You may have heard, Hillary and Cap’n Crappypants have called for a summer suspension of the gasoline tax, and Obama has told us driver-types to get bent. Normally, I’m all for a tax cut, even if it’s only 18.4 cents on every gallon of $3.70/gallon gas I buy for my 2001 Corolla that I fill up every 2 weeks or so — for $1.84 savings per fill-up. If you figure that I’ll drive home maybe once in that time (3 gallons), a 13 week gas tax holiday would save me, at most, approximately $18. But, $18 is $18, right?

Well, no not really. See, that $18 goes into the Highway Trust Fund that is designed to pay for new roads and fix old ones and stuff. If you eliminate the gas tax, you eliminate the money and, in my case, guess what some of that money is supposed to pay for? The Metro extension to Dulles Airport which would be cool. John McCain’s too crotchety to really care, he’ll either transfer money from the general Treasury to make up the shortfall or not at all. Hillary’s plan, though, is to exchange a temporary gas tax rebate for a permanent hike in the taxes paid by oil companies. It sounds good, right?

No, that sucks worst of all because it’s not like oil companies aren’t going to immediately go out and raise gas prices to cover up for the tax increase. There’s no free lunch out there in the world, and if you raise the cost of a company doing business, they raise the price of the product to cover the costs! So, Hillary’s proposing likely permanently increasing oil companies’ taxes (and, therefore, gas prices) to cover a temporary pandering tax increase. Great plan.

You know what would lower gas prices? Lower demand. Period. How do you get lower demand? Well, after years of virtual gasoline price inelasticity (increasing prices bore no relationship on demand), it turns out there is a price after which demand becomes elastic. That price is basically this one. If you lower the price artificially, even temporarily, then people will just keep driving/polluting/buying gasoline and, in all likelihood, will drive up the price point anyway.

Yeah, I’m feeling ranty. I just think it’s stupid when politicians think that we’re all so idiotic as to believe that increasing taxes on companies will have no effect on the prices we pay at the pump or anywhere else.

Obama says rivals Clinton, McCain pandering on gas tax [Washington Post]