Gas Tax Holiday....good idea or not? - Tilted Forum Project Discussion Community

dc_dux · 04-30-2008, 07:39 PM

As a short term response to rising gas prices, McCain and Clinton both support a gas tax holiday by suspending the federal tax on gas between Memorial Day and Labor Day.

Clinton would offset the lost tax revenue by a comparable windfall profit tax on oil companies; Mcain would offset it, but wont specify how.

Obama does not support it at all.

The federal gas tax is a flat rate of $.18/gal. The tax is earmarked for the highway trust fund to be used for infrastructure repair and related transportation projects.

According to estimates from the American Association of State Highway and Transportation Officials (AASHTO), suspending the tax for 3 months would save about $28 for those who drive about 12,000 miles/year....or computed another way, about 60 cents/day. Double that if you drive 24,000 miles/yr.

On the flip side, AASHTO estimates a loss of $8.5 billion to the highway trust fund for critical bridge/highway repair projects...and a loss of about 300,000 jobs.

I'm with Obama on this. Its an election year "solution" that really provides no meaningful savings at all to most consumers.

spindles · 04-30-2008, 07:44 PM

I think it is a terrible idea. All it does it encourage people to have bigger/less fuel efficient cars.

SecretMethod70 · 04-30-2008, 07:49 PM

You said it. Terrible - and, worse yet, gimmicky - idea.

One thing that isn't getting mentioned much in regards to this is how hypocritical it is for anyone to simultaneously say they will take global warming seriously yet propose this gas tax vacation.

filtherton · 04-30-2008, 08:19 PM

They should raise the gas tax and give people who actually need to drive exemptions.

Rekna · 04-30-2008, 08:23 PM

It seems pretty silly to me. It is nothing other than a political stunt and I commend Obama for calling a spade a spade.

MSD · 04-30-2008, 08:31 PM

1: Shifting the tax burden from the consumer to the companies means they'll charge us more to cover their costs. Net change to price: 0

2: Doesn't know how he'll pay for it? I'll give you a hint: who have we borrowed most of our budget deficit from? China.

hiredgun · 04-30-2008, 08:57 PM

MSD is correct. The real net savings to the consumer isn't $30 or whatever, it will be about zero. Supply is inelastic, and so prices will have to rise to accommodate demand. I don't know of any credible economist who would dispute this.

And the Clinton plan to tax oil companies is a misdirection. Whether you nominally tax the consumer side or the producer means almost nothing. The real tax incidence - i.e. where the tax ends up hurting - is determined by the underlying fundamentals of the market in question.

The saddest thing is that I'm sure the candidates are well aware of this.

SecretMethod70 · 04-30-2008, 09:00 PM

Clinton is. McCain admits he doesn't know much about economics...I can believe he may not understand this. Which is fine - the sad thing is that he has advisors who should.

via DailyKos...

Quote:

McCain-Clinton Gas Tax Holiday Proposal Slammed
by SusanG
Wed Apr 30, 2008 at 09:58:37 AM PDT

File this under "It Didn't Even Seem Like a Good Idea at the Time":

Quote:

WASHINGTON (Reuters) - A gas tax holiday proposed by U.S. presidential hopefuls John McCain and Hillary Clinton is viewed as a bad idea by many economists and has drawn unexpected support for Clinton rival Barack Obama, who also is opposed.

"Score one for Obama," wrote Greg Mankiw, a former chairman of President George W. Bush's Council of Economic Advisers. "In light of the side effects associated with driving ... gasoline taxes should be higher than they are, not lower."

The Reuters article cites Bush's former chariman of the Council of Economics advisors, economics professors, think tank wonks and Paul Krugman, all agreeing that the proposal sucks eggs. When you have Krugman and former Bush officials agreeing on something, it must truly be bad.

Quote:

Economists said that since refineries cannot increase their supply of gasoline in the space of a few summer months, lower prices will just boost demand and the benefits will flow to oil companies, not consumers.

"You are just going to push up the price of gas by almost the size of the tax cut," said Eric Toder, a senior fellow at the Urban-Brookings Tax Policy Center in Washington.

Obama threw out a great quote about the proposal yesterday; "This isn't an idea designed to get you through the summer, it's an idea designed to get them through an election."

Confirmation of Obama's take was provided this morning by the Washington Post:

Quote:

Clinton aides think that even if the measure is a limited way to reduce gas prices, it allows the candidate to bash oil companies and cast her opponent against an idea that has political appeal.

