May 16, 2018 at 5:56 p.m.
Hold the line on gas taxes
Hold the line on gas taxes
Oh, there's something else spring delivers: higher gas prices, and this year they are really spiking. As we report today, the price of fuel is at its highest in three years, and is likely to soon top $3 a gallon.
Politicians of various stripes like to make hay about the reason for gas price increases, and this year is no different. Liberals, for example, are blaming President Trump's withdrawal from the Iranian nuclear deal for interfering with gas supplies, and earlier, before that announcement, they were blaming him for his actions in Syria.
That's all bunk, of course. While politics may have some short-term and minimally disruptive influence on the price of oil, others factors can and always have loomed larger. As such, competent foreign policy that makes the world safer should always trump short-term pricing calculations because in the end a peaceful world will lower energy prices, not raise them.
What is really driving gas prices is the market, not the political arena. OPEC's decision 16 months ago to cut oil production has significantly reduced both supplies and expectations of supplies, and thus driven prices higher.
As always, there is betting on oil futures. In others words, because of OPEC's decision, speculators on the futures market gambled that oil prices would rise because of shortages in crude oil, and that drove prices higher even before there were any actual shortages.
The truth is, so far this year we have a perceived shortage of oil more than a real shortage of oil.
Add to all that the rising demand for gasoline in the spring and summer months, and you have a perfect storm for the higher pump prices we are seeing.
Then there's gas taxes. As we report in today's edition, according to GasBuddy.com, gas taxes have risen by $4 billion in 2018 over 2017, from $72 billion to $76 billion, or about 2.6 cents per gallon. A lot of that has been camouflaged by states adding on a higher fuel tax while prices have been lower, so many motorists don't notice the difference.
That's not the case here, where lawmakers and the governor have held the line on an increase in the state gas tax - so far. But as we also report, Republicans in Congress - and the president himself - have warmed to the idea of a hike in the federal gas tax. The National Association of Manufacturers is on board for a 15-cents per gallon federal gas tax hike.
All of these proposals should be rejected, and the president should be educated.
The president and the manufacturers want to build new infrastructure, of course, and we do need new and rebuilt roads, bridges, and highways.
The problem is, gas taxes are a redistributive subsidy from noncommercial drivers to commercial drivers. Big, heavy trucks tear up the roads in the first place, they travel the most miles on American highways, and yet it's not their corporate owners and sponsors who pay even close to their fair share for those roads; instead, the American people pay the freight, so to speak.
So the first thing that needs to be done is to be fair. Being fair means making corporations pay for the roads they use, and a higher gas tax does just the opposite.
Indeed, higher gas taxes take the biggest bite out of low-income households struggling to make ends meet. We should make it more affordable for them to get to work, not less so.
Grover Norquist, the president of Americans for Tax Reform, has also made a good point: "Supporters of raising the gas tax claim that roads and bridges are a priority and higher taxes are needed to pay for them. But by refusing to consider displacing existing spending, they are admitting that they view every other spending program - foreign aid, farm subsidies - as more important than fixing roads and bridges."
So by all means, let's fix our infrastructure but let's do it fairly and equitably. First, invest in infrastructure but, as Norquist advises, find that funding from existing dollars in the federal budget. Outrageous agribusiness farm subsidies and foreign aid are indeed good places to look.
Second, cut the federal gas tax, rather than raise it, and send the savings to the states to spend it on their transportation needs as they see fit. Who do you think knows the road priorities in Wisconsin the best, Wisconsin officials or officials in Washington? A no-brainer.
Who do you think will be more careful with our tax dollars, state officials or federal officials?
Just look at Gov. Scott Walker's recent pronouncements on a possible gas tax increase. He says he will consider it, but only if the dollars come from offsetting cuts elsewhere and is net neutral to the tax burden.
That's fiscally responsible, Washington is anything but.
Finally, we need more private-sector roads to manage costs better, and we need tolling so that commercial interests actually pay for the infrastructure they use.
All of this will give us better roads, reduce highway costs, and reduce gas taxes, which will in turn ease pressures on gas prices.
As for the rest of the gas price conundrum, that is a topic for another day, though we will say that there, too, a freer market, energy independence, and fewer special interest subsidies are a large part of the answer.
One thing is for sure, higher and higher gas taxes aren't the answer, not for our pocketbooks and not for our roads, and it's sad to see it gaining traction on Capitol Hill and in the White House. With elections looming, we need to get all the candidates on the record. As they say, Democrats never met a tax they didn't like, and Republicans never met a crony capitalist special interest they didn't like, and in this case that makes for a marriage made in tax heaven.
It's time to let them all know how we feel.
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