You know, it's one thing when a Republican proposes a tax cut that will only help large corporations and hurt the rest of the country. But when a leading Democratic presidential hopeful echoes him, that really just takes the cake. I don't know if she just doesn't understand the economics of supply and demand, fails to understand what this tax will save/cost, or is just being naive, but this is just ridiculous.
At current gas prices, about $3.50 per gallon, the average American will spend $420 for gas over the three months being proposed (1000 miles per month, 25 mpg vehicle). Of that, a total of
$7.36 $22.08 (over three months) goes to the government in tax. That isn't even half a tank of gas saved should the tax be revoked for a few months. And that is at current prices; gas is expected to reach $4 per gallon or more by the time this "holiday" is proposed to go into effect. That $7 $22 won't cover a quarter tank of gas. I might be able to get to work and back on that, but I live a mile or two from work.
Then there is what that tax pays for. $7 isn't much for you or me when it comes to gas, but $7 from all of us over those three months is several hundred million dollars that go to maintain roads and bridges. McCain doesn't have any idea of how to make that up, so at least Clinton does improve on that plan by also proposing a "windfall" tax on the gas companies. The thing is, that tax is just going to be passed on to us the consumers in the form of raised gas prices. So, if you're following all this, Clinton is proposing to lower front end gas taxes for three months, but raise taxes on the gas companies that will then raise the cost of gas to compensate.
All of this completely ignores the fact that gas prices are (largely) determined by the amount of gasoline available. Now, I expect that, largely, supplies are being kept lower by these companies in order to help push prices up slightly, but there are a number of things entering into this.
One is the supply of raw oil. Much of this comes to us from the Middle East, where Clinton is doing some saber rattling of her own to match Bush's and McCain's. This heightens the instability in the region and causes crude costs to go up.
Next is refining capacity. This is where, I think, oil corporations are doing the most to keep prices up. Oil companies would like you to think that they aren't being allowed to build new refineries. This is completely untrue. In 25 years, 1975 to 2000, there was one application to the EPA for a permit to build a refinery. There are environmental requirements that must be met to build a new refinery, as well there should be. But there is nothing creating a blanket ban on building new refineries. Instead, oil companies are holding out for a tax break ransom, holding these high gas prices over our heads and threatening to move them higher unless they get paid to make new refineries instead of paying to do it themselves.
I say we don't negotiate with these economic terrorists and instead encourage lower consumption through higher CAFE standards and increased development of alternative energy sources. These are the proposals that Sen. Obama has voted for and supports expansion of.
EDIT: Fixed amount saved in the tax holiday. Originally I had calculated it for only one month.