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You are here: MacNN Forums > Community > MacNN Lounge > Political/War Lounge > Gas tax holiday - good idea or bad economics

View Poll Results: Gas Tax Holiday - Good idea?
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Yes, its a good idea, I need the money 10 votes (16.67%)
No, its bad economics 47 votes (78.33%)
Who cares, I don't even drive 3 votes (5.00%)
Voters: 60. You may not vote on this poll
Gas tax holiday - good idea or bad economics
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MacosNerd
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May 5, 2008, 03:34 PM
 
We've been seeing this bantered about from the candidates. It's certainly a hot button topic that from a knee jerk reaction sounds like a really good idea. I mean with gas approaching 4 bucks a gallon, wouldn't it be nice to save 18 cents on each gallon.

Of course I see a couple of problems with this idea.
First there's no guarantee that the oil companies will feel so moved to reduce the gas price by $.18. They'll either not do anything, or cut the price a few cents citing costs associated with changing the price.

Then there's the whole supply and demand issue. We drive more because its cheaper, it will reduce the supply, thus increasing the price

I hate to say this as well but where will the gov't get the money they lose out from the gas tax. Its not like our roads and bridges are in pristine shape as it is. The gas tax goes to maintaining our roads/bridges.

Finally what will happen next year (though this just an election year ploy). Should we reduce the price in the summer of 09 because gas is approaching 5 bucks a gallon?
     
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May 5, 2008, 03:39 PM
 
It's not going to be enough to make a positive, personal difference.
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olePigeon
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May 5, 2008, 04:24 PM
 
You'll save $2, assuming you fill up once a week.

The gas tax funds $10 billion worth of transportation projects that are already underfunded. 18 cents is not going to break your wallet, it's not going to lessen our dependency on foreign oil, and stopping the gas tax will only add another $10 billion to our debt. We'll then have to borrow more money from China to pay for our transportation budget.

It's the dumbest idea I've heard come out of the candidates.
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May 5, 2008, 04:27 PM
 
On a side note, we have some of the cheaper gas in the world. If you want to drive a gas guzzler, you'll have to pay more for gas. The rest of the world's dealing with it, so can America. Just be thankful you don't have to drive a car in Aruba, it's $14/gallon there.
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May 5, 2008, 05:10 PM
 
Election. Year. Nonsense.
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May 5, 2008, 05:20 PM
 
Originally Posted by olePigeon View Post
You'll save $2, assuming you fill up once a week.
And that's assuming that the gas companies actually drop the price of gas, rather than just pocket the difference.
     
Buckaroo
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May 5, 2008, 05:36 PM
 
Hmmm, I'm not sure if it's good or bad.

I believe this whole oil price through the roof thing is created by the big Oil companies. The whole thing is another Enron scam.

They make out like a bandit when oil prices are high because of all the oil wells they own. They have NO reason to discourage high oil prices. They both buy and sell oil. They get huge profits when they get to sell their own oil at the same prices as the Middle East. They don't care that the constant drain of our wealth to the Middle East is bankrupting this country. All they care about is the buck that they get.
     
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May 5, 2008, 05:39 PM
 
The price of oil is a serious problem, and I don't believe our elected officials have a clue of the affect.

Sure less traffic is good, people need to drive smaller cars anyhow. But the problem is now there's less commerce all together. It slows down the economy, and transfers our wealth to the Middle East.
     
Buckaroo
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May 5, 2008, 05:41 PM
 
I'm not sure, but wasn't a barrel of oil somewhere around $40 just 2 years ago? Now it's over $120/barrel.
     
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May 5, 2008, 06:42 PM
 
Originally Posted by BRussell View Post
And that's assuming that the gas companies actually drop the price of gas, rather than just pocket the difference.
They'll just raise the price the night before the holiday, then lower it to make it seem like you're saving money.
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May 5, 2008, 07:10 PM
 
----> ?
     
tie
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May 5, 2008, 07:54 PM
 
No gas company would drop its prices. The idea is completely stupid. (At least Hillary says she'll fund it, whereas McCain will just borrow the money from China. Why should our government borrow money to give to gas companies?) This is the most basic economics.

