. Excluding the ultra-rich.

There is no escaping the shrinking energy supply.

You haven't heard , or ignore tha fact that Obama explained he had learned a lesson from back then.

Catch up, Tom. We're now at the point where it lowered prices in Illinois back then, but things are different now. The echo chamber is working on what info Obama had back then that convinced him the tax holiday hadn't worked. See the problem? He has egg on his face. Little working paper problem. Little study as opposed to deduction from a theory.

So where we are now is that gas and oil companies don't necessarily raise their prices to take advantage of the fact that the market has borne a higher price. As a matter of fact, in the real world, we don't know what the companies will do if Clinton lays an excess profits tax on them and lifts the gasoline tax.

I say lets get Obama out of the way and find out.

Since it is the Majors you are so hot to trot to take on, we can easily deduce what will happen when you slap them with windfall profits taxes - they will cease to be American companies and their investment into US production will drop.

Oil exploration is risky business and expensive. Further it is expensive because a number of the efforts are trial and error which yield nothing.

The demand for gas is generally increasing. Lowering the price will generally always increase the quantity demanded. The two main factors of increasing oil prices are the deflating dollar and decreasing petroleum reserves (and hence descreased supply).

This discount sounds good, but what about the lost revenue for infrastructure? If an additional tax is laid upon the oil companies, they will pass as much of it as they can onto the consumer. In this case, the price elasticity of the market is extremely inelastic. This means that the oil companies can pass a significant amount of the tax on to the consumer. Even if both of these initiatives were created before the summer (which won't happen in any case), the price would likely not change at all and may still increase. The end result would be a similar price for the consumer and hopefully similar tax revenue which would no longer be set aside for infrastructure.

avatar

Actually the demand for gas is falling. In fact, the demand for gas has fallen .08% in the first quarter. Supplies of gasoline are at an all time high.

That's domestic consumption. There's a whole world out there thirsty for oil.

Face it folks, the chorus may be singing for it, but gasoline is never going to get any cheaper, ever again.

With oil at $122 a barrel and heading skywards
we'll need a lot more than an $0.18 of pandering to deal with this problem.

How can this increase the demand for gas?

Historical fact. Consumption is inversely proportional to price. After the oil shocks of the 70's consumption went down, people wanted smaller vehicles, etc.

With renewed drilling, the Alaska Pipeline and the British North Sea fields (both now past-peak) glutted the market in the late 80's-90's and bigger cars came back as did consumption.

The conclusion is that American's can't control themselves. No matter how much food you put on a plate, they'll eat it immediately.

And if you are spending $50/week on gas, you will save $2.57/week (assuming gas is only $3.50/gal). Let's be honest, that's not relief... Shall we price $2.57 in terms of cans of soda to show how little it is?

"Historical fact. Consumption is inversely proportional to price."

I was about to post that but instead I give you kudos...so, kudos. Clinton's people know this and so do a lot of people. No one saves a dime on this proposal especially when you add indirect costs into the equation (we always forget this, eh!?). We should remember, any government action costs us money, the costs asociated with including a windfall tax ( which include legal and administrative fees) means everyone eventually pays more for this "holiday". It's not just bad economics, it's bad government.

avatar

You know, you don't like the label of "elitist" but this is elitist thinking. There are people in the tri-state area of Ohio, Kentucky and Indiana who are really, truly suffering. To them an extra three bucks a week means alot. Three bucks a week can mean the difference between having something for their kids to eat on the day before payday. With an extra three bucks a week, people can buy two loaves of bread, three boxes of cornflakes, two pounds of apples, a jar of peanut butter, a lb of hamburger, a dozen eggs or two quarts of milk. You don't see these people lined up at the food banks, you don't see them at dollar general counting out quarters to buy food, to many people 3 bucks a week is chump change, but there are many, many people to whom three bucks makes a hell of a difference in their lives. They have older cars that get poorer gas mileage, they have to have car insurance to drive, they have to drive to work, they cannot afford to live in cities.

To them an extra three bucks a week means a lot.

Then we should convince them of ways to save an extra $6 a week, or more. They could carpool, walk short distances instead of driving, turn off their car instead of idling it when not moving for more than 30 seconds, drive slower, keep their tires inflated, take public transit where it's convenient and available, lobby their politicians where it's not.

