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By Jad Mouawad
On the face of it, John McCain’s proposal to offer a gasoline tax “holiday” during the summer driving season might sound like a good way to cut gas prices at the busiest time of the year.
But economists and energy analysts say it would have little impact on mitigating the rise in gasoline prices. In fact, it could lead to the opposite result.
The federal gasoline tax represents a flat fee of 18.4 cents a gallon nationwide. With gasoline currently averaging $3.39 a gallon, the tax represents a mere 5 percent of today’s pump price. While that’s not trivial, consider that gasoline prices have more than doubled since 2004.
The problem is that lowering gasoline prices at the pump would encourage more consumption. So in the long run, it would push prices up.
http://thecaucus.blogs.nytimes.com/2...-gas-tax-plan/
On the face of it, John McCain’s proposal to offer a gasoline tax “holiday” during the summer driving season might sound like a good way to cut gas prices at the busiest time of the year.
But economists and energy analysts say it would have little impact on mitigating the rise in gasoline prices. In fact, it could lead to the opposite result.
The federal gasoline tax represents a flat fee of 18.4 cents a gallon nationwide. With gasoline currently averaging $3.39 a gallon, the tax represents a mere 5 percent of today’s pump price. While that’s not trivial, consider that gasoline prices have more than doubled since 2004.
The problem is that lowering gasoline prices at the pump would encourage more consumption. So in the long run, it would push prices up.
http://thecaucus.blogs.nytimes.com/2...-gas-tax-plan/
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