McCain's Gas Pains: Gas "Tax Holidays" A Good Idea?

For immediate release from John McCain's campaign:

John McCain, who just hours earlier proposed a "tax holiday" in which the 18 cent federal tax on gasoline would be suspended during the summer driving season, has reconsidered and has instead proposed that the U.S. gallon be redefined to be equal in volume to the current U.S. quart. "This will immediately lower the price at the pump by 75%, providing visible relief to millions of Americans", quipped McCain. "I rejected the idea of setting it equal to the liter, for obvious reasons".

When questioners suggested that this move wouldn't actually change how much consumers spend to fill their tanks, McCain responded "Well, neither would my previous proposal".

In unrelated election news, the McCain campaign announced that P.T. Barnum has been posthumously appointed as their policy director. Also, Hillary Clinton has proposed a suspension of the law of gravity, at least during the summer flying season, to help the beleaguered airline industry. Barack Obama reportedly had no comment on these suggestions, other than to say that Americans are definitely "atwitter" about gas prices.

We interrupt this vacation from reality with the following observations...(under the fold...)

  • As gasoline is a commodity for which prices are determined by supply and demand, lowering the price without increasing the supply will likely increase demand (usage). Prices will rise again to compensate.
  • The 18.4 cents per gallon that is now flowing into the US treasury, and which is then spent building roads, bridges, and mass transit, will instead flow to oil companies -- particularly those in foreign countries, since the US imports over half of its oil.
  • Targeting the current gasoline tax instead for the development of alternative transportation and ways of using energy more efficiently will provide more lasting solutions to the current energy and economic crises than short-term attempts to fix the problem.

Here's a link on today's increase in the price of oil:;_ylt=ArjvotvN...

McCain knows full well the tax cut he's proposing will never get passed, because to do so would eliminate for several months the very money used for federal highways and bridges. At the same time though he knows people will like him for such a proposal. So he gets to have it both ways - it will never pass so there's no worry about roads and bridges, and the people will love him for it. What a politican.

McCain's proposal is utter nonsense and will do nothing but compound current problems.

How will it compound problems when, like Cslater8 says, it will never get passed? Cslater8 has it exactly right. McCain is just saying it because the average voter thinks he's a great guy for coming up with the idea. Yeah, we know it's idiotic. Voters who advocate a balanced budget will be against it as well. But for 95% of the voters, it improves their opinion of John McCain. Politically, coming out with proposals like this is gold.

What is the economic effect of such a proposal? The pump price will seek a new equilibrium somewhere inbetween what if would have been without the change, and the naively presumed price minus the tax savings. In short for every dollar gives up the consumer will save much less than a dollar. Todays oil market is a great example, McCain's proposal tells the oil market "Those Murican Eeeediots will resist the needed adjustment in consumption. Therefore the prospects for demand destruction at current prices are lower than we thought just yesterday". Voilla $114/barrel. Todays reflexive rise is worth about $.07/gallon, i.e. the consumer has already given up to the oil sellers 35% of the proposed gain.

But Joe Sixpack is ignorant of economics -or to the fact that the lack of revenues will probably cost us another bridge collapse. Its probably good politics.

McCain's proposal might be political gold, but it is a fraud. It comes from a dishonest person representing a state full of land fraud of which I have been a victim. I posted about this before and will not repeat it here.

Arizona survives buy sucking water and wealth from others. Do not trust representatives from such a place.

Ah. Political alchemy. McCain tries to turn an idea which is essentially manure into gold.

Of course we all know that manure can be composted and used as fertilizer. The idea of reducing the gas tax has no benefit at all.

Political discourse in the USA amounts to manure which politicians try to pass off as gold.

Many in the dumbed-down electorate take this stuff quite seriously.

I'm looking for a sign of hope today. Will I find one?

The reality that the politicians might want to discuss is that too many people are competing for too few resources.

McCain, Clinton, and Obama might want to point out that the likely outcome of resource war is bad for everyone -- there will be no winners, only losers.

Next the politicians might point out that the steps to peaceful powerdown are going to require intense international cooperation as well as a great deal of change in the way we Americans live.

