Fortune Talkback: Time to raise the gas tax

No,no,no to any more taxes. The chances of the tax revenue on gas being returned to the taxpayer is slim to none. Once it gets in the government coffers it will be wasted by our free spending politician. It is easy to spend someone elses money.

Instead of taxing, lets start cutting the Pork from Gov. Cut staffs, eliminate mailings and start working instead of raising money for the next election.

Nuclear is the way to go and also using our natural water resources for generation. Wind is a rip off of our tax dollars,and inefficient.

Tax increase I say no, just like the tax on our 401 ks. The Gov will control that too and rob it like social security.

The oil and Auto industry have been sleeping in the same bed so long and the unions will have to learn to over lap jobs and no work no pay. No sleeping on the job.

No tax Tax Tax We want Cut Cut Cut, like 95% of us are doing right now.

My rant

As a petroleum engineer, I am preparing for the new president to impose a huge tax on our industry. If he were instead to listen to this idea it would be far more beneficial to Detroit, Houston, and the American people. The ‘windfall tax’ will tax the American producers discouraging them to drill while continuing to allow Saudi, Venezuala, etc to rake in sums of money. We will be more dependent on them than ever. This plan however limits their influence on the price of gasoline and allows people to make informed decisions. Unfortunately this policy goes against the new American Way by asking the public to directly and immediately pay for the policies they want (Green Energy, reduced carbon emessions, etc). Its a sad state really.

Hi Allen – I agree with you on raising the gas taxes, eliminating cafe, etc. It is a complicated subject but we have too cheap of fuel here in the U.S. and it is because politicians are scared of the public reaction. Funny then how everyone thinks Bush is Texan so the Oil Companies have the big profits. Fact is we would keep more money in the U.S. coffers with a much higher tax and the public just needs a little education on it and they would see a multitude of benefits.

I think you’re exactly right, but it has to be a SHIFT in taxes – not an increase. You phase in a higher gas tax over several years (encouraging conservation) while returning it as an income tax CREDIT (not a deduction). Being a credit, it gives a low-income person the same payback as higher income, offsetting the higher burden of gas taxes on lower income people. Some may decry this as redistribution, but let’s face it, you almost have to drive in the US to get around.

The US auto industry is the only one in the world without a reliable home market for fuel-efficient cars. If we don’t do something like this to create a reliable demand for fuel-efficient cars, the domestic auto industry will disappear.

If Nixon and his congress had done this in the 1970’s – when it should have been done – look what would have happened. Automakers would be selling high mileage autos, (at a profit) the actual cost of the gasoline would be lower due to decreased demand, and “climate change” would at least be stalled.
All due to the free market working like it should.
It certainly can’t hurt to do it now, but its over 30 years to late.

Who filled up their SUV with $50?? I call bullsh*t. My little Taurus took $55 per tankful every single week gas prices were so high. I have a 62 mile per day commute to work and back and gas prices ate me alive. My gas bill was more than my house payment, more than my electric bill. For a single working mom it was VERY hard to make ends meet. NO to a high gas tax, there has to be a better way.

Agreed.

The effect on world demand would not be so great, but it would be tremendously effective medicine for US consumers,and the environment. Medicine doesn´t always taste good, but sometimes we need it.

Deja vu. (already seen) Remember presidential candidate John Anderson? After the 73 oil embargo (campaign 78 I suppose?) he was an independent who did pretty good. One of his main promises was to RAISE the gas tax to keep gas at $1 a gallon to reduce demand and use the revenue to fund energy independence. I voted for him, America didn´t. What a pity! Thirty years of the planet´s life squandered by greed-as-usual.

On the list of all-time Stupid ideas, this one is very near the top just behind the Ford Edsel.

Mr. Sloan, Please tell me either that you are just kidding or explain to me how having the Federal Government siphon billions of dollars out of the economy is going to benefit anyone with the possible exception of politicians in Washington.

We are faced with two staggering domestic issues: Growing unemployment and high energy costs. Imposing an enormous tax burden won’t contribute to solving either of these problems.

What will help is taking aim at reducing the importation of oil, especially from those countries that have either declared outright that they don’t like us or whose friendship is questionable at best.

And before you cite that bumper sticker slogan ‘we can’t drill our way out of this mess’ I will tell you that NOT drilling for the past 30 years is largely responsible for getting us INTO this mess in the first place. We are exporting $700 billion worth of jobs every year while allowing some of our adversaries to hold our economy hostage on the basis of the European spot market price for crude oil. This is utter nonsense for the sake of moral vanity in the guise of being green.

We should look to grow our productive capacity by exploration and development of our own energy resources rather than growing the Federal Government with yet another new tax and making the already utterly opaque Internal Revenue Code even murkier.

The automakers should go to Exxon for their bailout funding (:-). $10B profit in 3 months on $100B revenue…(wow!)
If we raised the oil tax (not just a gas pump tax – but an import duty) by 5% of gross revenue, we’d have about $20B/yr from Exxon alone – and Exxon would still clear $20B/yr themselves. And other oil companies would do likewise. That won’t make a Big Dent in gas consumption or the economy, but it would cover the Detroit Bailout, gently encourage more domestic reliance on our own supplies, and that would itself create a stronger economic incentive for alternative energy investment.

