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Pat Garofalo writes in an op-ed in US News & World Report that with the recent drop in oil prices, there's something policymakers can do that will offset at least some of the negative effects of the currently low prices, while also removing a constant thorn in the side of American transportation and infrastructure policy: Raise the gas tax. The current 18.4 cent per gallon [federal] gas tax has not been raised since 1993, making it about 11 cents per gallon today, in constant dollars. Plus, as fuel efficiency has gotten better and Americans have started driving less, the tax has naturally raised less revenue anyway. And that's a problem because the tax fills the Highway Trust Fund, which is, not to put too fine a point on it, broke so that in recent years Congress has had to patch it time and time again to fill the gap. According to the Tax Policy Center's Howard Gleckman, if Congress doesn't make a move, "it will fumble one of those rare opportunities when the economic and policy stars align almost perfectly." The increase can be phased in slowly, a few cents per month, perhaps, so that the price of gas doesn't jump overnight. When prices eventually do creep back up thanks to economic factors, hopefully the tax will hardly be noticed.
Consumers are already starting to buy the sort of gas-guzzling vehicles, including Hummers, that had been going out of style as gas prices rose; that's bad for both the environment and consumers, because gas prices are inevitably going to increase again. According to data from the U.S. Energy Information Administration, taxes last year, even before the current drop in prices, made up 12 percent of the cost of a gallon of gasoline, down from 28 percent in 2000. And compared to other developed countries, US gas taxes are pretty much a joke. While we're at it, an even better idea, as a recent report from the Urban Institute makes clear, would be indexing the gas tax to inflation (pdf), so this problem doesn't consistently arise. "The status quo simply isn't sustainable, from an infrastructure or environmental perspective," concludes Garofalo. "So raise the gas tax now; someday down the line, it will look like a brilliant move."
(Score: 1) by Wrong Turn Ahead on Friday November 14 2014, @01:38AM
Gas prices always drop in the US around the holidays; a pattern that I've observed for the past 20 years. Lower prices a few months before Black Friday, Cyber-Monday, and Christmas mean that consumers have a little extra to spend. Lower gas prices also lead people to falsely believe that the economy is getting better; only to watch the pump prices rise sharply in the months following the holidays.
That said, this year is special in that we need to force Russia to play a bit nicer on the world stage and one way to do that is by creating economic pressure by lowering oil prices. Here are a few relevant news stories:
http://money.cnn.com/2014/10/15/investing/oil-price-fall-russia-hurt/ [cnn.com]
http://rbth.com/opinion/2014/11/12/low_oil_prices_hurt_russia_and_the_west_41337.html [rbth.com]
http://www.businessweek.com/articles/2014-10-13/oil-prices-are-hurting-russias-economy [businessweek.com]
http://online.wsj.com/articles/russia-may-need-to-cut-budget-spending-finance-minister-says-1414158145 [wsj.com]
So, people have more spending cash and things seem to look brighter thanks to the savings at the gas pump. They're feeling good about, and distracted with, the approaching holidays. The world appears to have found a way to back Russia/Putin down. This is the perfect time to frame the lower prices as a problem and push a tax increase through; after all, lower prices + a small tax increase still == savings. That is, until the oil price manipulations cease and prices recover -- only higher now because of the extra tax.
Never waste a crisis...
(Score: 0) by Anonymous Coward on Friday November 14 2014, @02:00AM
You're not really sure how this whole global economy for oil works, do you? You probably also think that every extra barrel of oil that comes out of, say, new wells in Alaska would go right into US tanks, don't you?
(Score: 0) by Anonymous Coward on Friday November 14 2014, @02:02AM
Correlation is not causation.
It is also getting cold so as to encourage more people to spend time inside shopping online and at the mall instead of out hiking and camping where there are no stores.
You sound like the guys who were saying that Obama lowered gas prices for this election (but not for the one 2 years ago).
(Score: 1, Insightful) by Anonymous Coward on Friday November 14 2014, @03:10AM
http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=132 [gasbuddy.com]
Your Christmas theory is probably not true. However, it does sound cool.
That the oil market is being manipulated is *very* clear and very true. OPEC has done it since 1973. They are no longer the only players in the market though anymore. Wait until oil hits about 65-70 you will see some amazing rhetoric flying out of the middle east. Massive monuments to consumerism like dubai dont run without the massive amounts of cash they have been taking in. Iran even came to the table with hat in hand already (never thought I would see that). When Dubai craters (and it will) it will be a massive humanitarian problem (it already is, but well hidden by the glitz). Add in the Chinese reigning in their massive building projects (which they were doing to fake growth). Much like the internet the market routes around damage. It just doesnt do it in internet time. It takes a few years.
One thing I have learned in watching the market in my 40 years of life is simple. If someone says 'this is the *new* normal' RUN from that market. It is about to crater. Currently gold and oil is where the massive amounts of derivative money our gov created in the mid 90s is parked (by creating billions of dollars thru loans and bond sales). The amount of people consuming oil did not go up by 3x in 4 years. That is a market money derivative bubble. You dont think that dot com money or that housing market money just disappeared did you; for every loser there is a winner. It is not even real market forces at work of supply and demand. At one point for every one person taking possession of the oil 1 barrel was traded over 25 times. There is a huge market of derivatives at work that is just starting to unwind. An oversupply for a few months would trigger it (which is what pops most bubbles). I dug around trying to find everyone using all this oil. It just didnt exist other than the mysterious 'Chinese'. Most of it was being traded around (I conservatively estimate 80% of global demand was just for trading and not physical use). I give it about 3-4 years before we settle out at a historical average of about 1.80-2.20 per gallon. Which given inflation is about where gas normally is. I predicted the bubble to pop 3 years ago. Suddenly you saw a bubble in gold... But a different bubble popped first and prolonged it and perversely fed into popping the housing bubble. Now the trick will be figuring out where those billions are going to go 'hide' and get in with the ride...
(Score: 1) by khallow on Friday November 14 2014, @03:15AM
Gas prices always drop in the US around the holidays; a pattern that I've observed for the past 20 years.
You know what else has happened for the past 20 years? Mandated seasonal changes in gasoline (EPA apparently started this program in 1992). I gather they kick in around October and November with requirements of oxygenated gasoline in a number of winter urban markets (the colder weather of winter results in more incomplete combustion of gasoline and the increased emissions of pollutants like various nitrogen oxides, carbon monoxide, and hydrocarbons). That results in a drop in demand for normal, less oxygenated gasoline and subsequent temporary drop in price - just in time for Christmas. There's no reason to look for political maneuvering when normal market behavior completely explains this phenomenon for twenty years.