We will essentially be on a peaceful war footing, fighting for survival together with others, rather than against others.

However it is far more likely that the politicians will continue spinning the Petro-fascist and Christo-fascist narratives already begun. These will continue to be woven into a rationale for endless war.

Still, I look for some reason to be hopeful.

Why wouldn't it get passed? Just such legislation passed here in Maine, where we gave the heaviest truckers subsidies paid for ultimately by the individual drivers. A construction company testified that they believed their company should pay more for their trucks and licenses than their employees - after all, the heavy equipment was beating up the roads more than their employees' personal vehicles. For their trouble, the company witness got a lecture from the chairperson of the Legislative Committee.

We might know better, but our brains have been rearranged to the new paradigms. Legislatures are structurally, emotionally and intellectually biased to supporting business-as-usual. No, that's wrong, sorry. They cannot conceive of any other way.

McCain is only promising another Morning in America. As sure as day follows night.

You cannot debate or educate people that think that way. They are not even fit for compost. Some compost kills good seeds - better to put your good efforts elsewhere.

cfm in Gray, ME

And this is from the man who originally was against the Bush tax cuts. And I can't wait to hear his plan to deal with peak oil and global warming.

Why doesn't he just write checks to all the foreign governments to which we are indebted and be done with it. I heard his speech; people clapped. Disgusting.

People can do themselves a favor this summer and cancel their vacations or vacation close to home. They can use that time to contemplate their future, what they will do in an oil short world instead of engaging in perpetual denial.

And Bush the Greater called the economic plan of Regan "voodoo". (and, as I remember 4 days before the election Reagan said that his plan would not work due to changes....)

Abe: Give me that old time fun,
Give me that old time fun,
Give me that old time fuuuuuuuun.
The kind where we stay home!

18 cents federal tax per gallon works out to 5.6% price cut at an average price of $3.20 a gallon.

McCain might have better luck asking natives to perform rain dances.

I wrote a letter-to-the-editor in 1996 when Bob Dole offered the same idea for his presidential candidacy. Didn't get published, but fun that I wrote it before I even heard of peak oil!

Maybe I'll try a rewrite, maybe call it "America needs Restrain, not McCain", or something like that, but political pandering is now really so outrageous, anyone who doesn't understand will never understand anyway.

Is Dole a banana?

Republican presidential candidate, Bob Dole, wants to repeal the 1993, 4.3 cents gasoline tax increase to help reduce gasoline prices. Why should we reduce any tax when our national budget remains unbalanced? And why should we not pay high taxes on gasoline?
Where is there a more just cause for taxation than on the consumption of oil: a now largely imported, limited, and entirely nonrenewable energy resource? I believe that even a 100% tax rate would not be unreasonable on a fuel that future generations won't likely have available.

The oil industry has given us nearly everything we could desire: an apparently vast and inexpensive fuel that gives power and freedom to the masses of humanity! If they are using the current low ready reserves as an opportunity for extra profits, I say "Good for them!" They deserve it.

I don't even care about the Democrat's "regressive-tax" lament in defense of the poor. We can direct more tax money into mass-transit systems, encourage bicycling, and support the development of simpler, smaller, lighter, and less powerful personal vehicles with smaller energy demands. These will help the poor infinitely more than cheap gas!

Gasoline taxes promote an economy of conservation. Excessively low gas prices promote an economy that is becoming ever more dependent upon a fuel that will be continually more costly to produce! The current temporary price increase is a mere speed bump. There are mountains ahead.
"... You may have heard the Republican presidential nominee propose something similar before — 12 years ago when the GOP nominee’s name was Dole, not McCain. ... Back in 1996, when Dole pushed his tax cut and Clinton sold oil from the SPR to ease drivers' pain, the average U.S. price of gasoline was about $1.36 a gallon, about 14 cents higher than a year before, according to the Associated Press. ..."

Does anybody else find it deliciously ironic that McCain is running ads on The Oil Drum?

Hey, if you are a McCain staffer checking on the blogs that you run adds on listen up...

