Archives

...a variable gas tax (http://www.msnbc.msn.com/id/28020043/)

http://www.cleanmpg.com/photos/data/501/CFL_Bulb.jpgMSNBC -,December 3, 2008

They have a really good idea on the variable gas tax....not just the routine Detroit deathwatch news. - Ed.

U.S. automakers are in deep trouble. On Tuesday General Motors, Ford and Chrysler reported their worst monthly sales in 26 years, and on the same day the companies asked Congress to grant them $34 billion in federal loans to help them overcome slumping demand because of the recession, the credit crunch and changing consumer taste. GM said it needs $12 billion alone by March to stay in business.

If Congress grants them the loans, will it be enough? What does Detroit need to do to survive? We asked a handful of automotive industry experts and observers for their views on how the nation’s big automobile makers can fix their problems. Other experts have offered their opinions to CNBC and other media outlets...http://www.msnbc.msn.com/id/28020043/

It just doesn't feel right driving a Prius and only paying $2/gallon for gasoline.

Seriously, I would be all in favor of having a minimum gasoline cost of $3/gallon for now, with taxes bringing it to that level. That's high enough to force conservation without hurting people too badly. They could raise that to $3.50 a year or two later.

It's just nuts to tell people to use less gasoline, and then sell it to them for a bargain price of $2/gallon. That will hurt the automakers in their efforts to provide more fuel efficient vehicles if the incentive for people to drive them is eliminated by cheap gas...

Harry

I voted Yes. BUT!!!!....
Unfortunately that type of tax will NOT work.
It would remove much of the competition in the gas market.

If we always pay $3.50 at the pump no mater what the price of gas truly is, then gas companies would have NO incentive to keep the price of gas under $3.50.
I know if I was a gas company or gas station I would instantly say the price of gas IS $3.50.

The tax needs to be a flat tax or percentage.

Harry, you pay that much? Here in Phoenix were averaging 1.75 today. Now I really feel guilty driving my Ford Escape Hybrid and getting 40mpg. Ok, I dont feel guilty! I dont think any politician will ever support a gas tax. They do want to get re elected dont they?

;)

We do need a new increase in the gas tax, but we should also allow supply and demand to occur. We just need to raise the bar.

Also, I have never understood why the gas tax is not a percentage of the price per gallon. Every other sales tax is. When gas prices go up and demand is down, the tax revenue wouldn't be hurt so much.

nf

PS Still I voted yes, because we need a higher gas tax in any form.

It just doesn't feel right driving a Prius and only paying $2/gallon for gasoline.

Seriously, I would be all in favor of having a minimum gasoline cost of $3/gallon for now, with taxes bringing it to that level. That's high enough to force conservation without hurting people too badly. They could raise that to $3.50 a year or two later.

It's just nuts to tell people to use less gasoline, and then sell it to them for a bargain price of $2/gallon. That will hurt the automakers in their efforts to provide more fuel efficient vehicles if the incentive for people to drive them is eliminated by cheap gas...

Harry

I agree with you Harry. The problem here is NOT that gasoline is too expensive. The problem here is the frame of mind we have been indoctrinated with for decades. For years and years the auto and oil industry have droned into our head that driving a BIG POWERFUL car is a way of demonstrating ones status, power and machismo. We do not associate the conspicuous consumption of oil with the growing consequences of our reckless use of oil. We do not see that our dependence on oil from those who hate us is leading us down the road to war, runaway inflation, recession, a horribly deflated dollar, people loosing their homes and jobs, etc. Before our addiction to oil did not seem to cause much in the way of problems. Now it is the root cause.

Like Harry said, fixing the price of gas does not attack the problem, it makes it worse. We need to be truly re-educated as to WHY we should conserve.

Bob. :flag::flag::flag:

It just doesn't feel right driving a Prius and only paying $2/gallon for gasoline.

Harry


I agree with that. I paid just over $12 to fill my tank last night. We are at $1.37/gallon here in KC. It just seems odd. I was convinced it would never be under $2/gallon here ever again.

It's a good idea, but so is communism. Implementation? Now that's another story.

I voted Yes. BUT!!!!....
Unfortunately that type of tax will NOT work.
It would remove much of the competition in the gas market.