This morning, George Stephanopoulos began his televised interview with Senator Hillary Rodham Clinton by asking if she could name a single economist who supported her plan for a gas-tax suspension.

Mrs. Clinton did not. “I’m not going to put in my lot with economists,” she said on the ABC program “This Week.” A few moments later, she added, “Elite opinion is always on the side of doing things that really disadvantages the vast majority of Americans.”

Look. This isn't hard. The supply of gas over the summer is basically fixed; refineries are running flat out, and can't quickly add capacity. Retailers won't respond to more demand by selling more gas --- because they can't. So, what does happen? They keep raising the price of the stuff they have until they can no longer sell it all
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May 5, 2008, 07:59 PM
 
Originally Posted by olePigeon View Post
You'll save $2, assuming you fill up once a week.

The gas tax funds $10 billion worth of transportation projects that are already underfunded. 18 cents is not going to break your wallet, it's not going to lessen our dependency on foreign oil, and stopping the gas tax will only add another $10 billion to our debt. We'll then have to borrow more money from China to pay for our transportation budget.

It's the dumbest idea I've heard come out of the candidates.
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MacosNerd  (op)
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May 5, 2008, 09:27 PM
 
Originally Posted by smacintush View Post
Election. Year. Nonsense.
Originally Posted by BRussell View Post
And that's assuming that the gas companies actually drop the price of gas, rather than just pocket the difference.
Yes, of course its election year nonsense, and it may be possible to constuct the bill in such a way to make it advantageous to the oil companies so they do drop the price (not that I trust the politicians or oil companies) but for some inane reason the billion dollar corporations enjoy tax credits. They don't want to risk losing them and so that could be used as leverage.

All in all, it will probably hurt us more then it helps
     
kido331
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May 6, 2008, 02:05 AM
 
Originally Posted by olePigeon View Post
You'll save $2, assuming you fill up once a week.

The gas tax funds $10 billion worth of transportation projects that are already underfunded. 18 cents is not going to break your wallet, it's not going to lessen our dependency on foreign oil, and stopping the gas tax will only add another $10 billion to our debt. We'll then have to borrow more money from China to pay for our transportation budget.

It's the dumbest idea I've heard come out of the candidates.
So why not double gas taxes then? If the transportation projects are underfunded and we want to hasten the end of our dependency on foreign oil, then why not add another 18 cents to the current tax? after all, 36 cents isn't going to break your wallet either.

also, i bet long haul truckers and taxi drivers don't think it is a dumb idea.
     
Captain Obvious
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May 6, 2008, 02:19 AM
 
No worse of an idea than corn based ethanol in the gas supply. Yet there it is and widely supported.

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May 6, 2008, 02:22 AM
 
Originally Posted by Captain Obvious View Post
No worse of an idea than corn based ethanol in the gas supply. Yet there it is and widely supported.
Which hurt all sorts of markets because farmers choose to grow corn instead of what they usually do.
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May 6, 2008, 04:49 AM
 
Originally Posted by olePigeon View Post
On a side note, we have some of the cheaper gas in the world. If you want to drive a gas guzzler, you'll have to pay more for gas. The rest of the world's dealing with it, so can America. Just be thankful you don't have to drive a car in Aruba, it's $14/gallon there.
I read on msnbc that gas in China is state controlled at $2.90 a gallon. I'm sure it's about .20 a gallon in places in Iran. I still think gas is so overvalued in the US. I think a year or so ago a barrel of oil was about 70 bucks per. There's no reason it's shot up to over 120 per now.
     
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May 6, 2008, 04:50 AM
 
Originally Posted by kido331 View Post
So why not double gas taxes then? If the transportation projects are underfunded and we want to hasten the end of our dependency on foreign oil, then why not add another 18 cents to the current tax? after all, 36 cents isn't going to break your wallet either.

also, i bet long haul truckers and taxi drivers don't think it is a dumb idea.
Yep, seeing as how deisel is what, $4.20 a gallon in most places?
     
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May 6, 2008, 05:28 AM
 
Supply and demand! Supply and demand! There's limited gas supply, especially in the summer, so if there's more demand, the price will go right back up, only this time the oil companies are pocketing it, instead of it being used to fix roads. EVERY economics expert interviewed about the issue has said the exact same thing.

