Gas Price Worries

One the hot-button issues in the presidential campaign so far have been high gas prices. Gas prices are now around $3.80, with four dollar a gallon gas almost inevitable. These costs increase the price of food (between of higher transportation costs), make travel difficult, and are partly responsible for the nation’s present economic woes.

Adding to the frustration is fact that there seems to be no end in sight. Things aren’t getting any more stable in the Middle East, and China and India are increasing their demand for oil. Gas prices have shot up in the last decade. In 2000, gas was less than two dollars a gallon, now, it is approaching four. Many Americans are looking to the government for help.

Fortunately, both the Republican and Democrat nominees (I think we can assume that Obama will be the Democrat nominee) have plans for dealing with the problem. Unsurprisingly, both plans are designed primarily to pander to voters weary of high gas prices, so that must be taken into account when weighing their plan’s respective merits. John McCain’s plan would be quite ineffective. Barack Obama’s plan would be extremely harmful.

McCain advocates a summer gas tax holiday, which would eliminate all federal taxes on gas from Memorial Day to Labor Day. These taxes total 18.4 cents on regular gasoline, and 24.4 cents on diesel gas. In theory, that would add up to savings of about thirty cents a day. Assuming an approximately ninety day period, Americans would save an average of about twenty-seven dollars over that time span.

Unfortunately, that theory wouldn’t work in practice. If gas prices suddenly dropped twenty cents a gallon, people would buy more gas, pushing the price of gas right back up to its previous levels. Nobody would save much. McCain’s idea sounds good, but it wouldn’t really work.

McCain’s tax holiday has only one thing going for it—it does represent a tax cut, and tax cuts are usually beneficial in some way. It wouldn’t lower gas prices, but I’d rather give money to Big Oil than Big Government.

The one part of McCain’s plan that would truly help the country is his proposal to end ethanol subsidies. Ending ethanol subsidies, again, probably wouldn’t slow down rising gas prices much. But it would mean an end to one of the most wasteful, idiotic wastes of taxpayer money in existence. Ethanol subsidies make the Bridge to Nowhere look like a clever plan—it isn’t possible to produce enough, it’s not really good for the environment, and is a major reason for today’s high food prices. Ethanol has many drawbacks, and no advantages. Ending government support of it is the best part of McCain’s strategy.

Obama’s plan is very different. He realizes that high gas prices are a problem, and that oil companies set these prices. Therefore, he reasons, the whole problem is the oil companies’ fault. He supports a “windfall profits penalty” on oil selling over $80 dollars a barrel. (Currently, oil prices are around $121 dollars a barrel). The money taken from this tax would then be used to help the poor.

Ignoring, for the moment, the massive, unnecessary, and unconstitutional expansion of the federal government, Obama’s plan is a poor one because it wouldn’t lower gas prices at all. If a draconian oil tax were imposed, oil companies would slow the search for new oil fields and technologies, since any new profits would only be swallowed up by the government, and would probably increase gas prices as well, to make up for lost revenue. The only purpose Obama’s plan would serve would be to enable the federal government to control yet another part of American life.

McCain’s plan wouldn’t do much to solve the problem of high gas prices, but it wouldn’t do any harm either, and offers some benefits. Obama’s plan would only cause gas prices to rise. John McCain isn’t a perfect candidate—but on this issue, as on so many others, he is clearly the better candidate.