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The Honolulu Advertiser
Posted on: Tuesday, May 6, 2008

Gas tax holiday plan shows poor judgment

Is there anyone — besides Hillary Clinton and John McCain — who thinks a federal gas tax holiday is a good idea?

The two presidential candidates want to suspend the 18.4-cent federal tax on gasoline and 24.4 cents for diesel between Memorial Day and Labor Day.

They contend the tax break would provide cheaper gas during a peak demand period, lowering prices on commodities affected by the cost of transportation, like food "and just about everything else," to use McCain's words.

About this plan, the opinions of energy experts, political pundits, Barack Obama and most everyone else appears to be virtually unanimous: It won't work.

The cost of gas is driven by supply and demand. Peak summer travel increases demand. With refineries running at near capacity, supply is limited, so prices will rise, especially if the possibility of cheaper gas increases demand more.

Even if the plan did lower prices, which is doubtful, a family might save about $30. In the meantime, an estimated $9 billion would be diverted from road and bridge repairs.

How would this shortfall be made up? McCain would divert money from other government sources. Clinton would apply an extra levy on oil company revenues, prompting oil companies to raise prices to compensate.

Either way, the oil companies profit. With McCain, they would simply profit more.

And how does this tax holiday fit in with the candidates' professed beliefs that we need to reduce our dependence on fossil fuels? Making gas cheaper does the opposite.

All this raises questions about why two leading candidates for president are pushing a plan that is so clearly flawed. Do they really believe in what they're saying? Or are they just pandering for votes?

An answer of "yes" to either should cause voters to question their judgment on an issue critical to our economy.