This is the dumbest idea I've heard come from the candidates as well. And it's especially sad because it's pandering to the uneducated portion of the population that thinks this is a good idea.
     
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May 6, 2008, 06:12 AM
 
Oh, it has nothing to do with supply and demand. Stop using that lame excuse. Over that last year or two, a barrel of oil has doubled in value. Has the demand doubled? Has the driving population of the US doubled in the last two years? Have people doubled the distance of their house to their place of work? I still live the same distance, still drive the same amount every day, people still drive the same amount every day.

So it's not supply and demand. And how do you you know the supply is down? You got a dipstick in the earth or something? Truth is, nobody knows scientifically for sure how much is left.

It has everything to do with the traders on the markets pushing the price up several bucks a day based on some ridiculous news source about something someone may have heard that has nothing to do with oil, so the price shoots up. And look at the profit margins of the big oil companies, they go up and up and up every single quarter reported, so that leads me to believe that the price to produce gas from oil is not going up, otherwise it would eat in to the profits.
     
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May 6, 2008, 06:13 AM
 
Originally Posted by awaspaas View Post
Supply and demand! Supply and demand! There's limited gas supply, especially in the summer, .

It's not summer yet. Oil and gas has been going up, even in the winter, when supposedly nobody drives, because it's not summer, when supposedly everyone drives hundreds of miles more a day than they do in the winter... So that negates that theory.
     
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May 6, 2008, 06:26 AM
 
Originally Posted by ctt1wbw View Post
I read on msnbc that gas in China is state controlled at $2.90 a gallon. I'm sure it's about .20 a gallon in places in Iran. I still think gas is so overvalued in the US. I think a year or so ago a barrel of oil was about 70 bucks per. There's no reason it's shot up to over 120 per now.
I believe for China, until recently, they were able to supply their own gas but have recently needed to import more oil
     
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May 6, 2008, 06:48 AM
 
Originally Posted by ctt1wbw View Post
It's not summer yet. Oil and gas has been going up, even in the winter, when supposedly nobody drives, because it's not summer, when supposedly everyone drives hundreds of miles more a day than they do in the winter... So that negates that theory.
I don't know about the US, but over here in Europe, many homes are oil-heated.
     
analogika
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May 6, 2008, 06:53 AM
 
Originally Posted by ctt1wbw View Post
Oh, it has nothing to do with supply and demand. Stop using that lame excuse. Over that last year or two, a barrel of oil has doubled in value. Has the demand doubled? Has the driving population of the US doubled in the last two years? Have people doubled the distance of their house to their place of work? I still live the same distance, still drive the same amount every day, people still drive the same amount every day.

So it's not supply and demand. And how do you you know the supply is down? You got a dipstick in the earth or something? Truth is, nobody knows scientifically for sure how much is left.
Um, "supply" isn't how much is in the ground; it's how much is available ABOVE ground. If oil well owners decide to cut down on pumping, or just not sell it, that's less supply.

And if you read the thread, you'll find that gasoline, specifically, is under additional supply constraints due to limited refining capacities.

And as for demand: Has it occurred to you that there's six BILLION people OUTSIDE of your country (you know, that vast expanse where most of your oil actually comes from)?

Just as one example: One billion of those people are Chinese, and they're buying cars like crazy.

And they're increasingly driving them, too.
     
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May 6, 2008, 07:12 AM
 
Originally Posted by MacosNerd View Post

Then there's the whole supply and demand issue. We drive more because its cheaper, it will reduce the supply, thus increasing the price

I hate to say this as well but where will the gov't get the money they lose out from the gas tax. Its not like our roads and bridges are in pristine shape as it is. The gas tax goes to maintaining our roads/bridges.
Ding! This is political pandering at its worst. but I bet it works, as far as the elections go.

Another thing you have to take into mind is the bad road feedback loop. The worse our roads are, the more gas we burn going up and down over humps and in and out of potholes, instead of forward, thus decreasing milage overall. The roads in Austin are already so bad that there are stretches I can't coast on because the horrendous pavement slows me down too much. Subtract Federal matching funds for road maintenance, and everyone will have to drive SUV's just because of the horrid roads. I swear, I've seen towns with better overall pavement in Mexico. That's embarrassing.