Aside from the political ploy aspect, there is the long-term cost of convincing the public that such an elementary quick fix will solve our energy problems, as the Reuters article points out:

Quote:

Many economists implicitly agreed with Obama and said the McCain-Clinton gas tax plan sent the wrong signal on energy efficiency and was at odds with their pledges to combat climate change by encouraging lower U.S. carbon emissions.

Update: To get an extra taste of how bad it is, here's an excerpt from uber-Clinton supporter Krugman's analysis:

Quote:

Anyway, John McCain has a really bad idea on gasoline, Hillary Clinton is emulating him (but with a twist that makes her plan pointless rather than evil), and Barack Obama, to his credit, says no....The Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it’s pointless, not evil. But it is pointless, and disappointing.

Update #2: And here's Tom Friedman on it as well:

Quote:

Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for this summer’s travel season. This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.

samcol · 05-01-2008, 05:56 AM

I think it's a good idea but it should be permanant, and it should only be compensated by cutting government programs elseware.

The_Jazz · 05-01-2008, 06:02 AM

Given the tie from this money to highway funds, it seems short-sited. Add that to the fact that this is only going to reduce gas prices for about 5% and won't impact oil companies' ability to increase their prices by the same amount, and it seems like a bad idea.

Cynthetiq · 05-01-2008, 06:05 AM

does nothing for me. I don't drive that much <8,000 miles per year.

It won't reduce the cost of my bagel which went up from $.60 to $1.00 this year. It won't change the cost of my eggs which also went up to $2.69 from $1.89.

Tully Mars · 05-01-2008, 06:30 AM

Quote:

Originally Posted by Cynthetiq

does nothing for me. I don't drive that much <8,000 miles per year.

It won't reduce the cost of my bagel which went up from $.60 to $1.00 this year. It won't change the cost of my eggs which also went up to $2.69 from $1.89.

I think the rising food costs are directly tied to fuel costs. You can't buy it if it isn't shipped to you. Shipping it to you is becoming more costly. In WWII the US was blanketed with "victory gardens." Wonder how high food prices have to get for them to return?

That side, I don't see this as anything but a gimmick to get votes. I don't see it saving anyone any actual cash. Therefore I see it as a bad idea.

Cynthetiq · 05-01-2008, 06:44 AM

exactly tully..... all those "fuel surcharges" that are added onto things like airline tickets, FedEx won't go away.

the truckers aren't going to "give back" that amount they saved from the gas holiday. so my food prices will stay the same.

aceventura3 · 05-01-2008, 06:54 AM

Quote:

Originally Posted by dc_dux

I'm with Obama on this. Its an election year "solution" that really provides no meaningful savings at all to most consumers.

The gas tax holiday idea is a 100% political move to get votes. Either McCain's way or Clinton's way consumers will still end up paying for this tax holiday.

Under McCain's plan, assuming the tax money is needed for the intended purpose, either we pay through the gas tax now or we pay through increased taxes later.

Under Clinton's plan oil companies will pass on any increased costs to consumers. The concept of controlling "windfall profits" through taxation shows a lack of a long-term economic view. The "windfall profit tax in the early 1980's actually lead to lower relative domestic oil production and tax collections were significantly lower than the Federal Government anticipated.

To the degree that oil companies are making excessive profits, we only need to look at how government is restricting supply and competition in the market for starters.

Ustwo · 05-01-2008, 07:37 AM

Quote:

Originally Posted by aceventura3

To the degree that oil companies are making excessive profits, we only need to look at how government is restricting supply and competition in the market for starters.

Winner.

The reason I pay .50 more a gallon than I would 40 miles to the east of me is not due to supply and demand.

aceventura3 · 05-01-2008, 07:44 AM

Quote:

Originally Posted by Ustwo

Winner.

The reason I pay .50 more a gallon than I would 40 miles to the east of me is not due to supply and demand.

How do you explain the difference?

Ustwo · 05-01-2008, 07:47 AM

Quote:

Originally Posted by aceventura3

How do you explain the difference?

From what I gather, and its been a few years since I looked, my area gets one of those special EPA type of gasoline which is limited in production to only a few refineries.

So yes you could say its supply and demand, but the government is regulating the supply.

The_Jazz · 05-01-2008, 08:03 AM

Price is not the only issue at stake here. Ustwo, the product you're referring to is a cleaner-burning fuel that is used in the summer months to reduce the amount of pollution carried downwind. That pollution is a major contributor to acid rain that affected forests and farmland.

And Illinois has some of the highest gas taxes in the US. If I remember correctly, it's about $0.40 higher than GA, which is on the low end of the spectrum.

But the weak dollar and high price of crude is also affecting the gas price.