While market forces generally work within well defined limits, “market forces” are fundamentally Darwinistic in their workings: adapt or die. But adaptation is a slow but constant process, even evolution was unable to deal with sudden environmental upheavals. (Besides, its hard to see how recent oil speculation can be a legitimate “market force” when most speculators never really want to take delivery.)

In my humble opinion (:-) “Market forces” include taxes that encourage strategic change at least as much as wars that try to preserve a status quo. Unfettered markets do not exist – not in this global economy. So lets use the tax incentive to alter course – to reduce US dependence on foreign energy sources, and reduce our overall reliance on fossil fuels more broadly. If you don’t want to pay an additional 5% oil tax…then use 5% less energy or switch to non-oil based sources. (How’s that for market logic?:-)

Its time to think in generations – not quarters.

A gas tax is huge opportunity that should not be missed. In the future, there will be a shortage of oil that makes the price rise to the cost of alternatives. This shortage may be real or induced by OPEC.

The thing is that P consists of two parts: the price we pay producers, and taxes. The first part we send overseas, the second part we get to redistribute among ourselves. So we should increase the part we get to keep.

A bit simplified:
Let’s say the alternatives to oil – electric cars, geothermal heating, etc – become viable at $150 oil. Sooner or later, the price will rise to $150.
However, if there is a $100 tax on oil, the producers cannot charge more than $50, otherwise P would be more than $150 and people would switch wholesale to the alternatives.
The consumers end up paying the same price ($150 equivalent), but $100 of this money goes to the IRS.

You’d have to be pretty lost to think that paying taxes is the same as sending the money to other countries. Because if you pay any other taxes than this one, the money can be used to cut those instead.

Some commenters say ”leave it to the market”. Usually, that is the best way to maximize wealth for everyone involved, but it doesn’t apply to goods supplied by cartels. Oil is a commodity that (mostly) costs much less to produce than it can be sold for. The difference is up for grabs to whomever is smarter – consumers or producers. The producers have OPEC. A gas tax may be considered a form of cartel on the buyer’s side.

This whole argument relies only on one assumption: that the oil price will, sooner or later, rise to the alternative cost. That shouldn’t be too hard to accept. They’re not making any more oil. As shown earlier this year, OPEC might not even be needed.

Remind us all how this is going to prevent the swing in Gas prices. If the price for a barrel of oil goes up you think the price will remain the same at your local gas station, if you have already increased taxes???

If you want taxes increased, increase taxes, but his is a silly silly arguement.

You think if we raise taxes our polictians will spend it wisely. That is funny.

I agree that this is a good opportunity to do something to rein in our oil consumption. What about setting a fixed price per gallon of, say, $3.00. Any difference between the $3 and the current price at the pump would be a “tax”. When the actual price is low, the amount funneled into res/dev and infrastructure could be significant. As the price creeps closer and exceeds $3, yes, the “profit” collected is less, but we’ve seen that as prices go above $3 and towards $4, consumption goes down.

I would love to get a “cheap” commuter car that was electric. I only drive 10 miles total per day round trip. A small number of electric commuter cars were developed in the late 70s and early 80s, but think how much technology has improved since then. Imagine a carbon-fiber and fiberglass body, 2 seats, charge overnight, range of 30-40 miles would be perfect for many people. If I need to travel a long distance, rent a car.

I don’t know if anyone else feels this way, but when someone says that it bothers them to pay countries that we are on bad terms with for their tank of gas, it really annoys me. The fact of the matter, is that the United States imports more oil from Canada than from any other nation in the wolrd, and that little to no oil is even imported from nations like Iran… Just me two cents… check out this link for more info
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

We’ve got some real brainiacs out there if any of you think that somehow the consumer can benefit from hiking the gas tax. Wake up and smell the coffee… It’s time that the rest of us enjoy a break for awhile! It’s just a matter of time before it all goes back up again.

It’s hard not to agree with the philosophy especially when our domestic car makers have more fuel efficient models they sell overseas.

It’s a tremendously good idea. It keeps more money in the US and less going to countries who hate us by creating a stable market demand for economy cars, which means Detroit will finally make some that people want to buy. It’s a win win.

How about a tax on engine horsepower? that way if you want to own a big heavy vehicle you pay more for it.

Agree – it’s time to raise the gas tax and use the money to fund infrastructure improvements that provide jobs as part of the much needed stimulus package. Let the additional dollars in the gas tank do good in the US rather than go overseas.

A number of years ago, CBO studies showed that best way to increase overall milage of new cars would to raise gas tasks. Time to dust off the past.

Also, unless gas prices are high enough, we will stop alternative fuels work again. Havn’t we learned this lesson before.