The only people who will ultimately benefit from the gas tax holiday are, of course, the oil companies.

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May 6, 2008, 07:22 AM
 
Originally Posted by Hillary
A few moments later, she added, “Elite opinion is always on the side of doing things that really disadvantages the vast majority of Americans.”
Blech. more pandering to the stupid. What's she saying here? That anyone with a master's level college education is out to make life miserable for those without one? Like it's some kind of giant plot? Well, maybe she'd better look in the mirror. Didn't she go to an Elite Ivory Tower Ivy League College and get her an Elite Law Degree?? If elitism is so bad, then why don't we just appoint the first c+ high-school graduate forklift driver we can find as president and be done with it? GAH. I'm really beginning to hate her. Well, more, anyway. What's the goddam matter with letting smart people do their jobs? and what's the goddam matter with the idea of having a smart president?? ARRGGHH!

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olePigeon
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May 6, 2008, 11:29 AM
 
Originally Posted by kido331 View Post
also, i bet long haul truckers and taxi drivers don't think it is a dumb idea.
So why not subsidize truckers and taxi drivers like we do farmers? Truckers are just as important as the farmer, they get the produce to where it's needed. It'd certainly be cheaper than subsidizing the entire country.

Originally Posted by Captain Obvious View Post
No worse of an idea than corn based ethanol in the gas supply. Yet there it is and widely supported.
Unfortunately. Ethanol is the other really stupid idea. It doesn't burn any cleaner than gasoline, and it's only driving up the cost of corn horrendously.
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May 6, 2008, 11:42 AM
 
Originally Posted by olePigeon View Post
Unfortunately. Ethanol is the other really stupid idea. It doesn't burn any cleaner than gasoline, and it's only driving up the cost of corn horrendously.
The biggest difference as I see it is that the money is going to our farmers instead of the oil countries and its renewable, where as oil is not. You're 100% correct though about the cost being driven up and farmers are planting corn instead of their other crops.
     
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May 6, 2008, 12:00 PM
 
Originally Posted by ctt1wbw View Post
Oh, it has nothing to do with supply and demand. Stop using that lame excuse. Over that last year or two, a barrel of oil has doubled in value. Has the demand doubled? Has the driving population of the US doubled in the last two years? Have people doubled the distance of their house to their place of work? I still live the same distance, still drive the same amount every day, people still drive the same amount every day.

So it's not supply and demand. And how do you you know the supply is down? You got a dipstick in the earth or something? Truth is, nobody knows scientifically for sure how much is left.

It has everything to do with the traders on the markets pushing the price up several bucks a day based on some ridiculous news source about something someone may have heard that has nothing to do with oil, so the price shoots up. And look at the profit margins of the big oil companies, they go up and up and up every single quarter reported, so that leads me to believe that the price to produce gas from oil is not going up, otherwise it would eat in to the profits.
Yes, on the world market the demand curve for oil is shifting dramatically, driven by the growth in China and India as well as others. That DOES have an impact on prices.

As far as the tax -- so prices have doubled. Has the tax doubled? It's a fixed rate for gallon, so the only way the govt gets more revenue is if sales in the US increase. If anything, the tax as a percentage of sales has decreased dramatically.

Repealing this tax is silly - it's one tax that is actually well-related to consumption - the more you drive (and use the infrastructure), the more you pay to maintain that infrastructure. Moving that burden somewhere else seems more unfair to me. And we'll end up paying anyway when there's more infrastructure neglect and another bridge collapses...
     
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May 6, 2008, 01:13 PM
 
Originally Posted by ctt1wbw View Post
Oh, it has nothing to do with supply and demand. Stop using that lame excuse.
Its no lame excuse. OPEC in the past has kept tight control over the supply, i.e., pumping less oil to keep the demand and price high. Currently all OPEC members are pumping at or near capacity except for Saudi Arabia. The other problem has been that we've pumped dry most of the easily attainable oil. Accessing other oil reserves is getting harder and more expensive. For instance, there's a huge oil reserve under the arctic. The technology isn't quite there to be able to tap into that reserve but when it does, it will be very expensive to proceed.
     
