By By Tray Smith
Senator John McCain, the forgotten candidate, sought his way back into the nation’s memory last week by proposing that all federal gas taxes be suspended between Memorial Day and Labor Day of this year. McCain predicted the action would be an “immediate economic stimulus — taking a few dollars off the price of a tank of gas every time a family, a farmer, or trucker stops to fill up.” But with gas prices averaging well over $3 per gallon, the 18.4 cents collected by the federal government make up little more than five percent of the total cost. Gas prices have increased more over the past month than they would decrease if the gas tax was suspended.
High fuel prices are caused by a growing global demand for energy. The only way to combat increases in fuel cost is to increase the world’s supply. Removing the gasoline tax will stimulate demand for fuel during the summer driving season-at the very time demand will already be at its annual peak. Increasing demand without increasing supply will only hasten the upward pressure on gas prices. The effect of any tax reduction will, therefore, be insignificant and short-lived. When gas taxes are reinstated next September, the American people will have to adjust to an 18.4 cent increase in the cost of gas on one day.
If the government’s goal is to reduce gas prices, then the government must allow more oil exploration in Alaska and off our coasts. Researchers have estimated that federal lands in the Arctic National Wildlife Refuge alone could contain up to 16 billion barrels of oil. If those additional resources were allowed to enter the market, the value of gasoline would decrease. But Senator McCain has consistently opposed expanded drilling opportunities because of environmental concerns.
We also need to have the facilities to refine more energy. However, no refinery has been built in the U.S. sine 1976, and the number of refineries has actually declined since the 1980s. Encouraging the construction of new refineries will require significant reforms to environmental regulations, which seriously hamper refinery construction.
Gas prices will also decline if Americans use less energy, but that will require serious efforts to conserve natural resources. Already, people are being forced to car pool, take fewer trips and buy more efficient cars. As gas prices continue to increase, such activities will become more common. Those efforts create significant savings. For instance, individuals who join carpools with three other people cut their commuting cost by 75 percent. Such savings more than offset the rising cost of gasoline.
Skyrocketing fuel prices have combined with the sub prime mortgage fallout to dampen our economic fortunes. But the stimulus created by lower gas taxes would be too negligible to ignite economic growth. However, the cost of a gas tax reduction would be substantial enough to increase the budget deficit, already projected to be more than $400 billion this year. That deficit is a result of both the declining economy and the $150 billion giveaway plan Congress already passed to “stimulate” the economy.
Lower gas tax revenues would be especially detrimental to the Highway Trust Fund, which is supported by the taxes motorist pay at the pump. But the Highway Trust Fund is already under funded; reducing revenues for highway construction as we try to repair our aging infrastructure will be another blow to our economy. Without the resources to build more roads, states will not be able to increase capacity on heavily-traveled freeways. Thus, commuters will remain stuck in traffic, using gas.
Congress can enact energy policies that will save the country in fuel cost, but reducing the gas tax is not one of them. Senator McCain needs a more substantive energy plan.
Tray Smith is a political columnist for the Atmore Advance. He is a student at Escambia County High School and can be reached at tsmith_90@ hotmail.com.