Gas Tax Holiday ... from Hell

May 08, 2008

Tom Friedman of the NY Times is not alone in being dumbfounded over the so-called gas tax holiday proposal championed by Democratic presidential candidate Hillary Clinton and Republican candidate John McCain.  Over the last few years drivers in the US have watched gas prices move up and down around $2 a gallon while the average size and horsepower of US vehicles have moved in one direction only: way up.  We've watched Japanese auto makers increase their sales every year by offering better built, more fuel efficient alternatives to the American offerings.  And while there's some debate on the topic of peak oil (the precise point at which the amount of oil produced per year actually levels off and begins falling), there's no denying these facts:

• The price for a barrel of oil is $120 and it jumps up every time someone in an oil producing country sneezes
• Gas prices at the pump are now double what they were a few years ago and are over $4 a gallon in many of our cities and diesel is even higher
• Prices of many essential commodities including food are climbing as transportation costs soar
• Federal taxes account for less than 20 cents of that $4 gallon

So WTF is going on with 2 of the 3 leading contenders to be the next POTUS saying a solution for this is to temporarily reduce the price to whatever is 20 cents less than the new highest price per gallon?  What will be the point of this gesture today, or when gas reaches $5 or $6 a gallon, with no serious energy leadership at the top charting the course to a more sustainable (and affordable) future?  See "Can the Economy Survive $200-a-Barrel Oil" for more.

How about a plan for massive innovation that reduces drivers' costs to one half or even one quarter of what their paying today?  As for the holiday, don’t expect a Hallmark card for this one anytime soon.

Photo courtesy of Gunnar Valdimar Bergsveinsson