You need to read this site well and reconsider.

Your candidate is making a complete fool of himself!

The McCoin does not understand economics or finances, as he freely admits.

Not that any of them really do, but you are misquoting him. He said it wasn't his "strong point". He probably meant more polictically than he did in terms of knowledge of economics.

And yet, isn't he one of the richer members of Congress?

Well - for sure he has one of the wealthiest spouses. Kinda like Hillary I suppose.


OK, his strong point is being a WARMONGER. And establishing himself as a stupid WARMONGER means he is even stupider on economics.

Google ads run off key words and phrases...we don't have a lot of control over what runs...

On March 29, 2008 I attended a conference sponsored by the Midwest High Speed Rail Association and the National Association of Railroad Passengers in Milwaukee. Mr. Frank Busalacchi, Director of the Wisconsin Dept. of Transportation (and I believe chairman of the Assn. of State Highway and Transportation Officials) gave a talk about funding transportation in the US. In nexty year's US government budget the taxes collected from on gas and diesel will be $9 Billion short of paying for the scheduled and contracted road and mass transit projects (mostly the roads have a shortfall as transit spending under Bush has not grown very fast).

So, if McCain has his way the transportation fund this year (2008) will be about $10 billion short, then next year will be about $19 billion short.

What McCain really has in mind:
To siphon off about 1 million barrels per day from Iraq and ship it to the American refiners who will buy the oil from the Feds, who will then replenish the gas tax fund! At $110/ barrel this would be $12 billion over the tax free period. Problem solved! Vote for McCain!

I saw the actual presentation by the researchers.

The break down is this (from memory)

Two GW (capacity) nuclear reactors.

5.2 Billion dollars of investment. I believe this is underestimated, he assumed $1000/kWh for nuclear when it is usually more like $2000 - $3000, but I believe it is safe to assume the price of nuclear will go down...

Total capacity, 17,000/bbl of gasoline per day. 14,000/bbl of diesel per day.

$5.00/gallon with current technology and the possibility of $3.90/gallon

This production capacity vs capitol investment is about 1/5 that of tar sands.

I personally believe plug in hybrids and full battery electrics are the future. Doing the math, 17,000 bbl will get 21,420,000 miles in a 30 mpg sedan. The 48 GWh of electricity produced in that same day will get 120,000,000 miles in a four door plug in hybrid or other vehicle to grid technology. (.3 kWh/mile and 75% system efficiency)

For transportation purposes, the technology won't be able to compete. However, I can see the best way to market it is to make carbon negative plastics. Carbon negative plastics would sell like crazy!

It's not going to fly (way too much capital investment, roughly 1/5 the pace of carbon reduction we'd get from going electric), but it might convince the SUV-driving public that they need to start building nukes to address our problems.  Convincing the public to go PHEV will come when they look at the $10/gallon pump price of "GreenFreedom" fuel and decide they'd rather hook up a cord at night.

This is a long way from the earlier McCain who seemed to understand that oil dependency and the climate were issues to be dealt with by thoughtful measures. There was a time when McCain/Lieberman sponsored legislation worked towards a weaning of the nation's oil dependency. Alas, now it seems he's drunk the conservative Kool-Aid and is being steered by advisors who do not have the nation's true interest in mind, but merely want to score populist points. And to think I used to be a McCain-iac...

Yea, I'm still a McCain supporter, but this is really dissapointing. Some of the other crap he's done as of late can be easily brushed off as placating the base (all that christian conservative crap), but this is starting to become a bit too much.

On the positive side of this proposal, it would be the reveral of a pretty regressive tax. Unfortunately this is exactly the opposite of what we need to be doing. While most of McCain's energy policy makes sense (against ethanol, pro nuclear, pro drilling assuming local support, CAFE standards, etc), but this has really shaken my trust in him.

I guess this is better than how Obama supports coal liqufication though.......

Maybe lowering the tax for farmers and truckers, while raising it for "families", would be a good idea.

It would seem like a nightmare to administer it though.

