The Center for American Progress released a plan to alleviate the burden Americans feel at the gas pump while avoiding the pitfalls associated with proposed gas tax holidays.
CAP’s proposal would:
· Assist the people who are suffering the most from record high gasoline prices.
· Offset some of the higher fuel prices for middle-income households making less than $75,000 annually.
· Aid those low-income households that do not drive, but face higher prices for food and other goods due to higher fuel costs.
· Help independent truckers suffering from record diesel prices.
· Pay for itself over time: The cost of the reliefbate would be $22 billion, and closing tax loopholes and recovering royalties from big oil companies would generate $25.9 billion over 10 years.
The proposed gas tax holiday has a number of flaws:
· It would add an estimated $11 billion dollars to the deficit since he has no plan to pay for it.
· It would provide money to all drivers and truckers, regardless of income or need.
· Many economists believe that reducing the price of fuel will increase demand, while supply is constrained by existing refining capacity. Prices may therefore not decline by the entire 18.4 cent gas tax.
· If the gas price drops due to the tax holiday, then drivers could respond by driving more due to lower gasoline prices. The additional demand could drive the price of gas back up.
As demand drives prices up to their previous level, the gas tax holiday would increase profits for big oil companies and refineries without providing any price relief.
Americans get a reminder of President Bush’s failed energy policies every time they gas up their cars. The average gallon of regular gas cost only $1.44 when Bush took office on January 20, 2001, and diesel cost just $1.53 per gallon. Yet today, gasoline and diesel fuel prices are at all-time highs, with gas prices at $3.60 per gallon and diesel prices at $4.17 per gallon.
There is little relief in sight as we head into the summer driving season that traditionally begins Memorial Day weekend. The U.S. Energy Information Administration predicts that gasoline prices would average “$3.60 per gallon in May and June” and also notes that, “should crude oil prices not decline from current levels of over $110 per barrel … retail gasoline prices could end up peaking even higher.” Oil closed near $119 per barrel on April 25. So it’s no wonder that an April Kaiser Family Foundation opinion poll found that “rising gas prices [are] Americans’ top economic woe.”
American families and small trucking businesses may be suffering, but big oil companies are thriving under the Bush administration. Since Bush took office, the big five companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Shell—have earned a total of $556 billion in profits. This includes a record $123 billion in 2007. And BP, ConocoPhillips, ExxonMobil, and Shell just posted record first quarter 2008 profits—a combined total of $31.7 billion. The BP and Shell huge first quarter profits were “built on the back of record-high crude prices.” Industry analysts called them “astounding.”
READ THE FULL REPORT: http://www.americanprogressaction.org/issues/2008/gas_prices.html
The Center for American Progress Action Fund is the sister advocacy organization of the Center for American Progress. The Action Fund transforms progressive ideas into policy through rapid response communications, legislative action, grassroots organizing and advocacy, and partnerships with other progressive leaders throughout the country and the world. The Action Fund is also the home of the Progress Report.