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May 6, 2008, 01:17 PM
 
Originally Posted by CreepDogg View Post
Repealing this tax is silly - it's one tax that is actually well-related to consumption - the more you drive (and use the infrastructure), the more you pay to maintain that infrastructure. Moving that burden somewhere else seems more unfair to me. And we'll end up paying anyway when there's more infrastructure neglect and another bridge collapses...
QFT.
     
tie
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May 6, 2008, 01:53 PM
 
Originally Posted by ctt1wbw View Post
Oh, it has nothing to do with supply and demand. Stop using that lame excuse. Over that last year or two, a barrel of oil has doubled in value. Has the demand doubled? Has the driving population of the US doubled in the last two years? Have people doubled the distance of their house to their place of work? I still live the same distance, still drive the same amount every day, people still drive the same amount every day.
Please draw a picture of supply and demand curves on a napkin. There's no need for demand to double for the price to double.
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May 6, 2008, 01:57 PM
 
Originally Posted by tie View Post
Please draw a picture of supply and demand curves on a napkin. There's no need for demand to double for the price to double.
True. Especially with an inelastic (more vertical) demand curve.
     
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May 6, 2008, 02:09 PM
 
Originally Posted by ctt1wbw View Post
Oh, it has nothing to do with supply and demand. Stop using that lame excuse. Over that last year or two, a barrel of oil has doubled in value. Has the demand doubled? Has the driving population of the US doubled in the last two years? Have people doubled the distance of their house to their place of work? I still live the same distance, still drive the same amount every day, people still drive the same amount every day.

So it's not supply and demand. And how do you you know the supply is down? You got a dipstick in the earth or something? Truth is, nobody knows scientifically for sure how much is left.

It has everything to do with the traders on the markets pushing the price up several bucks a day based on some ridiculous news source about something someone may have heard that has nothing to do with oil, so the price shoots up. And look at the profit margins of the big oil companies, they go up and up and up every single quarter reported, so that leads me to believe that the price to produce gas from oil is not going up, otherwise it would eat in to the profits.
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May 6, 2008, 07:30 PM
 
This is political pandering of the highest magnitude. Blame everybody but ourselves for our ravenous appetite for hydrocarbons. Blame the oil companies. Blame the Chinese. Blame the Arabs. Blame the rich. Blame the speculators. But don't blame me because I get into my $40,000 SUV, occupied only by myself, and drive two miles to the local Blockbuster's and back. And I just couldn't live in the city. No way, I had to live in the suburbs and drive 50 miles to work every day. We're all slaves to our gluttony.
     
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May 6, 2008, 08:42 PM
 
You know,

Most folks that I know understand that it is rare to work for the same place of business for 30 years and then retire - it just doesn't happen much anymore. We often work 2 to 5 years for the same business and then move on.

Knowing that, it means that a lot of folks will put the emphasis on their residence and live in an area that appeals to them, rather than move to live close to the office.

You can't in good conscience hold this against them. You can't force or guilt people into giving up their homes to live closer to work, just because you think they ought to do so.
     
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May 7, 2008, 02:36 PM
 
I wouldn't think it reasonable to ask someone to live close to work either. Especially condsidering the higher cost of real estate closer to cities. However, I think it is a good point that people have been making terrible choices about the cars they drive. Despite warnings for years and years that oil prices will ineveitably climb someday and even be completely depleted--people still buy huge gas powered vechicles with tons of unnecessary horse power. They then whine when they realize it'll suddenly cost $100 to fill the tank.

This country seems to be incapable of foresight, either with regard to debt or anything else. It's only when there is a disaster right in front of us that anyone will do anything about it.
     
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May 7, 2008, 03:22 PM
 
Originally Posted by Zeeb View Post
I wouldn't think it reasonable to ask someone to live close to work either.
What you are going to see as transport prices rise is the choice curve of real estate price / transport price changes. Location of new housing and businesses is going to change as it becomes more expensive to live further from where you work.
     
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May 10, 2008, 12:24 PM
 
I think any reduction is taxes is a good thing. My lady, who commutes daily, will save $250 a month. Not too shabby.