What about phasing in a tax so people can learn to live with it? This year $.10 per gal. Next year an additional $.10. I advocated that back in the days of ‘even/odd’ sales in the ’70s. If politicians had had the courage to implement it back then, we wouldn’t have these crises today.
I can’t believe the whining of those who want to leave control of our prices and consumption to foreigners who don’t particularly like us.
With a gas tax we control our fate. It’s not pleasant, but we’ve already experienced the alternatives.

I’ve advocated a 25 cent/gal. increase
in gas tax for years.

Fund two things with this
1) conservation techniques
rebates on moving to a more
fuel efficient car, more
public transit and
infrastructure improvements
(bridge repair etc. which would
improve employment picture)
and new transmission lines
for electric
2) Research/development of new
energy sources (particularly solar)

I’d give all 20 cents to #1 and
5 cents to #2 the first year, shifting to 5 cents to #1 and 20 cents
to #4 in year 4. This gives res/dev
time to ramp up.

The extra petroleum tax discourages consumption and funds the replacement
from petroleum to some other fuel.

I agree, taxing fuel use is the most efficient way to increase fuel efficiency and reduce fuel use. You don’t need to limit to gasoline though, coal and natural gas should also be targeted. Reduce income and capitol gains taxes to help offset the increase in taxes, and credit low income taxpayers. The problem with our current tax system is that the cost of oil imports to us as a nation is not reflected in the gas price at the pump. We are paying a tax on our inefficient energy system now, because govt. revenue must go to protect our national security concerns in the Middle East. Don’t believe for a second that the first and second gulf wars would have happened if we were able to produce all our own domestic energy.

Has taxing anything ever helped us gain prosperity?

Its stupid Liberal Agenda. Let the market decide the price

Because the tax per gallon is a fixed price (not a percentage), the gas tax revenue has been falling. Gas tax should be raised – if you don’t mind the volitility, make it a percentage instead of a fixed rate. If you want to take the volitility out, just raise it from what it is now.

If anyone out there can tell me that our war efforts in Kuwait, Iran, Iraq,… are not about the oil, then I might change my mind. We have huge war expenses and they should be paid with oil taxes.

I couldn’t agree more!!

You forgot to mention that other countries around the world are presently paying more than $4.00 per gallon at thier pumps. I’m afraid higher prices will back to stay.

Alternative energy such as; wind, solar, fuel cells, coal gasification and nuclear energy, cannot compete with an oil market that fluctuates wildly to the low end. And you can bet tha all of the countries we import oil from, know this.

I do agree. It is a reasonable way to effect a broad “tax” on all Americans, and thus reduce consumption and encourage change. It is also a great way to stick it to the OPEC countries and their ilk. Use the revenue to build more efficient energy resources in the US and supplement those that would suffer inordinately such as truck drivers, taxi drivers etc.

Whether or not a sudden, large increase in fuel taxes is debatable at some point, i.e., how much of an increase you have in mind.

It’s true that we do enjoy fuel taxes much lower than people in other nations. For instance, just this morning I heard that while in the U.S. we pay something on the order of 30% for fuel taxes (though it wasn’t clear if that included state taxes), while at the other end of the spectrum, of the several countries cited, Germany led the pack with comparable taxes of about %260.

Initially, maybe taxes increasing a flat 20-30 cents might be doable for consumers while also helping hold down demand. But any maximum increase needs to be for federal and state taxes taken together, not for just the federal tax — after all, states’ coffers are seriously hurting, too.

Perhaps, over time, fuel taxes could rise even more, but in carefully graduated steps that would balance motorists’ needs with reduced consumption, etc. Further, that should help the coming fuel-efficient vehicles gain traction in the marketplace.

I would hope that any fuel tax increases would set aside a portion of the extra for pushing alternative energy sources, especially those directly affecting driving.

So let me understand this… first people gripe when gas prices are too high and they want them lower, now they’re griping because they’re too low and they want them higher? Wow, sounds pretty stupid if you ask me and that tax solution does nothing to reduce our dependence on foreign oil. If we want to do something about this, let’s leave the gas tax alone and start doing something to get us off of foreign oil. I’ll support any energy plan if it involves a reduced use of foreign oil imports whether that be more offshore drilling (which we need), electric cars, natural gas, hydrogen fuel cells or anything else out there.

Washington has allowed Detroit to put us in this mess. I feel for the Detroit assembly-line worker, but not the management that flies to DC asking for a bailout.

Americans like to drive, after all, the lower 48 states have the land mass that is greater than many european countries. We can’t be blamed for driving. We can be blamed for driving guzzlers merely for keeping up with the Jones’.

For the first time in months, maybe even a year, I was able to drive to a pump and put $5 in the tank without feeling stupid. I’m not alone. We all want to pay less. I also don’t have cable (as mentioned in feedback from others).

As for the tax. I vote in the negative. However, I remember the odd/even rationing days. Those days, people made the news when they demonstrated cars that got 60mpg – 90mpg. One guy drove to D.C. from Florida on less than two tanks of gas, then drove around some federal bigwigs.

Individually, those people probably made some nice money when they sold the patents or rights to either the automakers or the oil companies. So if the technology already exists, why can’t Washington make the Oil companies and/or the Detroit Three (now that we have their attention) to make use of their patents ?

