In Favor of a Gas Tax Holiday, both State and Federal.

You’ve seen the gas prices lately, and they’ve gone up about a dollar a gallon since that piece of excrement Putin invaded Ukraine. Yes, even though the US traditionally uses very little Russian oil, the de facto ban on Russian oil by the world’s good people affects the price of oil worldwide.

And you may have also heard that, in the hallowed halls of both Sacramento and Washington DC, politicians of both Parties have been discussing ways to bring these prices down for you and me, sometimes broaching the possibility of giving us a temporary reprieve from state and federal gasoline taxes, for maybe a few months or maybe the rest of the year.

And gas prices carry more urgency than just gas prices, when we were already suffering a crippling post-Covid inflation – obviously the price of carrying our food and other essential goods by truck is reflected in those prices as well. So we gotta do something drastic about this ASAP, and I was getting ready to organize all my friends to pester our representatives, but…

But, what do *I* know about such things? A local progressive politician responded to me:

A gas tax relief means divesting from the critical local dollars we depend on for street improvements and infrastructure…

Hmm. Well, to that I say: If we have the choice of dealing with this Putin-Caused Oil Price Spike by either:

  • Suffering six-dollar-a-gallon gasoline prices and rising, with the concomitant inflation, or
  • Going without some of our street improvements and infrastructure for a while till the crisis passes…

The choice is clear. We’ll drive on bumpy roads while Ukraine defends itself. But my progressive politician friend continues:

…The real solution is to cut the subsidies big oil receives and impose a temporary excess fee in their profits that can at the least fill the gap that will be left. They can also say, if your prices go above a threshold say $4.50 then an excise tax will be levied and used for social safety nets.

I believe this is what they mean by the cliché “Making the perfect the enemy of the good.” (Jordan Brandman used to use that cliché all the time, meaninglessly.) Can we really do what this guy suggests quickly and simply, as quickly and simply as we could put a temporary moratorium on a tax? It seems doubtful. It would be nice. But something has to be done, NOW.

View from the Ivory Tower.

This piece from Salon gives lots of reasons why (the author thinks) a gas tax holiday is a bad thing. But I found this assertion the most revealing:

If Democrats are trying to give the working American a break, the pump is the wrong place to do it. Rich people spend much more money on gas than poor people. According to the Bureau of Labor Statistics Consumer Expenditure Survey, the top 20 percent of Americans by income spent almost three times more on gas in 2020 than the bottom 20 percent… So… gas tax relief would effectively give three dollars to every rich household for every dollar to a poor household. 

Spoken like a true social engineer. Helping everybody would help the rich more than the poor, so we’d better not help anybody. Well, that’s exactly ONE way to look at it, but there’s another way that makes more sense: As the same piece admits, gasoline makes up a greater share of the poorest households’ expenditures… so actually it DOES help the poor more than the rich! Duh. Rising tide lifts all boats, tax reprieve fills all tanks.

*******

But then, what do *I* know about such things? I called my State Senator Josh Newman.

Senator Newman’s relationship to the idea of a gas tax is, let’s say, “fraught” – his getting blamed for one a few years ago led to his 2018 recall; so I thought it’d be kinda neat if he got out in front of the temporary reprieve thing. (Senator Dave Min, who’ll probably be running against him in 2024, has already expressed support.) As always, Josh is NUANCED and thoughtful.

He’s naturally very concerned with the huge impact these prices are having on working people. He says that “by all means” the Federal government should grant a temporary reprieve of its 18.3 cent-per-gallon tax – but of course Josh does not work in Washington DC! And when it comes to the state temporarily losing its infrastructure funding, he points out the big fiscal surplus California has right now – this could be the best time and way to use it!

He is cautious however about granting a temporary moratorium to a tax, as it’s always hard to get the tax BACK on the books. Maybe he’s right, but I don’t know why that should be so hard. Why can’t there just be a “sunset” planned for the moratorium – even a gradual sunset, the way sunsets work in real life? (Left)

Another way he wants to attack this problem is by “increasing California’s refining capacity.” He seems ambivalent about a simple tax moratorium, cautioning me that “Just because we get rid of 50 cents in state gas taxes doesn’t necessarily mean that the price at the pump is gonna go down by 50 cents. The retailers [gas stations] can always charge whatever they want, and we can’t stop them.”

“Really?” I responded, “won’t competition between retailers eventually push it down?”

