Editorial: Put the brakes on U.S. gas tax holiday

Suspending it for the summer doesn't make economic sense.

Last update: May 3, 2008 - 4:36 PM

The Heritage Foundation's Ron Utt got off the best one-liner about the proposed federal gas tax holiday.

A senior research fellow at the conservative think tank, Utt sarcastically dubbed it the "No Happy Meal Plan.'' By his math, most motorists would save $1.83 per week, not even enough to buy a McDonald's kid's meal. "It makes you wonder if all the economists were out to lunch when somebody sold this plan to somebody else,'' Utt said. Democratic presidential candidate Barack Obama's assessment was even more accurate: He called it an election-year gimmick by fellow candidates.

Republican John McCain was first out of the chute with the proposal to suspend for the summer the 18.4-cents-per-gallon federal gas tax. The idea is to ease the pain of the nation's drivers as they take to the roads between Memorial Day and Labor Day. Democrat Hillary Clinton then issued her own call for the holiday, but with a twist. McCain didn't say how he'd make up for the lost revenue to the federal Highway Trust Fund, which channels billions to states for road construction and maintenance. Clinton said she'd hit oil companies with a windfall profits tax.

Opposition to the proposals has spanned the political spectrum. And it should. The gas tax holiday is an empty political gesture that makes little sense.

It wouldn't put enough in consumers' pockets to stimulate a sluggish economy. It wouldn't solve the underlying problems that are sending gas prices soaring toward $4. And, by artificially stimulating demand, many energy experts believe it could send pump prices even higher when the gas tax kicks back in about the time Minnesotans are closing up cabins this fall.

There's also the issue of lost revenue for road funding, an issue thrust center stage when the Interstate 35W bridge collapsed last Aug. 1. There are already insolvency fears about the federal trust fund. A gas tax holiday would only exacerbate the situation. Clinton's windfall tax is a questionable solution: One study found that the last time one was enacted, oil companies invested less in exploration, leading to reduced domestic oil production.

Presidential candidates should be thinking long-term, not short-term, when it comes to energy policy. Instead of an additional $1.83 a week for three months, voters are better served by a deeper understanding of what's behind the pain at the pump -- the weak dollar and rising crude oil prices. Consumers have already grasped how serious the energy crisis is and have begun to act on their own. Over the past year, U.S. demand softened as consumers drove fewer miles.

The markets are naturally pushing the nation toward conservation and energy independence. Proposals for a federal gas tax holiday threaten to derail this momentum, siphon money from roads and divert energy from the real solutions the country is moving toward. That's too high a price to pay to add pennies to voters' pockets -- not even enough for a burger and fries.

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