| Clinton's 'Gas-Tax Holiday' Would Hurt Consumers, Experts Say By Penny Starr CNSNews.com Senior Staff Writer May 06, 2008 (CNSNews.com) - Following GOP candidate Sen. John McCain's (R-Ariz.) lead in proposing to lift the federal gas tax over the peak summer driving season, Sen. Hillary Clinton (D-N.Y.) has proposed that oil companies use their own profits to pay the tax for consumers. Some analysts, however, say her plan won't work. "We have a choice," Clinton told a crowd in Hendersonville, N.C., ahead of Tuesday's primary. "We can choose to have you continue to pay the federal gas tax this summer or we can choose to try to make the oil companies pay it out of their record profits." She proposed an "excess profit tax" on oil companies, although she did not name which companies should be taxed. "(Oil companies) have record profits that they frankly are just sitting there counting because they are not doing anything new to earn it; they are just taking advantage of what's going on," Clinton said. "We ought to say, 'Wait a minute, we'd rather have the oil companies pay the gas tax than the drivers of North Carolina, especially truck drivers, or the farmers, or other people who have to commute long distances.'" But experts say that lifting the 18.4-cents-per-gallon gas tax and the 24.4-cents-per-gallon diesel tax could not only hurt consumers and add to the federal deficit, but also increase the bottom line for the highest earning oil companies, including Exxon Mobil and Chevron. "The only way to make gas cheaper for consumers is to have more gas available," David Kreutzer, senior fellow of energy, economics and climate change at the Heritage Foundation, told Cybercast News Service. Because the availability of gas is limited, the classic supply and demand scenario means consumers will eventually foot the bill. "If you get rid of the 18 cents tax, it would actually be a shift toward the oil companies," the conservative think-tank analyst said. "At the end of this charade, at the end of summer, the 18 cents per gallon will go to the oil companies instead of the highway fund. The Associated Press reported that lifting the gas task would cost the federal government $10 billion in revenues. Kreutzer also said the most successful oil companies are the ones that invested in oil reserves, an investment that involved risk and took years to pay off. "(Oil companies) didn't find the goose that laid the golden egg," Kreutzer said, adding that investing in oil reserves meant developing the oil fields and paying for all the equipment and infrastructure needed for the operations. "When oil companies make money, they make a lot of money, but we all forget the years they don't make money," Peter Van Doren, editor of Regulation magazine and senior fellow at the libertarian Cato Institute, told Cybercast News Service. He noted that between 1985 and 2001, oil companies didn't make the kind of profits Clinton wants to tax today. Kreutzer said if more American oil companies had invested in oil reserves it would mean more gas for American consumers and less dependence on foreign oil. Both Kreutzer and Van Doren said taxing oil companies also could hurt the economy in the long run. [Read More] |
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