No to the tax.

I agree higher pump prices do help me to be more frugal with energy consumption. However, there must be a more palatable method for artificially increasing our gasoline bill that would be enthusiastically embraced by us all. There is no mandate that the artificial surcharge must be a government-revenue tax. Why couldn’t the surcharge be a 401K-like deposit via a credit card mechanism into a personal account [similar to a health savings account]. From that personal account the individual would be constrained by law to withdraw from it only for investments in energy conservation such as R40 insulation in the attic, solar photo-voltaic/water heating elements on the roof, fluorescent and LED lighting, plug-in or hybrid autos, other battery-powered transport such as scooters or Segways, or for investing in securities of wind-solar-tidal industries? If a surcharge idea is a good one for gasoline, maybe it also could be applied to our other personal resource consumption bills– natural gas, fuel oil, electricity, and, here in Georgia, water. I would embrace a solution that motivates and empowers me as an individual to do the right thing. A government tax version of a surcharge has the repulsive stench of “redistributing wealth” that turns off too many of us.

As a European I can fully understand the logic behind this reasoning and have myself, for many years, suggested this is what should have happened years ago. It could have saved the US carmakers. The Europeans have been used to paying $4-$7/gallon for years now. Do you hear any of their manufacturers going under? No! They all drive smaller, more gas efficient cars, that they can now sell globally to people that have been hit by higher gas prices. The only problem now is that, as usual in the US, it is too little, too late. Good article. Did you send it to our lawmakers?

I would like to know where you were able to fill up your SUV’s gas tank for $50. For most people, driving a vehicle with a 25 – 35 gallon capacity gas tank, it was costing a minimum of $100 a week to week and a half over the summer. Compare that to what we are paying now with sub $2 gasoline and it is a 100+% increase. Big tax on gasoline, NO! Force the “Big 3″ to deal with MPG of their vehicles and the nation will be able to reduce consumption. Enough is enough, no more talk of higher taxes!

Same worn out ideas. More taxes solves all life’s problems. Robin Hood is medieval economics.

Drill off shore and in Alaska, use the proceeds to develop renewables. A no tax solution.

Those who think that transitioning to renewables will be easy and cheap are really naive. How many solar panels and windmills does it take to replace the consuption of 22 million barrels of oil a day and thousands of tons of coal a day.

You and many of the other bloggers are a few cans shy of a JOE SIXPACK. It is amazing to me the ignorance that has infected this country. First of all, you do not liberate yourself from foreign oil through CAFE standards. Gasoline is not a necessary fuel source to power a vehicle. (sugar cane, elec.) Why are we not looking for other resources to move us forward in the future. Oh, we are?? Oh, we have? Oh, but we can’t use them?? Petroleum companies and OUR government are in bed together. They say they want better cafe standards but the companines are not allowed to use the technology that has been around for 50 yrs.

I agree. The time to impose a tax on gasoline (and diesel?) in particular is when prices are falling, or have fallen. The tax now is low, relative to the price of fuel, since it is based on number of gallons rather than a percentage of the price. So the gas tax now is much lower than it was in the 1950s and 60s as a percentage of the fuel cost. And yes it can be redistributed to those with lower incomes who may experience hardship. The point is that fuel price should be a factor when vehicles are purchased. In countries with high motor fuel prices Surprise! Surprise! the average mile per gallon of vehicles on the road is much higher than it is here. You pay the same for the car and for the fuel, but you use less. And so, yes, we pay it to ourselves instead of sending the money offshore. This is basic economic good sense.

Off the cuff, I can see at least four problems with Sloan’s proposal:

1. His assumption that a high gas tax will constrain demand and mitigate future price shocks is unfounded. Look no further than the European model. On average, taxes comprise 50 percent of the price of a gallon of gasoline in the European Union compared to 25 percent in the U.S. And guess what? The average cost of a gallon of gasoline in Europe is double the cost of a gallon in the United States. Inordinately high gas taxes have done little-to-nothing to control prices in Europe. Why should they do anything in the U.S.?

2. Crude oil demand – and therefore prices – is a product of world demand. Sloan’s assumption seems to rest on the notion that the United States is “the” oil market. But U.S. consumption of oil, while high per capita, represents only 1/9 of global demand. So unless Sloan is proposing the assessment of a similar tax in every oil consuming nation – particularly in China and India – it’s difficult to see how a measure taken domestically can exert the kind of price controls assumed in his proposal.

3. Sloan argues that an excessively high fuel tax will rein in demand and allow the market to “make the decisions.” In other words, a high gas tax is tantamount to free market capitalism. Indeed, according to Sloan, an onerous arbitrarily imposed gas tax by the government is just what the free market needs to operate more effectively and control demand.