Tully Mars · 05-01-2008, 08:11 AM

Quote:

Originally Posted by Cynthetiq

exactly tully..... all those "fuel surcharges" that are added onto things like airline tickets, FedEx won't go away.

the truckers aren't going to "give back" that amount they saved from the gas holiday. so my food prices will stay the same.

Truckers in southern states are driving to Mexico to buy diesel, it's just under $2 a gallon here. I guess the US custom officials are stopping them if they're carrying more then 110 gal.

Big companies will likely weather this situation. Small and/or family owned businesses are fucked.

Reminds of the US stance on importing cheaper medications from Canada.

Ustwo · 05-01-2008, 08:15 AM

Quote:

Originally Posted by The_Jazz

Price is not the only issue at stake here. Ustwo, the product you're referring to is a cleaner-burning fuel that is used in the summer months to reduce the amount of pollution carried downwind. That pollution is a major contributor to acid rain that affected forests and farmland.

And Illinois has some of the highest gas taxes in the US. If I remember correctly, it's about $0.40 higher than GA, which is on the low end of the spectrum.

But the weak dollar and high price of crude is also affecting the gas price.

I know the reason and I am not convinced the cleaner burning really does anything major or not.

As for the taxes, I'm not surprised there either.

Perhaps the issue is we need a tax holiday from gas, not a federal tax holiday

The_Jazz · 05-01-2008, 08:20 AM

Quote:

Originally Posted by Ustwo

I know the reason and I am not convinced the cleaner burning really does anything major or not.

As for the taxes, I'm not surprised there either.

Perhaps the issue is we need a tax holiday from gas, not a federal tax holiday

The cleaner gas contains less sulfur. I think that we can agree that less sulfur in the atmosphere is good, if for no other reason than the smell. If you need another reason, think about what you get when you combine sulfur with oxygen.

Willravel · 05-01-2008, 08:32 AM

Massively, completely and utterly stupid. We need high taxes and cost cutting immediately, not more governmental debt.

Ustwo · 05-01-2008, 08:36 AM

Quote:

Originally Posted by The_Jazz

The cleaner gas contains less sulfur. I think that we can agree that less sulfur in the atmosphere is good, if for no other reason than the smell. If you need another reason, think about what you get when you combine sulfur with oxygen.

H2SO4.

Funny how I haven't needed that formula in about 10 years and yet there it pops into my head. At least I don't have to titrate anything these days.

One of my first science projects was on the effect of acid rain on annelids, I'd guess about 1982, it wasn't very good, but we all start somewhere. One lesson I learned there but didn't really grasp until I was much older is that running a scientific experiment is actually boring.

Now I'm not current on this subject, but last time I looked there were like 40 different EPA approved gasolines for various parts of the country. My thoughts were far fewer would still produce the same effect while allowing for a broader base of supply.

Tully Mars · 05-01-2008, 08:37 AM

Quote:

Originally Posted by willravel

Massively, completely and utterly stupid. We need high taxes and cost cutting immediately, not more governmental debt.

I don't know if we need high taxes, but we'd better start undoing what's been done. The amount we're borrowing and spending in Iraq alone is enough to do to us what Afghan did to the Soviets a couple decades ago. How fast that happens is debatable but I think the writings on the wall.

Willravel · 05-01-2008, 08:48 AM

Quote:

Originally Posted by Tully Mars

I don't know if we need high taxes, but we'd better start undoing what's been done. The amount we're borrowing and spending in Iraq alone is enough to do to us what Afghan did to the Soviets a couple decades ago. How fast that happens is debatable but I think the writings on the wall.

Even with massive cost cutting, it will be necessary to raise taxes to make back the money spent. Unless the government shuts down for a year or two.

Ustwo · 05-01-2008, 09:07 AM

Quote:

Originally Posted by willravel

Even with massive cost cutting, it will be necessary to raise taxes to make back the money spent. Unless the government shuts down for a year or two.

Whats better taxing a million dollar transaction at 20% or taxing two, million dollar transactions at 10% each?

Which one will help the economy more?

There is a limit to higher taxes. Revenues are at an all time high, we just need to stop spending and that INCLUDES all the left wing entitlement programs. Earmarks are at the second all time high despite congress being in democrat hands

I'd also add that defense spending, despite the war on terror is a lower % of the GDP than just about any time in the past outside of 2000.

So no the war on terror isn't making us broke, and raising taxes is not the answer in a weaker (yet still growing) economy, unless you would like a depression.

Edit: You know my own personal 'when will we have a revolution' estimate has been 2050. Looking at the data I did to check on this post, it turns out that 2052 is when entitlement spending alone (no defense or anything else) will be higher than tax revenues. I might be more right than I thought.

