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Why the is diesel still $3.30 when unleaded reg. is $1.88?
I don't remember it being that much more than unleaded 3-4 years ago.
Taxing our gas guzzling relapse
As gas prices fall, Americans seem to be using relief at the pump as an excuse to drive more. Could a gas tax bring unexpected benefits?
NEW YORK (CNNMoney.com) -- Gas prices have plummeted 44% since peaking at over $4 a gallon this summer, and are now averaging around $2.30.
There's some evidence suggesting Americans are using the savings not to buy groceries or make home payments, but instead to drive more. That may, in turn, drive up demand and push prices right back up.
So while gas prices are still well below $3 a gallon, is now the time to pass a gas tax in an effort to keep demand down?
And will a President Obama, who wants to cut greenhouse gas emissions, have the political firepower to call for a tax that most politicians are unwilling to discuss - even though many economists say it would be the most efficient way to reduce global warming?
"There's no question, it will be successful as a way to cut consumption," said Gary Becker, a Nobel Laureate economist at the University of Chicago. "It's certainly a better time to enact it, than when gas was at $4 a gallon."
To those who support a gas tax, cutting consumption has many benefits.
First, it reduces greenhouse gas emissions. It also helps alleviate congestion and eases the burden on the country's aging roads and bridges.
While it is likely to raise prices immediately, the tax would also simultaneously act to reduce consumption, so the market price for gas would likely fall. That would mean less money for OPEC or Exxon Mobil.
If the government raised the gas tax by $1, that's about $140 billion dollars a year that could be used for schools, roads, or whatever the feds wanted to spend the money on.
"If we can cut gas consumption, we can cut oil imports and we cut how much (money) we send to overseas nations," said Becker.
As gas prices passed $4 a gallon this summer, there was ample evidence that Americans were driving less.
Sales of big cars and trucks plummeted. As fall approached, it was clear Americans were changing their driving habits.
Numbers complied by MasterCard's SpendingPulse market report showed gas consumption falling by as much as 9% in early October, a deeper decline than the 4% or 5% seen throughout the summer. Government figures for October showed a drop of over 4%, also outpacing earlier government estimates.
Americans love to drive
Gas prices have fallen sharply since the summer and Americans once again are getting behind the wheel.
The latest MasterCard report shows a drop of only 4%, while government figures show a decline of 2.5%, despite an economy that only appears to be getting worse.
Sales of trucks are improving. J.D. Power and Associates say that the most recent figures show that of people buying new vehicles, a greater number are buying trucks compared to previous months.
While the renewed interest in truck sales is partly due to bigger incentives and pent-up demand, falling gas prices most certainly played a part.
There's got to be another way
A gas tax is of course just one way of cutting consumption, and some feel it's too crude a tool.
"It wouldn't be the most efficient way to decrease energy demand," said Chris Lafakis, an economist at Moody's Economy.com, an economic consultancy.
Lafakis feels gas demand is too inelastic to be reduced with a tax - that is, people live too far from work and have to drive no matter how high the price.
A better way to reduce oil consumption, he says, would be for the government to promote different fuels - like natural gas, biofuels, or electricity.
With at least $25 billion promised to U.S. automakers, he feels that the feds have ample leverage to get them to build cars that use less gas.
There are also those that downplay the dangers of global warming and say what the country needs is more energy at a cheaper price.
"You do not get more energy by taxing energy," said David Kreutzer, an energy economist at the Heritage Foundation, a conservative think tank. "The damage to the economy is fairly significant, while the case for catastrophic global warming just doesn't hold water."
There's also the criticism that a gas tax is regressive - it hits poor people more than rich ones. Now would be a terrible time for a new tax, with people losing jobs and the economy on the skids.
But proponents say a gas tax need not be a new tax, just a shift in taxes.
Andrew Samwick, an economic professor at Dartmouth, suggested lowering the payroll tax - which evaluated from an economists' standpoint discourages people from working, and replacing it with a gas tax, which would discourage people from driving.
"Is there anybody who would actively promote the reverse," asked Samwick.
Gas tax? Don't bet the farm
As to whether Obama or the new Congress would attempt such a thing, no one spoken to, for this story, thought it was likely in the short term.
A spokesman for Obama said they were too busy dealing with the transition right now to comment on policy matters.
Politicians have long resisted a gas tax, simply because they fear voters will kick them out of office for passing such a blatant tax.
Obama would be better off dealing with a more politically popular problem, like health care, said Samwick, in order to get some momentum rolling in his administration.
As for Congress putting their neck on the line and picking up with a gas tax, "you would have to invent a negative number for probability," he said.
Did you vote for Obama? How do you think the new president will affect your wallet? What do you think Obama needs to do to fix the economy - both in the short run and the long term? What should be first on the new Congress's agenda? E-mail us your thoughts, including your name, photo and contact info; the best answers will be featured in an upcoming CNNMoney.com article. To top of page
http://money.cnn.com/2008/11/06/news...ion=2008111005
more taxes who would have thought it
Why the is diesel still $3.30 when unleaded reg. is $1.88?
I don't remember it being that much more than unleaded 3-4 years ago.
I think gas prices will fluxuate allot. However, it is obvious that the amount of supply vs. demand decreasing the price blows away the people who say things like "It's only a year supply" speaking of ANWR. If we tap such a region, over 20 years, tyhe extra supply will help keep prices low!
Now as for gas taxes, this is the one tax I can think of that deserves an increase. Just like in out tax structure, The standard deduction and exemptions are indexed to inflation, gas taxes should be too. My state hasn't increased gas taxes in years. Neither has the federal gas tax been increased in years. I think we should take the $0.184 federal tax and increase it by how ever much inflation has gone up over the time since it went to that price.
