I last wrote about the numbers being a bit “off” on the gas tax. I stand by the “general” analysis, since the discussions in the media centered around the “average American” but I wanted to discuss a bit more in depth, some other confounding variables.
Of course, the first is the diesel tax. Most Americans don’t drive diesel cars. But virtually all tractor-trailer rigs run on diesel. And the tax on diesel is higher than on gasoline. And, of course, trucks put more miles on the road than general use automobiles. This does mean a larger share of the $10 billion in tax revenue comes from trucking than from automobiles, both in miles driven and cost per gallon.
One could argue that since a disproportionate amount of the tax-revenue comes from commercial trucking, that this explains the lower savings per American. Perhaps. But one must remember that unlike the gasoline tax, the tax on diesel fuel ends up raising the cost to deliver goods–a cost that is passed through to the consumer.
The Washington Post article “A holiday from gas prices? – Fat Checker” points out that, when legislators in Illinois (including Obama) passed a similar tax holiday, the prices went down about 3%, and thus “only three fifths of the savings from reduced taxes was passed on to consumers.” The problem is, that sort of measure assumes that the price of gasoline would have remained steady throughout the period. Now, perhaps the analysis actually considered this reduction relative to the gas prices around the country, and what they meant was something like “relative to other prices without tax reductions” but that was not mentioned in the article. So–while we may not see a full 18, or 24 cent reduction at the pump, that does not mean that we aren’t saving that amount.
The Post article cites economists as pointing out that the increase in price could be due to an increase in demand. You know that pesky price/demand curve? And far be it for me to argue with the practitioners of the dismal science. Although I would point out (as I mentioned in the previous post) the demand for gas/diesel is generally thought to be relatively “inelastic” with regards to changes in price.
Just some points of clarification.
For discussion purposes, I would love you have you share here what your average weekly gasoline consumption is, and what you expect to consume over 12 weeks this summer. In my previous post I mentioned that I suspect most people fill up their tank at least once a week–so how much fuel do you use?
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