4. Consumers don’t buy gasoline based on a pie chart, an argument implicit to Sloan’s reasoning. What difference, for example, does it make to the consumer if 25 percent of the price of a gallon of gas goes to Uncle Sam as opposed to 50 percent, provided – and this is the key point – that the overall price remains the same? If consumers were willing to pay $4 a gallon at a tax rate of 25 percent, is it Sloan’s contention that they’ll refuse to pay the same $4 at a tax rate of 50 percent? This is rather like saying it’s not the price of goods and services that matter but rather the amount of tax one pays on them.

As a pedestrian and cyclist, I rejoiced when gas prices peaked. People drove slower and were far more curtious. I saw more occupants per vehicle and fewer vehicles in total. Now that gas prices have plummeted, it’s business as usual. No one seems to have retained a thing they just learned about the value of conservation, and our country grows weaker by the day because of it. I will support a gas tax, even if it does not lower my income taxes, provided the money is spent on improvements to our depleted rail system and on mass transit options. Let’s take the “car culture” off life support and allow it the death that is largely overdue.

Great idea! We raise the gas tax and promise to give the money back by lowering some other tax. Sure. The politicians would keep the money and waste it. By the way, when is the last time a tax was reduced or rescinded?

This is a stupid idea. European countries tried this idea and, big surprise, the government was never willing to lower the taxes. Once a tax is in place it is near impossible to get it repealed or lowered. The real mistake was the idea that America should not have it’s money tied to a commodity (the Gold Standard) and 60-70 years later we’re still paying for FDR’s mistake since our money ended up tied to a much more volatile commodity.

I do not agree with your suggestion for several reasons.
1) Adding taxes at this time would be very difficult on consumers.
2) We can reduce our dependency on foreign oil by consistently raising gas mileage requirements for new autos. The problem in the past is that we have not been politically serious about it; consistently leting Detroit off the hook. Better gas mileage will be better over the long run, rather than trying to control consumer behavior (and damaging our economy). Demand for oil will continue to grow as India, China and other developing countries expand their economies.

I agree that the tax on gas should be increased. It would serve as you suggest to keep consumption down and drive the market in the right direction. I disagree completely with eliminating CAFE standards. The auto industry clearly needs a club hanging over its head to force it to be more strategic. The tax revenue should be used to soley finance the much needed work on infrastructure – bridges, highways, etc.

Are you kidding? With the economy in turmoil, I don’t think now is the time to add a fuel tax. We all recognize the government for the past 8 years has not been the best friend of the people it was entrusted to govern. I also recognize that the people of this country are going to have to pay higher taxes to pay for the bailout program. If we raise the gas tax now, I think that many will feel the government is just trying to find another way to squander our money.

Even though we now have a new administration coming in (one that I hope works for the people), we have to remember many of those of the past Congress are still there. That, is what bothers me. Our government has shown zero constraint or responsibility for allocating the tax dollars where they need to be spent. I, like many, would rather see a higher tariff on the imported oil. We have the resources here in this country to tap into our own oil supply. We can create jobs for our unemployed and stop doing business with those that don’t like us.

If we do impose a higher gas tax, I feel we should go a little further with the discussion. I feel this may be the perfect time to relook at the “Fair Tax.” The government can say we are going to raise “a tax” for the benefit of one thing. But, when that one thing is accomplished, the tax never seems to go away. They just find another way to spend the money in a different area that has zero benefit to what it was intended in the first place.

This coming from a person who drives 100 miles to work one way, I want to say I don’t like it. I fill my tank every other day and I’ll admit, I like spending less on my fill-ups. If we impose a higher “gas tax”, I just want to make sure our government doesn’t find a way to use this tax for any other way than it was intended. If the price of crude climbs like it did in July, I hope this will prevent us from paying over $4 a gallon for gas in the future. But if it doesn’t, I don’t want it to be used for “spreading the wealth” programs either. Under no circumstance should it be used for anything other than maintaining the “current price” of gasoline and for the R&D of more fuel efficient vehicles.

You have got to be kidding about a Gas Tax. One needs to have their head examined if you think that it is a good idea. I have a better idea, lets tax all the AIR that one has to breath, that way only the folks with big noses will pay a bigger tax…

What? Add another tax and expect higher prices to do what? Sending more money to Washington to spend will not help in any way the price of gas/oil. Get government out of the way and let the market work. This is America.

I completely disagree. Let’s face it, oil production and prices will continue to be set by OPEC. Therefore, the only leverage the American consumer has is to manage its consumption. Oil prices have gone down recently due due to the direct impact of lower demand. Let’s keep it up. It has hardly been a hardship !!

Yes, a ‘flex tax’ would have been a good idea. In a flex tax, a floor is established at a number, say $2.89 for regular. If the price slips below that, some or all of the difference goes to the state. For example, in New Jersey, you can fill your car at $1.89 a gallon. With a flex tax (assuming it was fully implemented), the price of a gallon would still be $2.89, of which $1 would go to the state government.

This would represent perhaps $15 million of revenue per day to New Jersey when its coffers are otherwise empty.

