A lot of environmentalists have criticized GOP presidential candidate-to-be John McCain for calling for an elimination of the Federal gas tax for this summer, arguing that such a cut would encourage fossil fuel consumption and lead to emission of more greenhouse gases.
Maybe, maybe not. A much simpler argument against that pandering exists, simpler even than the fact it will never pass (nobody in D.C. stands in the way of the highway and roads lobby for long).
Paul Mulshine of The Star-Ledger (in New Jersey) explains. Bluntly. Watch out for this guy in a dark alley.
McCain came out with a proposal the other day that was every bit as clueless as his many gaffes on Iraq. He wants to suspend the federal gas tax for the summer driving season.
"The effect will be an immediate economic stimulus, taking a few dollars off the price of a tank of gas every time a family, a farmer or trucker stops to fill up," McCain said.
No, it wouldn't. McCain is failing to take two things into account:
Supply.
And demand.
The supply of gasoline during the summer months is limited by refinery capacity. If demand rises, as it traditionally does in the summer driving season, the price will remain roughly the same even if the federal gas tax of 18.4 cents a gallon is lifted, says Len Berman, director of the Tax Policy Institute in Washington.
"The elasticity in supply is very low, so a cut in the gas tax is mostly just going to translate into higher prices," said Berman.
Florida officials tried the same stunt several years ago, says Fred Rozell of the Oil Price Information Service, the national authority on oil prices, based in Lakewood. They cut the state gas tax, but prices failed to drop accordingly. Why? It's hard to tell, said Rozell. Maybe people were driving more or maybe the service station owners were just pocketing the difference.
"The state spent all this money to see if gas stations actually chopped the price off," said Rozell. But the results were inconclusive.
And when it comes to cutting the federal gas tax, Rozell agreed with Berman that the supply for the coming summer is already set, so cutting the tax would not necessarily lead to a drop in prices.
Update: Now Hillary has joined McCain in calling for the elimination of the gas tax this summer. How low will she go? Once again, sound bite politics trumps the environment...and common sense.