I know, it might be a big increase. I don't want to see it to curb driving like some do, but so it can serve it's purpose. Keeping the road in good repair.
I think it has to do with the new mandated diesel standards that went into effect recently. I noticed that too. It used to be close to the price of premium, but wow... It's way up there now!
If Obama is smart, he will not support a gas tax...it would take a lot of air out if his win.
Last edited by samikeyp; 11-17-2008 at 12:35 AM.
A gas tax is bull . There are lots of cities in this country where the only way to get to your job is by driving, and this tax will truly screw the poor and middle class. I'd love to drop the demand for gas, but a much better way would be to invest in efficient public transportation such as light rail. Our highways in cities really can't effectively deal with how many cars we have on the roads, so that would be another plus to having legit public transportation (not just crappy buses).
While I do think the gas tax should increase, I'd hate for the feds to increase the gas tax. Many states are having financial issues, and Texas isn't even close to be able to afford needed road improvements. States should raise their gas taxes to help cover that.
Yeah, but some state's get jacked on it, plus that's designated for specific projects and doesn't help with things like repaving surface streets, building new county or state highways, etc. It also could help states with the general budget crunch many are facing, while a federal increase wouldn't.
I just think it's more effective if the states raise their state gas tax instead of increasing the fed tax rate.
Of course, take into account that I'm very much a federal minimalist, so of course I'd prefer it be left to the states anyway.
I don't support a consumption-based gas tax because I think it unfairly penalizes the poor. I prefer a method be devised to pay a "gas tax" on vehicles at tag application and renewal based on mpg. You want to drive the 10mpg -you-mobile, that's all good, just bring your checkbook. Poorer Americans will be less penalized than they would under a per-gallon tax system (as they tend to drive cheaper and more efficient cars). The middle class would be weaned off the gas guzzlers, motivating car producers to build more fuel-efficient vehicles and the rich would still have the freedom to drive whatever than can afford.
Everyone wins.
..
ducks, you can't even write a thread le that makes sense?
Europeans consume much less gas than US does, have much more efficient cars, because the Europeans accepted high gas taxes as the adult way to force down consumption permanently.
The Americans freaked out with gas at $4+ and reacted dramatically to reduce driving, shop for more efficient vehicules, quit buying gas guzzlers. Imagine how they would react, with all the fantastic benefits of reduced oil import and kicking the corrupt oilcos in the balls, if gas were taxed to European levels of $7-$9.
Last edited by boutons_; 11-17-2008 at 10:30 AM.
I like the idea of increasing the gas tax (though $1 seems a little high). I think maybe an increase of $0.20 would be a good start. This would provide the money needed to fund the Obama plan of $15B per year for alternative energy sources, with a little money left over. Additionally, I like the idea of having a progressive registration fee structure with the highest MPG's paying the lowest and the lowest MPG's paying the highest. This could provide a revenue stream for counties to start investing in public transportation. I really like this idea. We should make it happen!
I couldnt even discern what the this thread was about.dukks
As for the tax, it doesnt make sense. Discouraging the consumption of oil is not the path to energy independence. Youre hurting only those who have a hard enough time as it is. Doesnt make sense at all.
Poorer Americans are then going to be pushed to buying the 10 mpg -you-mobiles while the gas sippers will go way up in price. I bought a used car during the $4.50/gallon mess a few months ago, and it was pretty hard to find decent-mileage cars in good shape for good prices as opposed to the the SUVs and trucks that were all over the place and cheap.
Europe also has real public transportation unlike most of the US.
Some of you disgust me calling for $9 taxed to gas.
I hope your wealthy bosses fires you all.
Telling other people what they should be driving, STFU.
even though many economists say it would be the most efficient way to reduce global warming?
"real public transportation"
... could be subsidized with gas taxes.
CA just voted for a high-speed inter-city rail project, and intra-city light rail and tramways are being looked at in many cities.
USA must assume that cheap oil is no more, and figure out how to move people around more efficiently than one passenger per car.
I am sorry, what others drive affects me directly. The more 17 MPG SUVs that are on the road, the higher the demand. The higher the demand, the greater the price of gas. I also drive (or more precisely ride as in a motorcycle), and the price I pay for gas is directly affected by these idiots who drive cars that are inefficient. This doesn't even take into account the health and environmental impacts that these dirty automobiles are responsible for. So until I am not affected by what others drive, I absolutely will not STFU about it.
I wish my truck got 17 mpg!
Agreed.
Plus, we live in a democracy-- isn't the whole point that we all discuss and debate these types of issues, and NOT shut the up? Whenever I see someone use the "STFU" approach, it makes me think that they just have no good answer for something that they disagree with.
To stop this from happening, it could be a graded increase of the registration fees over the span of say 5 years starting a year from when it is passed. This would allow the auto makers to be able to have a clearer plan for the production numbers that would be necessary. When you bought your used car in the summer, we were in the middle of a run up in the price of oil that was unprecedented in both dollar amount and period of time. This did not allow for much adjusting in production levels (if any at all) by the auto companies. Additionally, they didnt know if it would be permanent (it was not . . . yet), while they will know that the demand resulting from this law would be permanent. I honestly dont see the problem.
Any large scale increase (of just about anything) should be graded in. It's not good for anyone when prices jump about.
I'd certainly be in favor of adding a tiered fee inversely based on rated MPG of the vehicle. It'd suck for me (driving a guzzler and all), but it's something I've liked the idea of for a while.
I'd still like to see the gas tax go up at least a little bit, such as increasing the TX state gas tax from 20 cpg to 30 or 40 cpg.
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