Reply #29: Here's why you're completely wrong

[HooptieWagon]

from the article you quoted:

"This paper considers the suspension, and subsequent reinstatement, of the 5% gasoline sales tax in Illinois and Indiana following a temporary price spike in the spring of 2000…. Using a unique dataset of daily, gas station-level data, retail gas prices are found to drop by 3% following the suspension, and increase by 4% following the reinstatements."

Okay. A 5% tax is suspended, yet the price drops only 3%... Oil companies pocket the 2% difference. Then the tax is reinstated and the price rises by 4%. Added to the 2% the oil companies are keeping that's 6% over the pretax price, or 1% higher than the original price with tax. It's a simple thing called "Supply and Demand", you should read up on it, and the oil companies will use it to pocket all they can.

A gas tax is a bad idea.
1) It encourages consumption at a time when we should be discouraging consumption.
2) The price is set by supply and demand. If it is lowered by removing a tax, the oil companies will not lower the full amount, but rather pocket some of the difference.
3) A separate tax levied on the oil companies will just be passed along to the consumer.
4) When the tax is reinstated, the price will be even higher than before, according to the article YOU quoted.
5) money will be taken from highway maintenence at a time when infrastructure like bridges are literally collapsing.

My own thought is the gas tax should be raised. It will discourage consumption. It will stimulate Detroit to develop more fuem efficient cars. The increased tax can be used to subsidize mass transit, alt fuels reasearch, and rebuilding infrastructure. A tax credit can be given to truckers, however I think that their fuel costs are tax deductable anyway. But even if shipping costs rise, it will stimulate local economies to produce themselves, and stop buying crap from China, shipping it to LA, and then trucking it accross the country.