Gas tax holiday = 5% reduction in the cost of gas

[Bill McBlueState]

In their never-ending quest to keep things simple, the media have been quoting what the average driver would save over the duration of a gas tax holiday. But the amount of money you save depends on how much gas you use. Sure, $30 might be a reasonable working average, but if you have a long commute, you might save double that. If you can't afford a car, you won't save anything at all, at least not directly.

It's more helpful to think of the savings as a percentage. The federal gas tax ($0.18/gallon) is about 5% of the cost of gas (currently an average of $3.62/gallon).

No matter how much gas you buy, 5% is a pretty small fraction of what you're spending on it. A ten-gallon fillup would cost $34 instead of $36. Do people break down the doors of a department store that's running a 5% off sale?

Many of us will take whatever relief we can get from high prices, but nobody's going to enjoy a better standard of living with a temporary 5% reduction in the cost of gas.

The candidates should be talking about real solutions to the economy, not little bandaids.

[Dawgs]

1. Uh, why not just tell drivers you will reimburse them for all of their gas costs?

Both ideas have just as much of a chance getting passed by Congress and Bush.

[Bill McBlueState]

2. true

My post didn't address the political feasibility of the tax holiday, but it's unlikely enough to make all the talk about the economics of it fairly useless.

[Kajsa]

3. Has anyone conducted an independent investigation

why the huge price increases occur?

If so, what were their findings?

Huge prices increases and record profits
look very suspicious.

[meow mix]

4. Hillary: "ill buy your vote for 28 dollars"

:puke:

[Texas Hill Country]

5. 5% in fuel costs make a big difference to Truckers... my father-in-law is praying this happens.

[Bill McBlueState]

6. that makes sense

If you're someone who spends an unusually large fraction of your money on fuel (like a trucker), then a small reduction in the cost of fuel would have a larger impact on your budget than it would on most people's.

[SoonerPride]

8. It actually wouldn't decrease price at all. It's a scam.

This entire argument is a boondoggle

[SoonerPride]

7. Gas tax holiday = 0% reduction in the cost of gas

The price you pay at the pump would not be affected. The oil companies would just keep the price the same.

If we are discussing price caps, then yes, a consumer might realize some direct savings, even a measly 5%.

But without a price ceiling, there is no guarantee that the price at the pump would decrease AT ALL.

Been tried before and the stations just keep the price the same and make more money.

[Bill McBlueState]

9. possibly

At any rate, 5% is the maximum reduction. The oil companies may or may not immediately raise the price by 18 cents/gallon as soon as the tax is lifted, but the legislation would have to prevent that to be meaningful.

[SoonerPride]

10. All one can do is look at past experience. And gas tax removal doesn't reduce price.

Now if they wanna talk about some other scheme for price controls, then I'd be interested to at least hear it, but gas tax holidays don't reduce price at the pump

[Bill McBlueState]

11. kick n/t