Yesterday, Sen. Hillary Rodham Clinton (D-N.Y.) joined the popular movement calling for a summer moratorium on the 18.4-cent/gallon federal gas tax. This is the same idea for which Sen. John McCain (R-Ariz.) introduced legislation earlier in the month. Both of the presidential hopefuls say the proposal would provide consumers much-needed relief during the peak driving months.
The trouble is (as we pointed out two-weeks ago), it makes not even an ounce of economic sense. In fact, if the laws of supply and demand mean anything to anyone anymore, dropping the price of gas will encourage greater consumption, pushing up demand and hiking the price.
So quite aside from removing an important source of federal revenue (and therefore increasing the federal debt — the interest on which already consumes 9 percent of all federal spending), the plan would lead to higher gas prices at the end of the summer, if not before. This says nothing of the environmental impact of spewing more carbon from millions of tailpipes.
On top of that, the proposed relief is hardly significant. Consider this: A typical car holds about 13 to 15 gallons of gasoline, meaning that under the McCain/Clinton plan, a driver would save roughly $2.76 with every tank refill — about the cost of a Starbucks coffee or a cold Bud at Happy Hour. How many times does a typical driver refill the tank in a week? Two? Three? Five? Not exactly the kind of cash to help prevent a foreclosure, for example.
Sen. Barack Obama (D-Ill.), who opposes the gas-tax moratorium, had another theory about why the other presidential contenders might be pushing their plan. From a speech he gave today in North Carolina, according to The Boston Globe:
“This is the problem with Washington,” Obama declared. “We’re arguing over a gimmick that will save you half a tank of gas. It’s not an idea to get you through the summer. It’s an idea to get them through an election.”