Gas Holidy a Headache-Inducing Déjà vu

May 1, 2008

Two summers ago, I made a step toward the dark side by trading in my bicycle for a shiny new SUV. I couldn’t have timed the switch more poorly. This was the first summer of record setting gas prices, when the pump price first climbed over $3.00 a gallon. Fair weather activists went to work that summer, sending out chain letters over email and myspace demanding a boycott of gasoline. Let’s boycott all gas stations for a day! Or better yet, let’s just boycott Exxon! That’ll show ’em!

After reading these, I (and anyone who had taken Econ 101) immediately were hit with terrible headaches. Why? These consumer gas schemes pandered more toward emotions than to any rational economics theory.

Now two years later, a similar situation is occurring. However, this headache isn’t being spread by zealous internet users. This fire is being fanned by two of our own presidential candidates. Their idea is not a boycott, but rather a “gas holiday” where the federal gas tax is erased for the summer driving months.

But wouldn’t lowering the gas price increase demand? And when demand increases, won’t the prices go back up? The short answer is Yes. Peter Schwartz of Global Business Network describes this as the true American energy policy: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Under such a scheme, consumers would see little change in gas prices this summer. Without taxes of course, our own Federal government’s revenue would shrink. And the real winners in the game would be….you guessed it….the big oil companies.

According to this article by Thomas Friedman of the NYT, “This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.”

Paul Krugman, another NYT columnist points out in a post that any attempt to quell gas prices for the summer driving season is too little, too late. The petro we’ll use this summer has already been extracted and refined. No matter what politicians will promise for the summer, there’s simply not much to be done.

Photo found at Huffington Post

My car gets 14 mpg on a good day and public transit isn’t an option for my commute. I’m sitting front and center in the cross hairs of high gas prices, and I would be ecstatic if there were a plan that could help me out. Unfortunately, there doesn’t seem to be much of a rationale consensus from our leaders. Of the three candidates, only Obama has voiced his disapproval of a gas holiday. Both McCain and Clinton have publicly favored this gas-tax holiday.

It’s time for our politicians to take a proactive and logical approach to our energy policy. All the research, rationale, and logic point to the same conclusion. It’s been close to 30 years since President Jimmy Carter proclaimed we would stop being dependent on foreign oil and that we would develop oil alternatives. Perhaps its time we began working toward this long-time goal.

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3 Responses to “Gas Holidy a Headache-Inducing Déjà vu”

  1. All talk and no walk.

    Boycotters, repeat after me: REDUCE AND CONSERVE, REDUCE AND CONSERVE!

    Ahhh, you must be one of those people who use their brain to come up with ideas. I’m glad to see you approve of a long-term strategy to reduce demand. Perhaps we could start a more educated myspace campaign?

    -Nicholas | SmartSense

  2. Ben K said

    This is not a problem of one party. This country has to do something and make some changes.

    about the time you got your SUV was the time I ditched my explorer and got a normal car. I miss the SUV, but I dont miss having to get gas for it.

    Hi Ben, You make a good point – no matter what the politics of the issue are, it’s an issue that affects everyone in this country. Even those who don’t drive much will feel a pinch for products that need to be transported.

    I’ve already got my eyes on trading in for a more efficient vehicle. I’m crossing my fingers that the SUV Hybrids become more affordable before I jump into a trade-in. Could you imagine 35mpg and 4 wheel drive? I’d be in heaven!

    -Nicholas | SmartSense

  3. Jamfish said

    Well, the Ford Escape Hybrid gets, according to Ford: EPA-estimated 34 city/30 hwy mpg. Which is funny because I always get better mileage on hwy/freeway driving than in the stop-n-go city.

    Anyway, by the time the gas-tax-holiday proposal came up, it was too late anyway, as you pointed out. And it was, indeed, a very short term solution that, in the end, would not work. After all, since when does the government EVER rescind a tax?

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