Willravel · 05-01-2008, 09:12 AM

Did you factor in Democratic presidencies?

Ustwo · 05-01-2008, 09:21 AM

Quote:

Originally Posted by willravel

Did you factor in Democratic presidencies?

Yep, raising taxes (which did little to increase tax revenue, just shifted the burden directly to the wage earner) and slashing defense spending to get a democrat 'balanced' budget is irrelevant. Interesting Clinton raised the taxes on the average American more than any other president, yet reinues are higher under Bush

The MANDATORY increases in spending for social security, Medicare, and the like will outpace tax revenue by 2052. Doesn't matter if Ron Paul is president if the entitlement programs dont' change.

smoore · 05-01-2008, 09:25 AM

It's just pandering. WTF is $0.18/gal going to REALLY do? Nothing. Besides, if you tax the gasoline companies does anyone really expect that cost to be absorbed? Hell no. They like their record profits and they will continue to make them.

Quote:

Originally Posted by filtherton

They should raise the gas tax and give people who actually need to drive exemptions.

This is a decent idea. I would pay more for gasoline if I knew my grocery prices weren't going to go up as a result of the increased tax.

aceventura3 · 05-01-2008, 10:31 AM

Remember when Pelosi and the Democrats made this promise to the American people about 2 years ago.

Quote:

Washington, D.C. – House Democratic Leader Nancy Pelosi released the following statement today on President Bush’s, Speaker Hastert’s, and the Republican Congress’ empty rhetoric on gas prices. Key facts on the Majority's failure to address gas prices follows Pelosi’s statement.

With skyrocketing gas prices, it is clear that the American people can no longer afford the Republican Rubber Stamp Congress and its failure to stand up to Republican big oil and gas company cronies. Americans this week are paying $2.91 a gallon on average for regular gasoline – 33 cents higher than last month, and double the price than when President Bush first came to office.

“With record gas prices, record CEO pay packages, and record oil company profits, Speaker Hastert and the Majority Congress continue to give the American people empty rhetoric rather than join Democrats who are working to lower gas prices now.

“Democrats have a commonsense plan to help bring down skyrocketing gas prices by cracking down on price gouging, rolling back the billions of dollars in taxpayer subsidies, tax breaks and royalty relief given to big oil and gas companies, and increasing production of alternative fuels.”

http://www.house.gov/pelosi/press/re...bberstamp.html

Too bad she could not deliver on her promise, or perhaps it was just an empty political statement. Yes, yes I already know the response I am going to get - its all Bush's fault.

SecretMethod70 · 05-01-2008, 10:37 AM

The Bush administration has significant fault for some of the failures of Congress these past 2 years, but Pelosi is not without fault either. Pelosi is a woman who refuses to fight for the impeachment of what is perhaps the most impeachable presidency in our history (and certainly the first which would not have been impeached on trumped up, political charges). Clearly, she and other Democratic leaders in Congress lack the courage necessary for their positions.

aceventura3 · 05-01-2008, 10:55 AM

Quote:

Originally Posted by SecretMethod70

The Bush administration has significant fault for some of the failures of Congress these past 2 years, but Pelosi is not without fault either. Pelosi is a woman who refuses to fight for the impeachment of what is perhaps the most impeachable presidency in our history (and certainly the first which would not have been impeached on trumped up, political charges). Clearly, she and other Democratic leaders in Congress lack the courage necessary for their positions.

On the subject of oil and gas I suppose they could have some more hearings. They can make those bad-bad-bad oil company executives explain their profit margins again. By the way their profit margins are about 10%, less than the S&P 500 average and generally the same as they were 5 years ago, go figure!?! I guess facts should never get in the way of an angry public.

SecretMethod70 · 05-01-2008, 10:59 AM

Hey now, I never said anything about blaming the oil companies: that's the Clinton-McCain drum. As I mentioned in another thread: our oil prices are only just starting to accurately reflect the environmental and political cost of our oil consumption.

aceventura3 · 05-01-2008, 11:09 AM

Quote:

Originally Posted by SecretMethod70

Hey now, I never said anything about blaming the oil companies: that's the Clinton-McCain drum. As I mentioned in another thread: our oil prices are only just starting to accurately reflect the environmental and political cost of our oil consumption.

