The Politics of Gasoline

The gas price issue is a true political issue that must be dealt with. This is a case of every few days people being reminded that they are paying way more out of their pockets than they feel they should be.

Several interesting events occurred today. First the Donks proposed suspending the 18-cent per gallon gas tax:

Democrats are set to introduce a measure that would create a "federal gas tax holiday" by eliminating the federal tax on gas and diesel for sixty days, RAW STORY has learned.

The measure, proposed by Sen. Bob Menendez (D-NJ), would reduce the cost of gas by $0.184 per gallon and the cost of diesel by $0.244 per gallon. The move, aides say, will provide $100 million dollars per day in relief.

Democrats say the money will be made up by cutting six billion dollars in tax breaks to oil firms. Currently, the money from the federal gas tax goes to the Highway Trust fund.

A very astute political move by the senator from my great state of New Jersey. He needs all the help he can get. Of course, rescinding the tax breaks to the oil companies will only force them to include it in the price later to make up the lost profit, but political expediancy is the name of the game in an election year.

You know the donks think this is a major way to beat Bush if they've proposed to lessen any taxes, even if they get to give the finger to "Big Oil".

Bush is even sounding like an oil company basher.

"Record oil prices and large cash flows also mean that Congress has got to understand that these energy companies don't need unnecessary tax breaks like the write-offs of certain geological and geophysical expenditures or the use of taxpayers' monies to subsidize energy companies' research into deepwater drilling," Bush said.

Second, Bush has okayed a probe into price fixing by the oil companies:

ABOARD AIR FORCE ONE (AP) -- President Bush is trying to calm Americans' outrage over soaring gas prices by ordering an investigation into whether the price of gasoline has been illegally manipulated, his spokesman said Monday.

During the last few days, Bush asked his Energy and Justice departments to open inquiries into possible cheating in the gasoline markets, said White House press secretary Scott McClellan. Bush planned to announce the action Tuesday during a speech in Washington.

I'm against it but again, political expediency forced his hand.

Bush also made several other moves today; he stop the receipt of oil into the strategic reserve and suspended certain environmental regulations:

Easing the environment rules will allow refiners greater flexibility in providing oil supplies since they will not have to use certain additives such as ethanol to meet clean air standards. The suspension of oil purchases for the federal emergency oil reserve is likely to have only modest impact since relative little extra oil will be involved.

I'm for the latter because the ethanol additive regs are nothing but a sop to the agriculture industry and the use of the poor-burning additive is what has gotten us to this point due to slow processing and transport. Bush can get whacked on the environmental end by suspending these regulations but it's an effective strategy.

The former stategy of diverting from the reserves is a non-issue as the amounts are minimal.

If I were advising the president, I would recommend he come out strong for building newer, cleaner and more efficient refineries. He can streamline the process eliminating as much red tape as possible and getting better, cleaner fuel to market. It will take several years, but the oil situation doesn't look as though it will improve much.

I would further recommend he again hit hard on drilling in ANWR and working with Canada to increase capacity of the oil sands in Alberta, Canada.

The Anchoress, Countertop and Texas Rainmaker on the right have their say. State of the Day whines on the left.