We need to keep demand for oil as low as possible; Our love for the automobile and lately the SUV has put us at the mercy of OPEC. We’ve seen what a reduction in demand can do to the price of oil on the world market. If we keep the price up, demand will stay low. We can use those revenues to fund public transit, alternate energy sources, and the development of more efficient vehicles; Maybe even powered by natural gas as Mr. Pickens suggests.

Great idea except for the “big honking” concept. Were we to raise the tax by just 10% but make it a percentage tax rather than a fixed per gallon tax this would do more to reasonably reduce consumption. As it stands the cost of gas could double again and the govt. would receive no more tax income. A 15% tax would yield 30cents of revenue/gallon at today’s prices and if the price were to double again it would yield 60cents of revenue/gallon. The wonderful thing about this is it would proactively reduce consumption, before Chavez or Putin or Saudi princes get absurd windfalls. If the price of gas goes from $2 to $3 the increased tax would put pressure on demand BEFORE gas becomes a bubble. Theoretically, you could leave the gas tax at the same amount but simply change it from a per gallon tax to a %of cost tax. Then when the price goes up (could take a couple years) the Govt. gets an increase and excess consumption is damped.

Allan Sloan – and for that matter – Tom Friedman of the New York Times who had voiced this opinion earlier – need to have some relatives who trade off gas for food, and maybe they would not be so callous. You are both spouting the modern equivalent of, ‘Let them eat cake!’. No, we shouldn’t raise the gas tax – gas even now is high enough, compared to the prices in the early part of this decade. You will get your desired reduction in driving at $50 dollars a barrel as much as at $100, without the hardship. Beside – you may have good intentions, playing with the market and ‘making nice’ by refunding taxes to poor people, but isn’t that what the road to Hell is paved with?

We need a project with the scope and urgency of the Manhattan Project to make alternative fuel for our vehicles a reality. Mass transit needs a major overhaul as does the transportation infrastructure system. A one dollar or more gas tax would be a good start.

some kind of sick joke right. tell me who is going to be able to afford these great new fuel efficient cars and what about the truckers. we start jacking the the price of fuel up and the cost of food will never come down. stop and think it all the way through not just the short term fix. I know I cant afford a new fuel efficient car right now but I know we need to develop more of them instead of toting that 33mpg is a great saver how about 65mpg aim high not just what looks good for today what is think what is good for 20yrs from today. Poor people and unemployed people cant afford new cars and the ones they do drive are old gas guzzlers. Find a way to get those people in a good fuel efficiant car before you tax. then figure some out for the trucking industry so shipping costs stay low.
sounds pretty difficult but this is what needs to be done for the next generation to survive.

OK this is getting out of hand. If we raise taxes on fuel who gets hurt ?
I can answer that, the low income folks who are on the ragged edge already. The choice becomes food, gas, bills or your house payment.
So its simple use the taxes you already recieve wisly insted of pork style funding. I am on a fixed income, its called disabilty from an accident at work. It was not my fault. I had no control over any thing. So I wound up with free parking and a poor income I am forced to live with. So how about leaving things like they are and let the market settle for a while?

I have to agree with this article. The most activity we’ve seen in a generation with regard to alternative fuels have been due to the gasoline price spikes. All that cheap gas is going to accomplish is the extension of the SUV and dependance on oil both foreign and domestic. I feel that the next oil price spikes will make these look calm and we need to be prepared this time. This is the third time in my lifetime that fuel has almost cripped our nation and it look like this time our auto industry will collapse over it. Many years ago our military switched ships to nuclear to avoid the issues with re-fueling, its now time to ween the civilians.

Tax rebates and tax credits are of limited use for the working poor -people who don’t make enough money to itemize deductions. This attitude of “we can afford a high gas tax if we just cut out our luxuries” just doesn’t apply to frugal Americans. I’ve never owned an SUV, never had cable TV (except for when it came with one apartment that I rented), I’ve limited the few vacations I’ve had over the past few years to wherever I could go by public transportation (thank God I don’t live in a rural area!!!), and in general have a pretty frugal lifestyle. When I was finally able to purchase a home, I bought one with a mortgage that was about half the size of what the mortgage broker insisted I could qualify for and what the realtors were trying to get me to buy and . Nevertheless, I am still vulnerable to heavy increases in the cost of gas and oil.And so are millions of other working Americans. We cannot afford, and do not need, another gas tax.

Consider the fact that there are many universities in this country with departments of chemical engineering and/or bioengineering that receive public funding. Most of the research they do is dependent on grant funding – they don’t have the luxury of studying whatever they want; they have to study what the grant will pay for and what subjects will get them published. I suspect that in the past, big oil and crooks affiliated with the government directly or indirectly suppressed attempts to study alternative fuels, because alternative fuels would cut into big oil profits. The time has come for the common people as a whole to demand that the government stop listening to these persons and fund the brightest young minds to study economically friendly, alternative fuels.

LeftCoastCurmudgeon, I think the point of this article was that if there was a big honkin tax added to gas, then the price of crude will NOT go back up to where OPEC wants it, because the tax will diminish demand. Similar to how the recession is diminishing demand right now (and therefore low prices), when this recession is over, demand will come back and crude price will go back up – but NOT if we have the big tax there (tax will artificially decrease demand and therefore decrease price).

