Let's look at this proposed temporary gas tax holiday recommended by Sen. Hillary Clinton and Sen. John McCain - opposed by Sen. Barack Obama.
Now, I have to tell you, for the past couple of days I've been siding with Obama on this one. I did the math to determine exactly how much I would save over the course of 12 weeks (I guessed - I didn't bother to check how long is actually is from Memorial Day to Labor Day) if they suspended the 18 cent/gallon federal gas tax. In that situation, Obama was right. For the average Joe, the direct savings would be pretty insignificant. For me, my savings would be something around $40 or so - total. I'd save 40 bucks over the course of the whole summer. Big deal........right? It's just a feel-good gimmick.
Well, no. That's not the big deal - and I haven't heard Clinton or McCain mention it either. The big direct impact that gas tax holiday would make would be in the transportation industry. All along we've been talking about how the high gas prices have been affecting the prices of everything else because of the tremendous TRANSPORTATION costs. THAT is where the proposal would REALLY save fuel costs. And I hate to toss in a Reaganism.....but that's trickle-down economics. Save the fuel costs for the transportation of the goods, and the cost of the goods come down. And EVERYTHING is transported. THAT is where the impact of the gas tax holiday hits Average Joe's wallet. Not in his own gas tank - but in everything ELSE he purchases.
And in the travel industry? Think about the summer surge in travel. I haven't heard if the temporary tax reprieve would apply to aviation fuel - that could be huge, especially with airlines in the condition they're in these days - but even if not, a cut in the fuel price of just 18 cents a gallon could add up to tremendous relief in the travel industry.
So on this one -- hold on to your hats, folks -- I'm siding with Clinton and McCain - in theory - not for the $40 it's going to save me in my gas tank, but for the far more significant savings that could be produced elsewhere in my budget. It's a short-term remedy - and I still want to know exactly how it will be paid for - but I can see its merit....and its potential for aiding in some degree of economic recovery.