If we always pay $3.50 at the pump no mater what the price of gas truly is, then gas companies would have NO incentive to keep the price of gas under $3.50.
I know if I was a gas company or gas station I would instantly say the price of gas IS $3.50.

The tax needs to be a flat tax or percentage.

Very good point here.

I am very much against adding more taxes to fuel. But if it is absolutely necessary, maybe it could be halfway between the current price and $3.50 (and maybe a minimum of $.25 per gallon).

If the real price of gas is $1.00, the taxed price would be $2.25. If the real price is $3.00, the taxed price would be $3.25.
At $1.50, it would run $2.50. $2.00, $2.75.

It avoids gouging the consumer too much, but gives the government a boost in revenues when gas prices drop. It also helps keep the price somewhat elevated so that people don't forget driving sensibly for FE on those occassions when the prices do plummet.

This all becomes a mute point when PHEV's become the primary vehicle for Americans. What are they going to do then, impose higher taxes on electricity? But hey don't stop there, people with wind generators and solar panels need to be taxed higher too!

This is a viscous cycle. I'm usually pretty optimistic about things, but this is a situation that has me truly concerned.

This all becomes a mute point when PHEV's become the primary vehicle for Americans. What are they going to do then, impose higher taxes on electricity? But hey don't stop there, people with wind generators and solar panels need to be taxed higher too!

This is a viscous cycle. I'm usually pretty optimistic about things, but this is a situation that has me truly concerned.That's years from becoming a problem. Futhermore, why penalize domestic alternative energy like OPEC?

I voted NO. A price floor is a horrible idea. It introduces massive distortions into the marketplace, and prevents markets from working effectively. When costs are low, you will no longer have price competition, leading the oil companies to raise their wholesale prices to just below $3.50, massively increasing their profits and reducing the gas tax revenue we're trying to raise in the first place.

Although I oppose price controls, I strongly support substantially increased gas taxes. Still allows the price to fluctuate in response to changes in supply and demand. Doesn't do away with the magic of the marketplace, just tilts it in a different direction.

The lesson hammered home time and time again when I was studying economics was that price controls always, always, always backfire in the long run (although they can in some circumstances be helpful in addressing short term crises). Markets can be used to achieve policy goals, however, if you manage them effectively, and tax policy is one of the key ways to do that.

Good point

noflash: You make a good point. Another article that I read off gasbuddy cited a state wanted to increase its gas taxes because it didn't have the funds it needed for its projects. They said they had more money when gas prices were higher as opposed to the lower prices. This doesn't make any sense since the gas tax is a fixed amount rather than a fixed percentage rate. If more people could actually stick to their budget the impact wouldn't be as bad.

It just doesn't feel right driving a Prius and only paying $2/gallon for gasoline.

Seriously, I would be all in favor of having a minimum gasoline cost of $3/gallon for now, with taxes bringing it to that level. That's high enough to force conservation without hurting people too badly. They could raise that to $3.50 a year or two later.

It's just nuts to tell people to use less gasoline, and then sell it to them for a bargain price of $2/gallon. That will hurt the automakers in their efforts to provide more fuel efficient vehicles if the incentive for people to drive them is eliminated by cheap gas...

Harry

You're getting ripped off! The Chevron station I drive past on the way to work is selling it here in Houston for $1.41. That's why I voted for it. People have short term memories and it's asking alot to ask people how much a barrel of oil was when it peaked and when the price peaked. BTW it was at $147/bbl in July.

Price floor, bad idea. Higher gas tax, good idea. You figure the people getting the short end of the stick are our future selfs when we start to realize we are running out of oil. Raise taxes now to promote more people and companies to get off oil. With high gas prices, the business models for wind energy look good.

Ethanol looked like a great business when corn was $2.00, but once it went to $4, 5 , and 6, the business model failed. It is kind of the opposite for renewalable energy. As long as oil prices are low, renewable energy business models don't work.

Harry, you pay that much? Here in Phoenix were averaging 1.75 today.

Chris, the price in town here just got down to $2.00 yesterday. In a nearby town, I noticed they were still paying $2.23/gallon.

My brother lives in Phoenix, and I've been to Arizona a couple of times. I hope to visit again some time.

take care,

Harry

PS: it did occur to me after my original post that setting a floor price for gasoline would have big problems. Shooting for $3.50/gallon, I'm sure the price would mysteriously become $3.49 overnight, with no room left for taxes...