Any thoughts?

switch red and green diesel to red, white and blue diesel. Keep red for farmers, white for truckers, and blue for all the sad consumers with big trucks or imported cars. :)

Increase the tax for gasoline to $1.50. (~229 billion/year)

Put a tax on imported oil/products, $15. (~65 billion/year)

Put a tax on diesel, $1.00. (~76 billion/year)

Various other taxes on various other products... (natural gas, coal)

Decrease/eliminate income tax for the poor.

Use the money (370 billion+) to subsidize nuclear and renewable electricity, and vehicle to grid technology.

In ten years, peak oil will be history.

Unless people are willing to accept these taxes (yes, it will hurt the economy, but it will force alternatives) they are just beating around the bush. They are not serious about climate change/peak oil.

Decrease/eliminate income tax for the poor.

They pay very little now.  You have to get at employment taxes (FICA, Medicare) to reach the poor.

Unless people are willing to accept these taxes ... they are just beating around the bush.

Too true.

From Tom Whipple's weekly Peak Oil Review, as posted at Energy Bulletin:

Quote of the Week

"As world oil production reaches its apex and begins its inevitable decline, it will have a radical impact on everyday American life. It will take bold political leadership and awareness on the part of individual citizens to craft a full-scale, creative response…I am convinced that the American people will tighten their belts if a president forges a national strategy to stretch the life of our oil reserves and to adjust to a long-range plan of energy conservation.”
—Stewart (and Lee) Udall, former Secretary of the Interior, in his Letter to his Grandchildren

I guess McCain's not that president...

None of the candidates will stand up and give bad news, this seems the same in many countries and i am not aware of any mainstream candidates anywhere putting out bad news since it is seen as electoral suicide. Bush could do this since he has nothing to lose and it might just go down in history alongside the notes on Iraq and hyperinflation.

The best time for bad news is immediately after being elected since the previous incumbents can be blamed and there are several years until the next election.

Here's a song that I wrote in 1974, with only a few very small changes since then.

First verse (sung to the tune of Bob Dylan's "Watching the River Flow"):

What's the matter with me
I've got too much to say
I'd be out there yellin' at the top of my lungs
and no one's listenin' anyway

Think I'll go down by the river
by the highway
via the busy streets
where the cars and trucks are rollin' fast
and say
Do you know how much noise you make and
that we're runnin' out of gas?

because we're

Chorus (with its own melody):

Oil Junkies
Oil Junkies
Waitin' for our next oil change
Yes, we're a thirty weight wonder
slowly goin' under
I think it's time we rearrange

Verse 2 (w/original melody):

Well, the Arab man
livin' on all that sand
he's got us over a barrel
and Chevron, Gulf, Mobil, Shell and the rest
of those fat cats over here in the west
they've all got us over a barrel
because we're


Oil Junkies
Oil Junkies
Waitin' for our next oil change
Yes, we're a heavyweight blunder
slowly goin' under
It's well past time we rearrange

Verse 3:

Well, you're drivin' here
flyin' there
you're shippin' everything every which way and where
you're ruinin' the soil, the water, and the air
there's only so much oil left in the ground
very soon there will be none around
but we don't even seem to care
because we're:

repeat chorus...

then end with:

It's well past time we rearrange (waitin' for our next oil change)
It's well past time we reorganize (waitin' for our next oil change)
It's well past time we reallocate (waitin' for our next oil change)
It's well past time we restructure (waitin' for our next oil change)
It's well past time we reduce (waitin' for our next oil change)
It's well past time we rearrange(waitin' for our next oil change)

I supported McCain in 2000. Mainly it was because he seemed honorable. After doing quite a lot of phone banking, I became completely convinced that his opponent was not.

I've paid closer attention to energy issues in this campaign, and I've begun to see problems with McCain that have to do with character that I had not seen earlier. He missed a couple of key votes in the Senate where his vote would have made the difference in having a better energy bill. He has made noises as though he supported the provisions and has made campaign appearances that suggest support, but when it comes to it, he's not there.