You must be out of your mind. We are struggling now just to buy groceries and you are suggesting a tax increase on gasoline?? If that happens we will be walking to the grocery store instead of riding in a car that we can not afford to trade.
You need to come down South and really see how high prices have affected us.

Sounds like it would be more properly the consumer version of a carbon tax. Unilateral tariffs create world-trade complications (maybe not a problem with the “unfriendly” oil trading countries listed, but with Saudi Arabia and others). But if it is focused on the Other Big Problem, global climate change (remember that?), then an oil tax that decreases consumption and encourages the development of clean technology is a net benefit for everyone.

not now. people that are already stretched are getting welcome relief from high gas prices a few months back.
Also, putting money into mass transit in areas with large suburban populations is wasteful and stupid. instead encourage developers to make neighborhoods have nearby
shopping, medical and heath needs so within the neighborhood they can walk to stores!

Gas Tax? Come on! How about putting “true” business people in the drivers seat,(no pun intended)over at Ford and GM. Why is it, that the foreign auto companies are always 3 or 4 years ahead of us? Why is it that they know what the consumers want and build it? Now GM and Ford want a bailout. How many years have they had to “get it together” and they are stil losing millions and millions. Bailing them out is only prolonging their demise. They seem unable to see the forest through the trees and I’m not sure that will ever change!

In Norway we had had high gas taxes for quite some time now, and allthough its not very popular, the spikes in gas prices that allmost doubled the prices in the US, was only slightly noticeable over here. Using a gas tax to even out the price spikes would only be hard in the short term, and if it had been in place a few decades ago it would have resultet in more fuel efficient cars from the US aswell and they would had a fighting chance.

So help me understand … we add a “big honkin tax” on gas and get the price back up to, say $3.50. Then the price of crude goes back up to where OPEC wants it, resulting in a pump price clime back up by the same percentage as last time, and we end up paying $6.50 to $7 per gallon, the price of everything that has to move to markets goes up, but the “truely needy” get some kind of rebate to cover the pump price increase.

Sounds like more “spread the wealth” mumbo-jumbo to me, but I haven’t experienced the “Obasm” yet, so maybe I just don’t understand.

~LeftCoastCurmudgeon

You’re kidding right? Give an “income tax rebate” to who? The unemployed? Yeah,make it harder for them. Sounds like a let “them eat cake” attitude we’ve seen way to much of already. A reduction in gas prices now equates to a “stimulus” package that’s bipartisan and no long waits. Who’ll benefit from that? Sit down now…this might hurt..the middle and lower middle class that’s been supporting this country for decades.

I don’t like taxes any more than the next guy, but I’d rather see an increase in the gasoline tax to inhibit consumption consumption, allowing each person to make their choice, than some other form of rationing. And the revenues can be targeted to repairing our infrastructure, improving mass transportation, and developing alternative power sources.

I agree but this tax must be geared to the income tax system as you suggested with write offs only allowed for people whose jobs depend on low cost fuels like taxis, truckers and others involved in transportation related fields. I for one do not want to see tax write offs for big business to travel around in big gas guzzling suv’s claiming a gas allowance on their income tax forms. Individuals should be claiming an allowance based on the type of vehicle they drive plus their total income.

I think the idea of raising gas taxes to decrease consumption is a good one. The run-up of prices this year has shown that there will be changes when gas is $4 a gallon. The problem is this can’t be done over night. I envision a progressive tax that will increase every year up to a certain cap. That way, auto manufactureres will have time to develop new fuel efficient vehicles and consumers will have time to adjust.

My job has cut back my hours in half. My commute each day is 30 minutes and I’m not in a position to pay a higher price on gas. I already cut out all my frivolous miles, cable TV and spending since summer. Please don’t encourage the government to take anymore of my paycheck than they already do. I’m using the difference from summer prices to pay down debt, and eventually contribute to my 401k in a few months. I earn my money little by little… let me choose where to put it or else you’ll have to bail me out too in my retirement.

You are joking right? Just because gas has fallen, it is still over priced by the valuation module API informed congress it uses by almost $.25-.40 a gallon still. Absolutely not to your proposal

Well with all the other tax increases that are sure to come with our new Democratic leaders this will just be icing on the cake. Of course when the prices go back up we will be screwed but what the hell! Go for it! Between tax increases and the run away inflation we can expect by this time next year with all the spending we can look forward to we should be able to remove the incumbents in 2 years and the new President in 4 so go for it!

I would imagine he’s also a proponent of tacx and spend- bigger government and dem to the core of his heart. Why not leave things the way they are, with capitalism at its best. Sometimes we feel pain, but usually we see prices rise as supply decreases and demand increases- it’s a constant balancing act but it does in fact work. As for gas prices going up/down, we all make decisions if we will continue to drive or not. As for the have-nots, why should gas be any different, in America if you want to achieve, you can, it’s strictly up to you.

