Pump Up The Gas Tax?

25 04 2006

Gas prices. A big complaint these days.

I am glad to see that the government is now at least acknowledging that they see it too, but I don’t think this will be effective and it will take too long.

Via Washington Post

President George W. Bush, alarmed by a spike in gas prices at the pump, has asked the Departments of Energy and Justice to look into possible cheating or manipulation of gasoline markets, White House spokesman Scott McClellan said on Monday.

Bush plans to announce his directive publicly in an energy speech on Tuesday in which he will talk about “how gas demand is only projected to increase this summer and experts are projecting that gas prices will remain high,” McClellan told reporters aboard Air Force One as the president flew back from Nevada.

The pain at the pump keeps getting worse for U.S. consumers as the national price for gasoline skyrocketed 13.1 cents over the last week to $2.91 a gallon, the fourth highest average retail price on record, the government said on Monday.

Republican congressional leaders, worried that high fuel costs will turn voters against them in this November’s midterm elections, urged the Bush administration to investigate whether oil companies are gouging consumers at the pump.

“Anyone who is trying to take advantage of this situation while American families are forced into making tough choices over whether to fill up their cars or severely cut back their budgets should be investigated and prosecuted,” Senate Majority Leader Bill Frist and House Speaker Dennis Hastert wrote on Monday in a joint letter to President George W. Bush.

I don’t enjoy paying more at the pump either, but we can’t put all the on the oil companies. And it’s easy to blame Bush because these high increases have happened on “his watch.”

This is from National Review

“Harvard economist Joseph Kalt found that price controls in place from 1974 to 1980 kept domestic production 0.3 to 1.4 million barrels per day lower than it otherwise would have been, and the Congressional Research Service estimates that the windfall tax on oil profits from 1980 to 1988 decreased domestic production by 3 to 6 percent.

Those are just the kinds of numbers we don’t want to see if keeping gas prices low is our goal. The only way to put downward pressure on prices over the long term is to make sure supply can match demand — and that means encouraging domestic oil and gas production, not discouraging it. Hastert, Frist & Co. have it exactly backward.

If Congress really wanted to be helpful, it could allow drilling in the Arctic National Wildlife Refuge and oil exploration on the continental shelves off the western and eastern coasts of the U.S. It could also streamline the onerous regulatory process that has kept the U.S. from building a single new refinery since 1976.

And it could undo the ridiculous ethanol mandate in last year’s energy bill. For years, Congress has required that gasoline contain “oxygenates” to make it cleaner. One such oxygenate, ethanol, is made from corn (among other things). It has accordingly been the traditional additive in the Midwest, while coastal regions have found it cheaper to use the petroleum-based MBTE. No longer. The energy bill requires the use of 7.5 billion gallons of ethanol each year by 2012; at the same time, Congress has denied liability protection to makers of MBTE, who have become a favorite target of tort lawyers. The consequence has been to end domestic MBTE production almost altogether. But since the ethanol industry hasn’t been able to pick up the slack yet, we’ve gotten shortages — and higher gas prices.”

Now check out Neil Cavuto’s response to Sen. Chuck Schumer who did quite a bit of complaining about gas prices:

I see Chuck Schumer wants to investigate the oil companies for price gouging. Why doesn’t he ask his fellow politicians to do the same about tax gouging?

After all, oil companies’ profit works out to nine cents a gallon. Taxes total more like 40 cents a gallon.

But you don’t hear Schumer whining about the taxes. After all, that’s an easy source of revenue for a monotonous list of social programs whose failures are legendary. Better to keep funding them through taxes that are killing us, than demanding accountability due all of us.

Senator, if you want to bring gas prices down, start offering solutions and stop playing games.

Start opening areas for more oil exploration here, so we don’t rely on oil from over there.

So, Chuck, I dare ya’ to flip flop. I guess you’ll have to one way or another. Either gas or taxes. You or someone else…it’s just a matter of time.

It’s also important to note that, especially over the last twenty years, we have enjoyed nice oil price control. But OPEC and our non-activity of domestic drilling has decreased supply, thereby increasing price and the loss of our price control.

If we adjusted gas prices for inflation (which the price controls eliminated), we should be paying a minimum of $4 / gallon, but some sources say it would be in the $6 / gallon range.

I lived in Europe in the late 80’s and early 90’s and gas prices, at that time, were the same PER LITER as they were in the U.S. That means Europeans were paying around $1 / LITER while Americans were paying $1 / GALLON.

Others not enjoying high prices (taxes) at the pump: Michelle Malkin, Wizbang, Stop The ACLU, Right Wing News, Blogs For Bush

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