We’re from the government — we’re here to raise the price of gas

In Washington Tuesday, a special commission appointed to study the need to repair the nation’s aging bridges and roads said the answer is to more than triple federal gasoline tax — increasing it by 40 cents per gallon over the next five years.

The two-year study by the National Surface Transportation Policy and Revenue Study Commission is the first to propose broad changes since a devastating highway bridge collapse in Minneapolis last August.

But in a 10-page dissent, the commission’s chairwoman, Transportation Secretary Mary Peters, and two other members sharply criticized the gas-tax-hike proposal.

She and the two commissioners call instead for sole reliance on tolls and private investment, which Secretary Peters said would avoid sending millions of dollars of new tax revenue to Washington to end up as congressional pork.

“Relying on increases in the federal fuel tax and inviting political earmarking is a recipe for failure that we, as a nation, can no longer afford,” she and the two commissioners wrote.

Well, the big oil companies can afford to pay a lousy additional 40 cents per gallon out of their profits, can’t they?

Actually, no.

The California state Energy Commission — hardly an outfit anxious to sing the praises of the oil companies — estimates that out of a current $3.33 per-gallon price of branded gasoline, the crude oil cost is $2.22. (If you want to lower that, tell your politicians to approve offshore drilling and the construction of more domestic refineries.)
(http://www.energy.ca.gov/gasoline/margins/)

Of the remaining $1.11 that we pay at the pump, state, local, and federal taxes and fees eat up 62 cents — more than half. That leaves 38 cents for “refinery costs and profits,” and one thin dime for “distribution costs, marketing costs, and profits,” the California government reports.

But that “lumping” of costs and profits still makes profits sound bigger than they are. Last year, Mark J. Perry, professor of economics at the University of Michigan, agreed that taxes added up to 62 cents on the average gallon of gasoline — while company profits amounted to 10 cents per gallon. (http://mjperry.blogspot.com/2007/05/gasoline-taxes.html)

In other words, if “Big Oil” cut their profits by 50 percent — never mind that investors would be far less likely to give them the capital they need to build refineries, explore for new deposits, drill new wells, etc. — gasoline might drop from $3.20 per gallon to $3.15. Yee-hah! Steak dinners all around!

On the other hand, if greedy politicians were to trim their current gasoline taxes in half, gasoline would drop overnight from $3.20 to $2.89.

What’s that? All those gasoline taxes go directly into highway construction and repair?

Not really.

Although the Federal-Aid Highway Act of 1956 established the Highway Trust Fund and stipulated that 100 percent of federal gas tax revenues be deposited into the fund, that’s no longer the case.

“Highway Trust Fund revenues were first allocated to mass transit in the Surface Transportation Act of 1982, when Congress raised the gas tax from four cents per gallon to nine cents per gallon and dedicated one cent, or 20 percent, of the increase to the newly-established Mass Transit Account,” reports the American Road & Transportation Builders Association. “Each time there has been an increase in the amount of gas tax going into the Highway Trust Fund — 1990, 1993 and 1997 — 20 percent of the increase has been allocated to the Transit Account and 80 percent to the Highway Account. Of the current (federal) gasoline tax of 18.3 cents per gallon, 2.86 cents per gallon is allocated to the Mass Transit Account.”

That’s like charging you a six-cent tax every time you buy a Coca-Cola, and sending one of the pennies to Pepsi.

Indeed, buried in Tuesday’s 68-page report from the NSTPRSC was an admission that some of the added 40 cents they want to slap onto the price of each gallon of gasoline would go to “public transit” — not to mention another $2 billion over the next decade siphoned off to “develop new energy sources.” (Colorado oil shale, anyone?)

If our highway infrastructure is in such urgent need of repair, why continue diverting funds to ethanol boondoggles that drive up animal feed costs while generating no more energy than they cost, and then tossing another 15 percent of your scarce funds at “politically correct” mass transit boondoggles that coast around our urban areas half empty?

Over the past 25 years, oil companies paid more than $2.2 trillion in taxes, after adjusting for inflation, to federal and state governments. That amounts to more than three times what they earned in profits during the same period, according to the latest numbers from the Bureau of Economic Analysis and U.S. Department of Energy.
(http://www.taxfoundation.org/news/show/1168.html)

Furthermore, according to the Congressional Research Service, when Congress levied a windfall profits tax during the 1980s, the result was to depress domestic production and extraction, increasing our dependence on foreign oil.

Transportation Secretary Peters and the minority have it right. Since working class people spend a much higher percentage of their paychecks driving to work, high gasoline taxes are regressive — they disproportionately hurt the working poor.

Family paychecks barely cover our basic costs, as it is. Find the money somewhere else.

For starters, do what voters said they wanted done way back in 1980: Close the federal Departments of Education and Energy.

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