Gas Tax Holiday?

What would a 4 cent reduction on gas locally cost our General Fund in Escambia County?

Channel 3 requested and subsequently conducted an interview with me yesterday on the topic of the President's "Federal Gas Tax Holiday."  Apparently we as local communities and counties will be asked to forego local gas taxes as well along with the federal reduction if it occurs--ostensibly in order to cobble together enough savings to where the average consumer would actually feel "some" relief at the pump.

The state is doing something similar in the month of October.

The idea is fraught with problems, in my opinion,  as I explained during the interview which I don't think Channel 3 used.  Which is fine, no worries.  It's probably no a popular viewpoint I have on this.

Number one problem is I don't know that the President will have support---in his own party---to get this done.

Number two is, 18 cents in federal taxes on a gallon of gas--even if the congress did support this-- would likely be slurped up by the stations, oil producers, refiners and the distributors--with very few pennies of the 18 cents winding up back in consumers' pockets.  

The other argument is that with gas in some areas approaching $7 per gallon---even if all 18cents on a gallon of gas  went back into consumer's pockets----for a 10 gallon fill up this only represents a savings of $1.80 on a cost of $70 dollars on the fill up.  $1.80 on a $70.00 fill up is a savings of only a little over 2% and a negligible amount when juxtaposed to the $70.  $1.80 doesn't even buy a cup of coffee at waffle house or denny's these days.

Locally--our 4 cents per gallon goes exclusively to support mass transit and generates nearly $5 Million per year for ECAT.  Giving that funding up --even for a short duration--would provide very negligible relief in and of itself (e.g at $5.00 per gallon on a 20 gallon fill up costing $100---the savings to an individual if all four cents directly lowered the price which is not a guarantee--adds up to less than a dollar--$.80cents.).  But the overall costs to our general fund could reach a million dollars or more--depending upon how long such a "tax holiday" would last;  if we cut this tax for 30, 60, or 90 days--we would have to plug that funding hole with general fund dollars totalling betweeen $416,000-$1,250,000 (depending upon length of the holiday).

I explained to Ch. 3 that the board has not discussed this, and that I do not know if a discussion is planned, but I would obviously be willing to have this discussion.  But I also told them the better option is for the federal government to actively work to increase supply--which will drastically reduce costs rapidly without constricting demand and utilizing a gimmick bandaid solution which is what a gas tax

holiday would be if done alone with no other action.  Increase supply by opening up the Keystone pipeline, reduce red-tape and onerous over-regulation of the refineries, open up the leases for Federal lands and waters (no new leases signed by the federal government in the last 18 months) and let's get America energy independent again.

Russian oil has been taken out of the equation which has led to a reduction in the commodity worldwide which exacerbates problems created by our apparently deliberate reduction in production domestically(additionally, interestingly, some of our "allies" are still buying gas and oil from Russia--- and the Ruble is now back to it's origal pre-war strength again despite America's action)--so until these structural issues are confronted -- tax holidays and any benefit they bring will evanesce lika a morning mist and little benefit, if any, will be realized by the average American long term.

Nope---anything other than fixing the supply side and ramping up domestic production is just a half-measure that produces no tangible long-term benefits.  You don't have to be Adam Smith to work that one out.