My bad. I have gotten so used to oil companies being blamed, and the need to tax their "excessive" profits. Some don't seem to recognize the difference between increased revenues, net profits-measured in dollars, and profit margins. Additionally, as indicated by the relative consistency in profit margins over time, some don't realize that increased costs (even increases in taxes) are passed to consumers. The real answer to reducing the price at the pump is for government to regulate in a manner that will allow increased supply of oil and gas in the market.

dc_dux · 05-01-2008, 11:37 AM

Quote:

Originally Posted by aceventura3

The real answer to reducing the price at the pump is for government to regulate in a manner that will allow increased supply of oil and gas in the market.

Ace..where will that increased supply come from...particularly short term?

Much of the blame, aside from habitual reliance on (and infatuation with) gas ]guzzlers (ie SUVs), rests with the Saudis (who have turned down the spigot), increased demand worldwide (India, China) and the decline of the dollar.

Arctic National Wildflife Refuge? ....10 years down the road, if some have their way...and then, would only increase supply by an insignificant amount.

THE SPIN:
Bush has long called for opening the Arctic National Wildlife Refuge in Alaska to oil development, and on Tuesday he chastised Congress for repeatedly blocking the proposal.

"If Congress is interested, they can send the right signal by saying we are going to explore for oil and gas in U.S. territories, starting with ANWR," said Bush, adding that opening the Alaska refuge to oil companies "likely will mean lower gas prices."

FACT:
Energy experts believe ANWR's likely 11 billion barrels of oil - pumped at just under 1 million barrels a day - would send a signal of increased U.S. interest in domestic energy production. However, in the long run, it likely would not significantly impact oil or gasoline prices. And it likely would have little impact on today's prices.

In 2005, the Energy Information Administration estimated that it would take about 10 years before oil would flow from ANWR if drilling were approved. By 2025, it said, the additional oil would have only a slight impact on global oil prices and cause a decline in gasoline prices of less than a penny a gallon, using constant 2003 dollars. Oil imports would drop from an expected 68 percent of U.S. demand to 64 percent, the EIA said.

fact check: Bush remarks earlier this week.

A willingess to sacrifce environmental quality for minimal savings in other areas? ..most Americans say NO.

More refineries? ...the oil company execs showed no interest in their recent testimony.

IMO, the only viable short and long term solution....change our consumption habits and intensify efforts (and govt support) for alternative energy development.

aceventura3 · 05-01-2008, 12:25 PM

Quote:

Originally Posted by dc_dux

Ace..where will that increased supply come from...particularly short term?

This is not a short-term issue. Today we live with what we sowed in the past. The solution to this problem is to approach the root controllable causes that affect supply and demand. You are correct in that we can not control the Saudis, world demand, etc. I also agree with you regarding the need to change our consumption patterns for gas and oil. I also think we agree that this will take time.

Where we differ, I think, is regarding the impact regulation has on costs and whether some of those regulations are in fact necessary.

I also think we agree that there is currently risk and political premiums built into the current price of oil. I think our views on how to address those premiums is different. I think if we took an aggressive posture and action on new exploration, refineries, nuclear, and other alternatives, even with long-term tails, we immediately send a message to the world that would lead to a reduction in those risk and political premiums in the current price.

Oil company executives will manage their companies in a manner consistent with their view on what is needed for their companies to prosper. Oil exploration, and the development of new refining capacity takes large investments that will require a profitable returns over long periods of time. There is a point when it becomes unwise to invest additional billions today when future returns on that investment is uncertain. Oil companies clearly face a hostile group of legislators in Washington. They also face hostilities from other national governments, i.e. Venezuela. If we as a nation want oil companies to take more risks, we have to give them some level of assurance that the government won't unduly interfere with their operations. The constant threats of taxing and legislation forcing investment in certain areas is not helpful.

Another issue affecting investment by oil companies is the fact that they can spend millions attempting to get regulatory approval to build or expand refining capacity only to have government officials put a stop to it, in the eleventh hour simply for political reasons. Oil company executives make decisions the way you and I would. We need to understand that they are not our enemy and we need to give them the opportunity to do what they do best. When political people who don't understand the impact they have, play political games, they have to realize that over-time there will be consequences.

P.S. - On ANWR this says it all for me.

Willravel · 05-01-2008, 12:36 PM

How about a lift on the tax of alternatives?
How about instead of opening the spigot of a nearly drained gas container,
putting more money in the pockets of a campaigner,
we stop acting like parasites. This is a no brainer.
One more barrel left, crude, weak handed deal.
Instead of planting our last seeds, we're making them into a meal.
A holiday when you're out of work; meaningless.
A holiday when you're starving; fruitless.
We don't need a damned vacation,
we need noses to the grindstone on a 24 hour rotation.
If you were bleeding, would you widen the wound?

