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Gas prices have a big impact on Americans -- both on their wallets and on their psyche. After all, few other prices increases are announced almost daily in three-foot-high numbers that stare motorists in the face several times a day. And Congress would love to do something to help, especially with an election looming. But the hard truth is, there’s nothing that can be done that will help much in the near future. The basic problem is an imbalance in supply and demand, and it will take years to develop more supplies or switch to a heavier reliance on alternative fuels.
For weeks now, the talk has been of a gas tax holiday for the busy driving months of the summer. The idea of lifting the 18.4 cents per gallon tax on gas and the 24.4 cents per gallon tax on diesel gained momentum after Republican presidential nominee-in-waiting John McCain proposed it and Democratic candidate Hillary Clinton jumped on board, saying it would provide small but important relief to people who drive a lot.
But the idea isn’t going anywhere. While there is a measure of bipartisan support for relief, few think the gas tax holiday is a real answer. Democrats want to replace the $9 billion in lost revenue for the highway trust fund by increasing taxes on oil companies.
But President Bush and Republicans in Congress will never go along with that. Rather, Republicans want to use the debate over gas taxes to push for other energy plans, such as more domestic oil drilling, fully aware that larger energy plans have little chance to pass quickly or affect the price of gas in the near term.
Also working against a gas tax holiday is the opposition of Sen. Barack Obama, the likely Democratic presidential nominee. He dismisses it as a ploy that won’t do any good, and few Democrats want to cross the new leader of the party, especially after his big win in North Carolina and his near-upset in Indiana. And his strong showing in those primaries suggests voters don’t think a moratorium is a real answer to their problems either.
Another idea is to tap the Strategic Petroleum Reserve, but any drawdown would be too small to help much in the short term -- and is opposed by Bush. One suggestion that does have support is to lift summertime fuel blending requirements. Green groups will squawk, but not having to make special low pollution rules for 12 cities will save refineries, although it will only shave about a nickel off the price of a gallon of gasoline. No one will even notice that.
Lastly, any kind of price controls are out of the question. Economists across the board say it would be disastrous to the energy sector and the economy as a whole because it would lead to increased demand and give the oil companies little incentive to find new supplies.
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POSTED BY: Brian (May 13, 2008 10:13 AM)
Gas prices can't be lowered in the long term by governmental forces. They have to be lowered by market forces. Like if everyone carpooled with RideSearch.com
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