And the Senator replied, “Not necessarily, competition doesn’t always seem to work the way it should in this industry.” And sure enough, I read a very informative article he sent me last night, and here’s a couple of “twists,” in which I briefly digress from talking about what the government should do RIGHT NOW about the crisis:

Twist #1. Competition, or Lack Thereof

What we grow up believing in this capitalist nation is that healthy competition between different businesses that offer a similar product brings the price to that sweet spot that the consumer can afford while the business still profits. But competition doesn’t work when consumers don’t care if they’re being ripped off or not, as long as they don’t have to make a U-turn. California’s gas stations have the HIGHEST DIFFERENTIAL in all states, with certain name-brand stations charging more than 30 cents per gallon more than others.

There are various minor factors partly explaining this, but mostly it seems that competition isn’t working the way it should here because drivers like YOU choose to spend an extra quarter a gallon at Chevron, Shell, Exxon or 76, rather than go a tiny bit farther to a reasonably priced ARCO, Valero, or something more independent like the Ralph’s on Harbor near North Court. AND IT’S THE SAME EXACT PRODUCT, costing the retailer the same exact price!

You want to do your little part to help bring down gas prices? Well, you can start by filling up at ARCO until Chevron stations lower their price.

Twist #2. the “Mystery Surcharge”

Have you heard about this? It’ll blow your socks off. Sure California has the most expensive gas in the nation, and you would expect that, given our taxes and environmental regulations which many of us cherish. BUT there’s something sneaky buried in there – about FIFTY CENTS A GALLON WORTH of sneakiness – which UC Berkeley energy economist Severin Borenstein has dubbed the “Mystery Surcharge” – and which is not explained by ANYTHING legitimate.

In fact, this fifty-cent-a-gallon jump in prices first materialized during our last crisis, in 2015, when there was a blast at an Exxon-Mobil refinery that injured four workers and resulted in a $566,600 fine. Well, THAT crisis came and went… but the prices at the pump didn’t come back down fifty cents like they should have. Some kind of silent collusion between the retailers, you think?

It’s taken a long time but California’s justice department is supposedly investigating this. In MY perfect scenario we’d get a tax moratorium starting now and going to the end of the year, and right around then Rob Bonta’s Justice Department would finish their long investigation and get us our fifty cents a gallon back!

Gavin Newsom’s … “Rebate?”

BACK TO SENATOR JOSH NEWMAN. Not sounding at all sold on the idea of a tax moratorium, Josh was puzzling over the “smart way to offset” working people’s heavy gasoline burdens, the “least REGRESSIVE way.” And he sounded like he was coming around to the idea of a “REBATE” – rebating folks’ excessive fuel expenses to them.

“REBATE” – that’s also the word Governor Newsom has been using – see the video below:

I hope what’s in the works is not some income tax rebate that comes some time next year. What we want is LOWER PRICES AT THE PUMP, AND voters to know that Democrats were (at least partly) responsible for it.

Democrats, Vote-Tards, and The Earth.

Republicans have been at the forefront of calling for a gas tax repeal, because they’re against all taxes, because they don’t care about the environment, because they really don’t care that much about infrastructure, and because they’re generally against anything the Democrats do or want.

I don’t think it’s unreasonably partisan to believe it’s existential to the future of both the earth and America’s democratic experiment, for the Democratic Party to not only retain but INCREASE its majority in Congress and Senate, and retain the Presidency, for decades, until this fascist, fact-denying, TRUMP-DOMINATED incarnation of the GOP fades away.

And here’s the thing: political scientists have long marveled at the predominance, in this nation, of what they have labeled “VOTE-TARDS” – that is, voters who blame anything from the price of fuel to the price of food on whoever’s President at the time, and whatever Party’s in power. So we can’t risk having excessive gas prices wrapped around the neck of the one sane Party.

And that leads to the point I’m making to my good environmentalist friends, who’ve probably been irritated by this whole story, who probably can’t wait for people to just give up and stop driving cars: If the Democrats retain popularity and get a few more Senators we’ll be able to pass the Build Back Better Act, do a lot of good stuff to address climate change, and push for more. If the Republicans take back power because of fuel prices and inflation… then it’s GAME OVER for this planet.

But then, what do *I* know about such things?

What do you-all think?

About Vern Nelson

Greatest pianist/composer in Orange County, and official troubador of both Anaheim and Huntington Beach (the two ends of the Santa Ana Aquifer.) Performs regularly both solo, and with his savage-jazz quintet The Vern Nelson Problem. Reach at vernpnelson@gmail.com, or 714-235-VERN.