This is not what I expected. What had my support in the past was that you knew where he was coming from and could expect honorable behavior from him. Now he seems to want to have things both ways. Some reporters have been noticing this and saying, well, at least he's not very good at spinning and pandering and double-crossing, he seems uncomfortable with that....

I'm glad he's got the nomination. The manner in which he lost it in 2000 was just too sickening for it not to be right for him to get it now. But, I would not urge people to support him in the general because I think he's lost his compass and won't be able to lead in what look to be pretty difficult times ahead.

As to the proposed policy, a tax holiday, I think it is a great idea. I would make it a federal tax holiday for the month of July. No FICA, no income tax, no fuel tax, and of course, no representation since congress is on vacation. Just be sure that vacation pay is taxed in July and that we put the taxes up in other months to compensate for any lost revenue. It would be a nice way to acknowledge the hard work of those who can't take July off.


I think Los Alamos has the answer to peak oil. And it would be carbon neutral. A never-ending supply of gasoline,made from dirty air. I'm surprised you guys aren't all over it.

We're on top of it like a school of reverse entropy flounder fish.

CO2 + H2O + Colonel's_Secret_Sauce --> CxHy + O2 + Utopia

I'm surprised you guys aren't all over it.

We were all over it.  I was all over it two months ago.  TOD didn't cover it because this is just another variant of the H2CAR boondoggle.

Where were you?

Well, at least he is looking to cut some taxes. That puts him ahead of his front running mates, if nothing else. Of course, as tax cuts go, his choice is about as ass backwards as one can make it, encouraging additional consumption of an in shortage commodity right when demand is at its highest naturally.

Still, if this actually passed, it would give government a little less to spend bombing foreigners, locking up local kids by the hundreds of thousands, and stealing the children of what has got to be the least invasive and trouble seeking group of people in America today. That’s got to count for something. I doubt even the vilest ‘foreign oil company’ could manage to do that much damage with whatever dollars this tax cut might help it make.

Having insufficient tax revenues hasn't made an iota of difference to any of the policies you mention. The grandkids will pay for the freedom the US has brought to Iraq and for the drug-free nation that the moral minority are passing on. And why shouldn't the little shits pay; do they expect to get something for nothing?

Well, at least he is looking to cut some taxes.

Riiiiight. Looking.

Action says otherwise.

(and exactly how will a 100 year occupation of Iraq be a revenue positive thing?)

Is this a late Aprils Fools joke or what?

Which are you referring to: his pandering, or my satire?

I recall a Mad magazine. There 300th issue they parodied the classic movie Casablanca.

" Ric the Germans are headed to Paris! - what can we do? ! "

__" I'm drinking as fast as I can! "

At this point if the American people are stupid enough to want this then this is our Germans in Paris moment

Looks like we're "all McCain gas tax, all the time" on TOD today.

I guess the one silver lining on this cloud is that starving the federal highway trust fund of revenues will tend to curtail spending on such wasteful money pits as widening of urban expressways and building of new, soon to be unused highways.

sad reality-the level of basic economic understanding in the u.s. is such that this nonsensical proposal is actually being received seriously instead of dismissed as nonsense, among much of the punditry.

I know, let's respond to a serious issue with non sense. Let's reduce the national speed limit from 70 mph to 55 mph! Oh sorry, we did that already. No wait I have another idea, let's take a "holiday" on the gas taxes, that will make this all go away.

Who is voting for these jokers now anyway?

It's contagious, but then Charlie has been rumored as a VP candidate!

TALLAHASSEE, Fla. -- Gov. Charlie Crist said he believes that suspending or lowering the state's gas tax during the summer travel season might be a good idea.

He said Wednesday he may ask the Legislature to consider the idea to help give people relief from high gas prices. Floridians pay 15.6 cents in state tax per gallon.

House Speaker Marco Rubio, though, said there may be problems with the idea. He points to a monthlong 8-cent state gas tax cut in 2004. He said people hoarded gas before the tax break ended, throwing off supplies, and questioned whether retailers would pass along the entire savings to consumers.

I don't believe this. Humanities in deep shit. Expletive, expletive, expletive.