The candidates are sparring over this one – whether to temporarily eliminate the federal gas tax for the summer in order to allow drivers to get to work and vacation a little more. On one side Barack Obama thinks it is an election year ploy to win votes. On the other hand Clinton and McCain argue that it will offer much needed relief to consumers during this difficult economic time. What is the truth?
Well, Obama’s argument suggests that the average driver will save only a few dollars per week and over the course of a summer will total less than half a tank’s worth of gas. I guess he figured that according to an 18.4 cent per gallon reduction multiplied by the average number of gallons used per week. Not a bad number accept that it forgets about a tremendously large part of the equation. You see, when gas prices go down I save money on what goes into my tank, but I also save money on what goes into everyone else’s tank.
Maybe Obama hasn’t noticed that the price of food has gone up lately? Why, you ask? Well, one important reason is due to the cost of transporting that food across the country. When truck drivers pay more for gas, I pay more for food. (Truck drivers pay 24.4 cents per gallon federal tax on diesel) I also pay more for furniture, clothing, office equipment, footwear, garden supplies, and everything else that gets trucked from one side of this country to another. So I am not saving just a few bucks a week at the pump – I am saving many, many dollars per week at every store I go to. The same way that high oil prices drag the economy down as a whole, when the relief comes it raises the economy as a whole.
What scares me about Obama is that he sees only the first link in this economic chain. He does not seem to understand that dropping gas prices will stimulate the entire economy. Will it pull us out of a recession? Hell No, but it might offer enough relief to motivate people to take an extra day off this summer and spend a little money.
The flip side of Obama’s message is that the gas tax money is sadly needed for road repairs and construction projects. He argues that 7,000 road workers will be laid off from public works jobs in North Carolina alone and the country will be forced deeper into debt. Isn’t it funny how he sees the extended link in the negative side of the equation, but not on the positive side? It is also funny how when McCain offers the money back to us it is a piddling little amount, but when it is in the government’s hands it is a huge amount that will help solve all our energy needs for the future.
Truth be told, the temporary federal gas tax vacation will offer some much needed relief. If we could get the states to chime in then we would have massive relief across the board on all consumer goods. Texas has legislation on the table right now to do just that (They did it last year). In Massachusetts we could save about 42 cents per gallon. But, other states have gas taxes much higher than our own and we would reap a part of that benefit as well. New York residents pay about 63 cents per gallon in total taxes. The gas tax vacation is a good thing.
Read the story here: http://ap.google.com/article/A…
And another one here: http://www.dallasnews.com/shar…