It's the economics that get in the way of a good idea!

[habitual]

So why exactly is this 'gas tax holiday' a big con???

Glad you asked.

In economics there is a concept of supply and demand. The concept goes like this:

For a particular good, there are two lines that can be drawn, a demand line and a supply line. They are drawn on the same graph with the Price of a unit of the good on the Y-axis and the Quantity on the X-axis. In drawing the line for demand you see at each point on the line how much of a good will be demanded at a particular price. The Supply line is similar and shows how much of the same good will be produced at each particular price. The demand line slopes downward as the cheaper a good is the more is demanded of it. The supple line is upward sloping in that the more expensive something is the more the company wants to produce of it.

The two lines intersect on the graph at what is known as an equilibrium. At this point, people are willing to buy at that price what producers are willing to make at that same price. Everything is peachy.

If, as Hillary Suggests, the Price part of this equation is artificially lowered, that would knock things out of whack, but ONLY FOR ENOUGH TIME FOR THE MARKET TO CORRECT this imbalance. The market reacts VERY QUICKLY to things like this and the immediate effect would be an INCREASE in the demand for the good.

take a look at this graph of the effect of an increase in demand on the graph, it serves to push the demand curve farther to the right. Shortly, after an shift in this curve, the price will start to rise again to it's equilibrium level, which is now either back at the original level OR even higher:


source: http://en.wikipedia.org/wiki/Supply_and_demand

Let's see where this extra savings that we thought we had will go then.... we're still paying the same price for gas, but the tax that the government was receiving from the price of gas they are now extracting directly from the oil companies.... so as far as the government goes, they see no change in their revenue from gas purchases. The consumer sees only a short tiny blip in the price of gas as it goes down very temporarily but then rise right back up, so they will see no real relief. The oil co's see no change as they are now paying a tax that they did not have to before BUT prices are now at the old level AND THE GOVERNMENT IS NO LONGER TAKING OUT THE TAX -- meaning they get what used to be used for taxes, so they see no change in their revenue... IT IS A BIG ILLUSION THAT ENDS EXACTLY HOW IT STARTED if we're lucky.