Repeal the Federal gas tax for the summer?

I truly hope they are joking. McCain and Clinton have both come out in recent days saying they will support a temporary repeal of the Federal gas tax. I heard one quote mention something to the effect that the American tax payers need this break. This is ludicrous.

The gas tax is $0.184 per gallon of gas. To put this in perspective, at $4/gallon this is only 4.6%. This is less then most states’ sales tax. Another angle… Assume for a minute that the average American drives 50 miles per week day and 200 miles each weekend. Also assume they drive that monster SUV at 15 miles per gallon. If the gas tax relief lasts 4 months that is only $95.68 in savings over all 4 months.

Consider the fact that the average American doesn’t need that 15mpg SUV. If they had instead been driving around in a typical large sedan getting 25mpg they’d save the same as the 4 months of tax relief in two weeks with gas at $4/gallon.

After doing all this typing I’m even more convinced that we should raise the gas tax to $3.184 per gallon. This would give us an extra $3 per gallon to spend towards clean energy. Assuming the average 150 million driving Americans drive 12,000 miles per year in cars that average 22 mpg. That is $245,000,000,000. This will cost this average person $1,636 per year.

There are roughly 120,000,000 households in the US. Each of these on average would need a 3 kilowatt alternative energy system to produce their own power. These systems would cost roughly $17,000 each. If people keep driving the same 22mpg cars, then we could outfit every household in the US with their own power generation in less then 9 years.

Although with gas around $7 a gallon people will be inclined to buy more efficient cars. So figure by 4 years into this the average mpg changes to 30 mpg. This will only extend total adoption by two years.

Now its been 10 years. Pretend the average mpg is now 35. Also pretend that the national debt has not increased in the last 10 years. If this money is put towards the debt we could pay it off in 60 years. Wouldn’t this all be a good gift to give our kids?

Also lets look at the change from 22mpg to 30mpg. By getting a car 8mpg more efficient the consumer will save $1,015 a year. At this point the extra $3 only costs $1,200 a year. For $185 a year we give everyone home power generation. Also remember that this eliminates people’s electric bills. People generally use about a thousand kwh per month. At $0.13 a kwh this is roughly $130, a $1,560 a year savings. By charging people an extra $3 per gallon of gasoline, in 10 years we’ll be saving people roughly $1,375 per year.

Also keep in mind that the average American is paying about $1,300 per year in interest to our national debt. By using the remainder of this tax money to pay off the national debt our kids will be able to divert that $1,300 per year per person to something way more useful.

So please call your representative and encourage them to not vote to repeal the Federal gas tax for the summer. And when you are doing that please ask them to raise the tax by $3 per gallon.

I’m not a statistician. I don’t know if my quoted numbers are right. I do believe that they are in the proper ball park to show my point. Please interpret my napkin analysis as a thought provocative view to show people that there is another way and realize that this is not a literal financial analysis.
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One Response to Repeal the Federal gas tax for the summer?

  1. boreal says:

    A friend pointed out to me one miss in my above examples, Inflation. So if we increase gas taxes (including diesel) this will drive up the cost of goods. This is probably true and this is not factored in. The point of the post is that there are different ways to look at this problem then we’ve been looking before. Hopefully this has opened up new thoughts on how to persuade the American public to change their ways.

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