The liberal platitude that the oil companies are bilking the consumer is nonsense.

The government makes more profit on gas sales than the oil companies, and the government doesn't have to do a darn thing in the drilling, extraction, transport, refining, or delivery of the actual product.

So who's doing the real bilking here?

     
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May 10, 2008, 12:41 PM
 
Originally Posted by spacefreak View Post
The government makes more profit on gas sales than the oil companies, and the government doesn't have to do a darn thing in the drilling, extraction, transport, refining, or delivery of the actual product.
The government does not 'make a profit' on gas sales. Who do you think pays for road building, infrastructure like bridges, policing etc? Who is going to pay for that without a gas tax? Oh, right - general taxation or our children. Stop whining that the things you use need to be paid for and asking for subsidies.
     
BRussell
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May 10, 2008, 12:50 PM
 
Originally Posted by spacefreak View Post
My lady, who commutes daily, will save $250 a month. Not too shabby.
Again, that's assuming that the full amount of the gas tax will simply be lopped off the price of gas. I haven't seen any serious person who thinks that will happen. Every analysis I've seen suggests that 1) in an environment like the current one, with gas prices rising, a gas tax reduction will simply be swallowed up by that trend, and 2) if anything, to the extent that prices do drop or are perceived to drop, consumption will increase, making prices rise even higher in the long run.
     
slpdLoad
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May 10, 2008, 01:39 PM
 
I honestly don't think most people realize yet that this isn't going to happen THIS summer. It's going to be over a year before this would take affect with the new president, and by then we'll have all forgotten about it.
     
smacintush
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May 10, 2008, 04:42 PM
 
Originally Posted by spacefreak View Post
I think any reduction is taxes is a good thing.
I'm all for reducing taxes. This isn't a tax reduction, it's a tax shift from the consumer back to the oil companies. It's nothing more than an election year gimmick designed to give the illusion that Hillary is "for" the "little guy" and wants to "stick it" to Big Oil™.

If they want to cut these taxes, they should cut their spending as well to cover it. It's not that big an amount relatively speaking.
Being in debt and celebrating a lower deficit is like being on a diet and celebrating the fact you gained two pounds this week instead of five.
     
peeb
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May 10, 2008, 05:26 PM
 
Originally Posted by smacintush View Post
If they want to cut these taxes, they should cut their spending as well to cover it. It's not that big an amount relatively speaking.
Right, because road and bridge infrastructure is in such good shape... The gas tax is by far the best way to pay for road infrastructure and other spending.
     
BRussell
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May 10, 2008, 05:35 PM
 
Originally Posted by smacintush View Post
If they want to cut these taxes, they should cut their spending as well to cover it.
Cut spending to cover tax cuts? I thought you were a Republican.
     
CreepDogg
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May 10, 2008, 07:40 PM
 
Originally Posted by smacintush View Post
If they want to cut these taxes, they should cut their spending as well to cover it. It's not that big an amount relatively speaking.
Great idea - let's reduce the tax and cut spending on infrastructure so we can have more of this...


     
tie
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May 10, 2008, 08:27 PM
 
Originally Posted by spacefreak View Post
I think any reduction is taxes is a good thing. My lady, who commutes daily, will save $250 a month. Not too shabby.
Actually, she'll save zero, since gas prices won't change a bit. But on the other hand, our government will borrow $250 from China on her behalf so the oil companies can make that much more. Since you're a big supporter of the Iraq war, this should be just as good. It's practically money in your pocket if you own shares in oil companies. And every American with a retirement account owns shares in oil companies.
The 4 o'clock train will be a bus.
It will depart at 20 minutes to 5.
     
peeb
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May 10, 2008, 08:37 PM
 
Yeah, the trouble is you're running up more interest borrowing the money than your retirement account is making.
     
BRussell
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May 10, 2008, 09:47 PM
 
Originally Posted by peeb View Post
Yeah, the trouble is you're running up more interest borrowing the money than your retirement account is making.
peeb, peeb, peeb. You don't understand modern economics. The Republican party has proven that this system works. You gotta get your mind right, boy.
     
 
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