Still a Bad Idea

Two weeks ago I was critical of Senator John McCain’s proposal for a national “gas tax holiday.”

Now Senator Hillary Clinton is backing a similar idea.  Though she has added a twist to the proposal with a windfall-profits tax on oil companies, the idea of a gas tax holiday is still a bad one, regardless of political party.  This is even one of the few times I find myself in agreement with the Bush Administration (which is also finding itself in unfamiliar territory by essentially agreeing with Senator Barack Obama’s position on the issue).  Says Dana Perino, White House spokeswoman, gasoline prices were “entirely too high, but I think it would be disingenuous and unfortunate for American consumers for them to be led to believe that there is a short-term fix.  There is not going to be one.”

A windfall-profits tax is worth considering.  Oil company profits are up largely because of external market factors on a commodity essential to the functioning of the economy.  The demand for and use of petroleum, largely in the form of fuel, is not easily or readily subject to change (price inelasticity of demand, at least in the short term).  I can’t instantly make my family hauler a high-mileage commuter or hybrid, or afford to pay several thousand dollars for solar panels or geothermal heat for my house, for example.  But we can take advantage of the situation, begin changing our behavior, and harness the costs already in the economy to prepare for a future beyond the “Oil Age.”