Sorry, I've been watching a bunch of Def Poetry Jam on Youtube. Seriously, though, this is the worst kind of crazy. Instead of allowing the pressures of ever increasing gas prices force the market to move on more seriously to alternatives, we're giving ourselves a vacation from responsibility. It's like taking a vacation from a drought by opening up the last of the reserve water.

SecretMethod70 · 05-01-2008, 01:02 PM

My problem with ANWR drilling has nothing to do with the time it would take to become productive and everything to do with the environmental impact. Aggressively pursuing other forms of energy is something we should have started doing yesterday, and that includes investing in both short- and long-term prospects, and not focusing on only one or two options. Nuclear, wind, solar, solar thermal, hydro...these are all things that, combined, could have a huge impact, and the technology is only becoming more and more efficient. From what I can tell, the ideal future - and one which we can easily head towards with determination and dedication - is one which involves renewable, environmentally safe electricity, combined with electricity-focused hybrid cars. And at that point, we could even look to biofuels for the relatively small fuel need of the cars, since the amount of fuel needed would be small enough that using biofuels wouldn't have the terribly disasterous effect we're seeing it having right now.

Charlatan · 05-01-2008, 02:39 PM

I read this on the topic yesterday and thought it was bang on.

Quote:

Dumb as We Wanna Be

By THOMAS L. FRIEDMAN
Published: April 30, 2008

It is great to see that we finally have some national unity on energy policy. Unfortunately, the unifying idea is so ridiculous, so unworthy of the people aspiring to lead our nation, it takes your breath away. Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for this summer’s travel season. This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.

When the summer is over, we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.

No, no, no, we’ll just get the money by taxing Big Oil, says Mrs. Clinton. Even if you could do that, what a terrible way to spend precious tax dollars — burning it up on the way to the beach rather than on innovation?

The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Good for Barack Obama for resisting this shameful pandering.

But here’s what’s scary: our problem is so much worse than you think. We have no energy strategy. If you are going to use tax policy to shape energy strategy then you want to raise taxes on the things you want to discourage — gasoline consumption and gas-guzzling cars — and you want to lower taxes on the things you want to encourage — new, renewable energy technologies. We are doing just the opposite.

Are you sitting down?

Few Americans know it, but for almost a year now, Congress has been bickering over whether and how to renew the investment tax credit to stimulate investment in solar energy and the production tax credit to encourage investment in wind energy. The bickering has been so poisonous that when Congress passed the 2007 energy bill last December, it failed to extend any stimulus for wind and solar energy production. Oil and gas kept all their credits, but those for wind and solar have been left to expire this December. I am not making this up. At a time when we should be throwing everything into clean power innovation, we are squabbling over pennies.

These credits are critical because they ensure that if oil prices slip back down again — which often happens — investments in wind and solar would still be profitable. That’s how you launch a new energy technology and help it achieve scale, so it can compete without subsidies.

The Democrats wanted the wind and solar credits to be paid for by taking away tax credits from the oil industry. President Bush said he would veto that. Neither side would back down, and Mr. Bush — showing not one iota of leadership — refused to get all the adults together in a room and work out a compromise. Stalemate. Meanwhile, Germany has a 20-year solar incentive program; Japan 12 years. Ours, at best, run two years.

“It’s a disaster,” says Michael Polsky, founder of Invenergy, one of the biggest wind-power developers in America. “Wind is a very capital-intensive industry, and financial institutions are not ready to take ‘Congressional risk.’ They say if you don’t get the [production tax credit] we will not lend you the money to buy more turbines and build projects.”

It is also alarming, says Rhone Resch, the president of the Solar Energy Industries Association, that the U.S. has reached a point “where the priorities of Congress could become so distorted by politics” that it would turn its back on the next great global industry — clean power — “but that’s exactly what is happening.” If the wind and solar credits expire, said Resch, the impact in just 2009 would be more than 100,000 jobs either lost or not created in these industries, and $20 billion worth of investments that won’t be made.

While all the presidential candidates were railing about lost manufacturing jobs in Ohio, no one noticed that America’s premier solar company, First Solar, from Toledo, Ohio, was opening its newest factory in the former East Germany — 540 high-paying engineering jobs — because Germany has created a booming solar market and America has not.

In 1997, said Resch, America was the leader in solar energy technology, with 40 percent of global solar production. “Last year, we were less than 8 percent, and even most of that was manufacturing for overseas markets.”

The McCain-Clinton proposal is a reminder to me that the biggest energy crisis we have in our country today is the energy to be serious — the energy to do big things in a sustained, focused and intelligent way. We are in the midst of a national political brownout.

