The Fuel Tax Holiday Debate

Senator Obama is stating that his political opponents – Senators Clinton and McCain, are pandering to the voters with their proposed suspension of federal gas tax (18.4 cents per gallon presently) in order to get Americans through the summer with a relief on cost at the fuel pump. Economists state that this is a bad idea.

Yet, during the course of Senator Obama’s state legislator’s office, he has voted for such a thing three times in the past …

Fact Check: Obama and Gas Taxes by Christopher Wills …

Democratic Sen. Barack Obama accuses his presidential rivals of pandering to voters by supporting the “gimmick” of temporarily lifting federal taxes on gasoline, despite his own past support for a similar tax holiday. … Most experts criticize the idea of a federal tax suspension, but Obama’s political opponents accuse him of flip-flopping and ignoring the financial pain caused by today’s rising gas prices. … The Facts:
In 2000, gasoline prices were climbing quickly, reaching $2 a gallon in the Chicago area … Illinois legislators scrambled to offer some election-year relief to angry motorists.
Obama voted three times for a tax holiday.
The version that ended up becoming law required a six-month suspension of the state’s share of the sales tax on gasoline, a 5 percent tax paid directly by consumers rather than gas stations. … The impact of the tax holiday was never clear. … During a three-month suspension, the average driver would save only about $28, according to the American Association of State Highway and Transportation Officials.
“That assumes the oil companies are going to give it to you. That’s probably not a likely outcome,” said Jack Basso, the association’s director of management and business development.
If oil companies did pass along the savings, tax experts say, the lower prices would increase demand. Since refineries are already at maximum production levels, the increased demand probably would drive prices back up. The association also estimates that suspending the tax would divert about $8.5 billion from the Highway Trust Fund, which pays for road and bridge repairs and already faces a shortfall of $3.2 billion. Taking that tax money from the trust fund could endanger hundreds of thousands of jobs – every $1 billion in highway money supports 33,000 jobs, by one estimate … McCain suggests avoiding that problem by replacing the lost money with unspecified funds from elsewhere in the budget. Clinton wants to impose a new tax on oil company profits to make up for lifting the gasoline tax.

What really should be done is that Congress forget this tax holiday, quit making matters worse by punishing American oil companies and pass the Alaskan drilling legislation that fell by the way, pass approval for building another refinery, as well as upgrading the refineries already in operation. Supply and demand determines the cost of fuel when it comes to crude oil, and we should be producing more in America and only supplementing from choice nations. Presently the two top importers of crude oil to America is Canada (#1) and Saudi Arabia (#2) with Mexico and Venezuela in the top five of the list of importers. The latter three countries do not care about American interests or the stability of world crude oil prices. The fault is not with oil companies, it is with Congress. It is time they stop passing the buck. It is also time for Congress to quit taking from Peter to pay Paul. We need a responsible budget. As my wife said: “If we did to our budgets and checking account the way the government runs our treasury, we would go to jail.”

LINKS:

In Defense of Oil Companies, April 29th 2008 - Money/CNN
Exxon, World’s Largest Publicly Traded Oil Company Posts Quarterly-Annual Profit Records - CNN-Money
Oil Refiners Profit Margins Seasonal Weak - Market Oracle, UK
Big Profits, Even Bigger Margins - Business Week
Oil Executives Face the Big Bad Government - Political Lore
Slippery Questions About Oil, Gas and Biofuel - Associated Press