I know this will sound "elitist" to some, but it'd save more money than this gas tax holiday would—and it would be better for the environment.

avatar

You obviously don't live in a rural/suburban area. People are driving less, they are carpooling more, they are combining trips. The point is that these people have to drive long distances to work, there is no tranportation system. Here's an example of what public transportation is like in my area - if someone works downtown, he has to drive 6 miles to the busport, a take a bus that leaves at 7am and returns at 6pm. That is the schedule. Now that's great if you have a nine to five job, but if you work in a downtown restaurant, say from 4 to midnight, what do you think those people have to do? Drive (not to mention pay for parking) they have no other choice. So sure, it's great to carpool and do all those things, but for now what would you suggest they do?

The point is that these people have to drive long distances to work, there is no tranportation system. Here's an example of what public transportation is like in my area - if someone works downtown, he has to drive 6 miles to the busport, a take a bus that leaves at 7am and returns at 6pm.

Hence the reason I stated

take public transit where it's convenient and available, lobby their politicians where it's not

I used public transit in Atlanta when I lived in the suburbs, so I know what bad public transit is like.

You obviously don't live in a rural/suburban area. People are driving less, they are carpooling more, they are combining trips.

I know several people in both rural and suburban areas who complain about gas prices, but who don't carpool, who drive down the street to pick their kid up from the bus stop, and who buy new, fuel inefficient vehicles when there are cheaper and more fuel efficient vehicles that would serve their needs. In fact, all of the people I know who live in rural and suburban areas that complain about the price of gas fall into at least one of these groups.

So sure, it's great to carpool and do all those things, but for now what would you suggest they do?

I already provided a detailed (if incomplete) list. Make sure your tires are inflated properly. Don't idle your car excessively. If you drive a car made after 1980, don't "warm it up" in the morning (regardless of how cold it is outside) by letting it idle prior to driving. Drive slower. Rotate your tires. Walk or ride your bike when you can. When buying a new or used car, make fuel efficiency one of your criteria.

Any one of these things is more likely to save you money than the gas tax holiday.

Nice post, Ben.

avatar

Well, Ben, those are all great suggestions and I'm sure many people are following them, but when I work at the food bank and see these people come in, humiliated, worn down, worried sick, driving old clunkers and having to replace them with newer old clunkers because they can't afford anything else, who work two and three jobs to keep their heads above water, yes, I think that a tax holiday on gasoline is a good idea. No, it's not going to solve the energy problem, but it isn't meant to do so. These are people in this country who are not "grumbling" about the cost of gasoline and driving their SUVs, these are people who are genuinely afraid they're not going to make it to the next paycheck. We are serving more people now than we did in December and these people are are working. Unfortunately, for many of these people local jobs consiste of grocery clerking, McDonalds countering and pizza delivering. I talked with a woman the other day who cleans houses, sometimes two and three a day, and an entire day's pay is wiped out with a tank of gas. She has no choice but to drive around to these neighborhoods to work and yes, three to six bucks a week makes a difference in her life, because it is cash going out faster than she can make it.

Is it pandering? Yes, so what? Was it pandering when Obama said that he would give a raise to every school teacher in America? Sure it was, he has no more authority to do that than Clinton does to declare a tax holiday on gasoline. When Clinton stands at the gas pumps and talks to people, I'll bet she is getting an earful of what it's like out here in the real world, the rust belt, where people face a 60 mile round trip everyday to get to work at a factory or manufacturing plant. These plants are becoming far and few between and leaving desolation and poverty in their wake as they move away. As far as I am concerned, candidates can pander on and on and if they provide any kind of relief for the regular guy, I am glad of it. If Clinton introduces legislation to enact a gas tax holiday, good for her and shame on those people who scoff at it.

Again, these people at the food bank who are paying $50 a week on gas will get more benefit from being taught about how to drive and maintain their car, as well as how not to drive, than they will from a gas tax holiday. They will get a lot more benefit from someone fixing public transportation.

For example, the cleaning lady you're talking about. If she had access to someone who could analyze her driving habits, I expect she would be able to save at least 10 times as much as she would from that gax tax holiday.

Also, these savings are two-fold: they help the poor and they help the environment. These savings are also permanent, if they become habits.

The gas tax holiday, on the other hand, harms the environment to the degree that it has any effect on gas prices. Additionally, it's a short-term fix.