The United States is the only Western country dependent on imported oil that does not have a high tax on petroleum products to discourage consumption. It would be hard to introduce higher taxes right now because people have made decisions based on the assumption that gas would always be plentiful and cheap. It is a case of short term pain for long term gain.

I agree with you, but for different reasons. Why not impose a $1 per gallon temporary tax. At the same time
offer a $5000 tax credit for purchasing
a government defined “fuel efficient”
vehicle made in the U.S.

This would raise $7B -$10B per month,
should cause a reduction in consumption
and stimulate sales in a troubled auto industry.

I would continue this temporary tax to
fund any further “bailouts” the government has committed to. While I
am not in favor of bailouts, it would be better to pay for them with cash
rather than debt. The more debt the
government puts on the street, the higher long term rates will go. We simply can’t come out of a recession unless long term rates drop below the 5% mark.

I agree, and would go a step further. I think such a tax should be applied to imported oil, rather than specifically to gasoline. That would support the move toward greener energy in addition to lowering demand for petroleum based motor fuel. The proceeds of this tax could be used to reduce the impact on lower income persons, fund infrastructure projects, and fund research into renewable energy.

The answer to the problem is a large tariff on imported oil. This would keep the price of oil down and spread out the increase to all of the markets and the money could be used to help new technology and energy sources without hurting the oil production in the u.s.

No doubt the idea has merit and is at it’s core sound. But our current government has shown no constraint or responsibility allocating the tax dollars it recieves now. Why should we trust them with more of our money?

Painful, but an interesting idea. We need more efficient cars and low gas prices dull the appetite for small cars.

Absolutely, now is the time for a tax of $.05-$.20. Dedicate the money for mass transit and research so that we are ready the next time prices go up. Scale the tax down if prices average over $3.50 a gallon.

I agree that we need a higher gas tax, but I disagree that it should be used for any purpose except development of mass transit, altrenative energy and rebuilding infrastructure. This idea of allowing the money to get mixed up with other general fund money is what gets us in trouble. The money should go to a restricted fund and at least 70% of it should go to mass transit and the other 30 to alternative energy and rebuilding infrastructure efforts.

By “stabilize”, I can only guess that you mean “Keep High”. All indications are that this current drop in gasoline price is temporary. Temporary may mean 12 to 24 months, but temporary all the same. Eventually the world economy will right itself and the forces of consumption will drive oil prices beyond historical highs.

Once again this can be attributed to the “Big 3″: US, India, China. Even if higher prices here drop demand, overseas consumption will still lead to higher oil prices based on available production capacity and a dwindling amount of oil which can be extracted cost effectively.

The gas tax would aid in keeping US consumer consumption lower for now since we are dealing with a consumer with a very short attention span. The problem is that in this case “Stabilize” may mean $8 to $10 per gallon at some point per the European model. Lets face it, if you add a federal tax it will be continually raised by a governemnt that has never proven responsible with distributing our tax money in the past

We absolutely need a gas tax. The only way to keep alternative energy initiatives alive is to keep the price of gas high enough to reflect the REAL costs of using oil–costs in terms of defense spending, trade deficits, foreign policy and the environment. Americans have shown that many of us have a very short memory when it comes to depleting natural resources.

I agree that with lower gas taxes, alternatives will soon go away. Why don’t we do something creative – setup a tax to keep gasoline at 2.25/gal and diesel near the same price. Take the revenue and direct it to alternate research and production. Congress will be prohibited from using this money for anything else. Keep the fuel mileage standards in-place and demand more, 20% more with a directed initiative to hybrids, plug in hybrids, and of course, electric and hydrogen powered vehicles.

Any event to decresae the disposable income of the American consumer would have a negative effect in over coming the current down turn of the economy. A move such as this would indicate we had learned nothing from the great depression.

Wow … is this the beginning of the ‘change, change, change’, we’ve heard so much about in the past year? Tax, tax, tax, so that you can spend, spend, spend. Sounds more like the same old, same old from Washington

I can’t believe you would rob the working poor Americans who don’t collect welfare or disability of the only good thing they have going for them. Leave the poor workers alone. We work two full time jobs to live in our 1979 trailer. Leave us alone. Stop taxing the working poor.

Let me get this… raise the gas tax so gas prices would be higher, Detroit would be off the hook for making more fuel efficient cars;while gas prices would be higher, the extra would go to the gov’t not the companies selling the energy. Other than making Detroit even less competitive, raising our living costs, giving no incentive for alternative fuels, and setting up another Washington bureaucracy, what good would this accomplish?

This is the most ridiculous thing I have ever heard. If you impose a high gas tax, most people won’t be able to make ends meet and yes they will drive less. But the reality is even with a gas tax oil companies are still going to raise gas prices. America is not the only country that uses oil. Even if we drive less that leaves more oil for other countries to snatch up. It is an incentive for these countries to drive more because gas is plentiful. Thus demand goes up and so do prices. The only one that is hurting is the American tax payer.

You must be kidding me. The only bright spot and relief and you want to kill it? Since when has government been able to tax and redistribute to the general population. Your proposal is ridiculous.