Benefits of suspending federal gasoline tax would be minimal
There are good points in U.S. Rep. Phil English's proposed Affordable Fuel For Consumers Act, including steps aimed at increased offshore oil and gas exploration and opening up portions of Alaska's Arctic National Wildlife Refuge for oil drilling (provided that that drilling would be subject to strict limits and monitoring).
But the provision in the proposed legislation that English has thrust most into the spotlight in recent days — suspension of the federal gasoline tax — is the provision that should be soundly defeated, if it isn't withdrawn or shelved prior to a vote.
The 18.4-cent federal excise tax on gasoline, which goes into the Highway Trust Fund for road and bridge projects, should not be suspended for 60 days, as English advocates — not for 45 days, not for 30 days, not for 15 days, not for one day.
Unfortunately, suspension of that tax for various lengths of time also has been presidential campaign fodder for the likes of Sens. John McCain and Hillary Clinton, who put forth the idea prior to English.
Sen. Barack Obama, who is battling Clinton for the Democratic presidential nod, correctly opposes such a move.
If gasoline were being sold for $1 a gallon, an 18.4-cent reduction in the price of a gallon would be a very noticeable savings. However, with the price of gasoline expected to continue rising during the summer — to well above the current $3.60 — that 18.4 cents is destined to be increasingly insignificant and, at the same time, would apply no pressure on the oil companies to reduce or stabilize prices.
For the average driver, it has been estimated that suspension of the tax over the course of the summer would result in a savings of just $30 but would create a $10 billion gap in the Highway Trust Fund.
And, suspension of the tax actually could provide a window for higher profits for the oil companies, if suspension of the tax were to serve as a devious incentive for the companies to increase their prices 18.4 cents a gallon more than might have happened if the tax had remained untouched.
Over the short term, what will apply pressure for gasoline prices to drop is Americans cutting down significantly on their driving. Lower demand promotes the volume of unsold product to increase, which in turn encourages lower prices to keep the supply on hand from becoming overburdening to storage capacity.
Over the longer term, vehicles that are more fuel efficient also would cut down on fuel consumption, having an impact similar to that of less driving.
Had the nation become more serious about vehicle fuel efficiency standards in the years since the first big spike in oil prices, it's reasonable to believe, today's price problem might not be so dire.
Under English's proposal, lost revenue for road and bridge projects due to the temporary tax rollback would be replenished by funds from general federal revenue.
But with the U.S. Government operating with a budget deficit of hundreds of billions of dollars, the tax suspension English is seeking portends $10 billion in additional federal borrowing and, thus, a greater burden on the backs of current taxpayers and future generations.
English is correct that something needs to be done to provide relief in the oil price morass. And, he makes the reasonable point that "it is absurd to allow rogue dictators and wealthy oil states to have unfettered self-determination when it comes to the production and pricing of their products."
But the kind of measures that are needed are those that are not artificial, feel-good, temporary fixes whose long-term problem-solving capability is virtually nil.
The temporary gasoline-tax suspension now being proposed by English, but proposed by John McCain and Hillary Clinton before him, is not the right solution. Meanwhile English, whose Western Pennsylvania district is in a state grappling with huge highway and bridge needs, and which is considering highway leasing and tolling proposals to raise needed repair funds, should not be advocating a plan that has the potential to undermine a pot of federal highway money so important to his state.
In terms of politics, English's idea looks good. In terms of good judgment, it leaves much to be desired.
The congressman shouldn't toss aside all provisions of his proposed legislation, because there are good ideas in the proposed bill. However, he should split from the ranks of those who believe shortchanging the Highway Trust Fund is a reasonable and responsible approach.
It isn't the right approach and it never will be, as long as there isn't a budget surplus to replenish the money that would be lost without additional federal borrowing.