Gasoline-tax reprieve: an idea running on empty

Minimal cost savings, increased dependence on foreign oil, and high administrative costs are among reasons why this idea ran out of gas.

from the May 5, 2008 edition

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•The gas-tax break would do nothing about United States dependence on imported oil, or, for that matter, on a limited supply of domestic oil. Contrariwise, it would add to consumption and to global-warming emissions.

"We are the laughing stock of Europe because we keep [gasoline] taxes so cheap," notes Matthew Simmons, chairman of a Houston-based investment bank for the energy industry, Simmons & Co. International.

The state gasoline tax, which ranges as high as 32.1 cents in Wisconsin and as low as 8 cents in Alaska, averages 28.6 cents a gallon. So, add in the federal tax, and the average tax totals 47 cents. Way low by European standards. In Germany, for example, gas is taxed at about $2 per gallon.

Only last January, a bipartisan commission appointed by Congress recommended a 40-cent boost over five years in the federal gas tax with revenues used to improve the nation's transportation system.

•The tax break would add to the federal deficit. Gas-tax revenues normally go to the Highway Trust Fund, which is used to maintain and improve the highway and public transit systems. One proposal in Congress would have substituted Treasury revenues for the lost HTF money.

•The change would be an administrative nightmare for the nation's retail sellers of gasoline.

"It would be a logistical challenge," says Jeff Lenard, spokesman for the convenience stores that sell 80 percent of the nation's gasoline supply.

At this time, Republicans and Democrats are busily trying to blame each other for the troubling high gas prices. For instance, sometimes more than once a day House Republican Leader John Boehner issues a press release teasing Speaker Nancy Pelosi for not presenting her long-promised "common sense plan" to lower gas prices.

For now, Washington is looking for other ways to hold down gasoline prices. One popular idea is to stop filling the Strategic Petroleum Reserve. At present it contains 701 million barrels, enough with private oil company reserves to substitute for imported oil for 118 days. It is being filled at a rate of 70,000 barrels daily, not a hefty amount compared with imports of 10.1 million barrels a day.

"We are addicted to petroleum, a source of energy which is gradually going to disappear," warns Michael Klare, who teaches international affairs at Hampshire College in Amherst, Mass. He says the US must really work on "alternative" energy sources.

That's not a short-term solution.

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