Sen. McCain: In need of econ 101
Presidential candidate John McCain is calling for a Memorial Day-to-Labor Day moratorium on collecting the 18.4 cent-a-gallon federal gasoline tax and 24.4 cent-a-gallon federal diesel tax.
Yes, gasoline is very expensive. The price for one barrel of light, sweet crude hit $114.08 on April 15. The national average for a gallon of gasoline is $3.386; diesel is $4.119 per gallon. And yes, prices will increase as more refineries move to summer-blend gasoline, a lower evaporation formula that causes less air pollution (for more on blended gasoline, check out this Slate article.)
But reducing the cost of gasoline by reducing or eliminating the federal tax is a phenomenally bad idea.
First, the gasoline and diesel tax supports the Highway Trust Fund (HTF). The HFT, which is supposed to provide monies for maintenance of federal highways and bridges -- like the one that collapsed in Minnesota -- is already so anemic that the National Transportation Policy and Revenue Commission called for a 40 cent increase in the gas tax over five years.
Second, McCain seems to be of the "tra-la-la, I can't hear you" school of thought when it comes to the budget. To make up for the estimated $8.5 billion in losses from eliminating the gas tax, he's suggested raiding general treasury funds.
Third, basic economics tells us that when the cost of something goes down, demand goes up. Summer is traditionally a busy driving season and making gasoline cheaper will encourage consumers to use more.
Do we really want to be encouraging more driving during the summer? Summer generally means higher ozone levels. Higher tropospheric ozone, the kind that forms nearer to the ground on hot and sunny days, is bad for human health, causing respiratory ailments and aggravating asthma. Many cities try to cope with high ozone by issuing "Code Red" or "Code Orange" days during which the advise residents to limit outdoor activity and/or reduce the cost of public transit.
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