ASU2003 · 05-01-2008, 03:53 PM

The only answer I have is to not use gas. Eliminating the tax will do nothing. Gas companies will just all raise prices the same amount the next day and come up with another lame excuse.

Now, if we limited the amount of profits gas companies could make to 2006 levels and taxed everything above it at 100%, then it might make things interesting.

04-30-2008, 07:39 PM	#1 (permalink)
dc_dux Location: Washington DC	Gas Tax Holiday....good idea or not? As a short term response to rising gas prices, McCain and Clinton both support a gas tax holiday by suspending the federal tax on gas between Memorial Day and Labor Day. Clinton would offset the lost tax revenue by a comparable windfall profit tax on oil companies; Mcain would offset it, but wont specify how. Obama does not support it at all. The federal gas tax is a flat rate of $.18/gal. The tax is earmarked for the highway trust fund to be used for infrastructure repair and related transportation projects. According to estimates from the American Association of State Highway and Transportation Officials (AASHTO), suspending the tax for 3 months would save about $28 for those who drive about 12,000 miles/year....or computed another way, about 60 cents/day. Double that if you drive 24,000 miles/yr. On the flip side, AASHTO estimates a loss of $8.5 billion to the highway trust fund for critical bridge/highway repair projects...and a loss of about 300,000 jobs. I'm with Obama on this. Its an election year "solution" that really provides no meaningful savings at all to most consumers. __________________ "The perfect is the enemy of the good." ~ Voltaire

04-30-2008, 07:44 PM	#2 (permalink)
spindles Mine is an evil laugh Location: Sydney, Australia	I think it is a terrible idea. All it does it encourage people to have bigger/less fuel efficient cars. __________________ who hid my keyboard's PANIC button?

04-30-2008, 07:49 PM	#3 (permalink)
SecretMethod70 Human Administrator Location: Chicago	You said it. Terrible - and, worse yet, gimmicky - idea. One thing that isn't getting mentioned much in regards to this is how hypocritical it is for anyone to simultaneously say they will take global warming seriously yet propose this gas tax vacation. __________________ Le temps détruit tout "Musicians are the carriers and communicators of spirit in the most immediate sense." - Kurt Elling Last edited by SecretMethod70; 04-30-2008 at 07:51 PM.. Reason: Automerged Doublepost

05-01-2008, 05:56 AM	#9 (permalink)
samcol Junkie Location: Indiana	I think it's a good idea but it should be permanant, and it should only be compensated by cutting government programs elseware. __________________ It's time for the president to hand over his nobel peace prize.

05-01-2008, 06:02 AM	#10 (permalink)
The_Jazz Asshole Administrator Location: Chicago	Given the tie from this money to highway funds, it seems short-sited. Add that to the fact that this is only going to reduce gas prices for about 5% and won't impact oil companies' ability to increase their prices by the same amount, and it seems like a bad idea. __________________ "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin "There ought to be limits to freedom." - George W. Bush "We have met the enemy and he is us." - Pogo

04-30-2008, 08:19 PM	#4 (permalink)
filtherton Junkie Location: In the land of ice and snow.	They should raise the gas tax and give people who actually need to drive exemptions.

04-30-2008, 08:23 PM	#5 (permalink)
Rekna Junkie	It seems pretty silly to me. It is nothing other than a political stunt and I commend Obama for calling a spade a spade.

04-30-2008, 08:31 PM	#6 (permalink)
MSD The sky calls to us ... Super Moderator Location: CT	1: Shifting the tax burden from the consumer to the companies means they'll charge us more to cover their costs. Net change to price: 0 2: Doesn't know how he'll pay for it? I'll give you a hint: who have we borrowed most of our budget deficit from? China.

04-30-2008, 08:57 PM	#7 (permalink)
hiredgun Addict	MSD is correct. The real net savings to the consumer isn't $30 or whatever, it will be about zero. Supply is inelastic, and so prices will have to rise to accommodate demand. I don't know of any credible economist who would dispute this. And the Clinton plan to tax oil companies is a misdirection. Whether you nominally tax the consumer side or the producer means almost nothing. The real tax incidence - i.e. where the tax ends up hurting - is determined by the underlying fundamentals of the market in question. The saddest thing is that I'm sure the candidates are well aware of this.

05-01-2008, 06:05 AM	#11 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	does nothing for me. I don't drive that much <8,000 miles per year. It won't reduce the cost of my bagel which went up from $.60 to $1.00 this year. It won't change the cost of my eggs which also went up to $2.69 from $1.89. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

05-01-2008, 06:44 AM	#13 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	exactly tully..... all those "fuel surcharges" that are added onto things like airline tickets, FedEx won't go away. the truckers aren't going to "give back" that amount they saved from the gas holiday. so my food prices will stay the same. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

05-01-2008, 08:03 AM	#18 (permalink)
The_Jazz Asshole Administrator Location: Chicago	Price is not the only issue at stake here. Ustwo, the product you're referring to is a cleaner-burning fuel that is used in the summer months to reduce the amount of pollution carried downwind. That pollution is a major contributor to acid rain that affected forests and farmland. And Illinois has some of the highest gas taxes in the US. If I remember correctly, it's about $0.40 higher than GA, which is on the low end of the spectrum. But the weak dollar and high price of crude is also affecting the gas price. __________________ "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin "There ought to be limits to freedom." - George W. Bush "We have met the enemy and he is us." - Pogo

05-01-2008, 08:32 AM	#22 (permalink)
Willravel ... a sort of licensed troubleshooter.	Massively, completely and utterly stupid. We need high taxes and cost cutting immediately, not more governmental debt.

05-01-2008, 09:12 AM	#27 (permalink)
Willravel ... a sort of licensed troubleshooter.	Did you factor in Democratic presidencies?

05-01-2008, 10:37 AM	#31 (permalink)
SecretMethod70 Human Administrator Location: Chicago	The Bush administration has significant fault for some of the failures of Congress these past 2 years, but Pelosi is not without fault either. Pelosi is a woman who refuses to fight for the impeachment of what is perhaps the most impeachable presidency in our history (and certainly the first which would not have been impeached on trumped up, political charges). Clearly, she and other Democratic leaders in Congress lack the courage necessary for their positions. __________________ Le temps détruit tout "Musicians are the carriers and communicators of spirit in the most immediate sense." - Kurt Elling

05-01-2008, 10:59 AM	#33 (permalink)
SecretMethod70 Human Administrator Location: Chicago	Hey now, I never said anything about blaming the oil companies: that's the Clinton-McCain drum. As I mentioned in another thread: our oil prices are only just starting to accurately reflect the environmental and political cost of our oil consumption. __________________ Le temps détruit tout "Musicians are the carriers and communicators of spirit in the most immediate sense." - Kurt Elling

05-01-2008, 12:36 PM	#37 (permalink)
Willravel ... a sort of licensed troubleshooter.	How about a lift on the tax of alternatives? How about instead of opening the spigot of a nearly drained gas container, putting more money in the pockets of a campaigner, we stop acting like parasites. This is a no brainer. One more barrel left, crude, weak handed deal. Instead of planting our last seeds, we're making them into a meal. A holiday when you're out of work; meaningless. A holiday when you're starving; fruitless. We don't need a damned vacation, we need noses to the grindstone on a 24 hour rotation. If you were bleeding, would you widen the wound? Sorry, I've been watching a bunch of Def Poetry Jam on Youtube. Seriously, though, this is the worst kind of crazy. Instead of allowing the pressures of ever increasing gas prices force the market to move on more seriously to alternatives, we're giving ourselves a vacation from responsibility. It's like taking a vacation from a drought by opening up the last of the reserve water.

05-01-2008, 01:02 PM	#38 (permalink)
SecretMethod70 Human Administrator Location: Chicago	My problem with ANWR drilling has nothing to do with the time it would take to become productive and everything to do with the environmental impact. Aggressively pursuing other forms of energy is something we should have started doing yesterday, and that includes investing in both short- and long-term prospects, and not focusing on only one or two options. Nuclear, wind, solar, solar thermal, hydro...these are all things that, combined, could have a huge impact, and the technology is only becoming more and more efficient. From what I can tell, the ideal future - and one which we can easily head towards with determination and dedication - is one which involves renewable, environmentally safe electricity, combined with electricity-focused hybrid cars. And at that point, we could even look to biofuels for the relatively small fuel need of the cars, since the amount of fuel needed would be small enough that using biofuels wouldn't have the terribly disasterous effect we're seeing it having right now. __________________ Le temps détruit tout "Musicians are the carriers and communicators of spirit in the most immediate sense." - Kurt Elling

05-01-2008, 03:53 PM	#40 (permalink)
ASU2003 immoral minority Location: Back in Ohio	The only answer I have is to not use gas. Eliminating the tax will do nothing. Gas companies will just all raise prices the same amount the next day and come up with another lame excuse. Now, if we limited the amount of profits gas companies could make to 2006 levels and taxed everything above it at 100%, then it might make things interesting.