Gas Tax Buffoonery

The wonderfully entertaining aspect of any government is the humor inherent in the illogical and non-sensical reasoning it uses to portray what it believes is good policy. Governments regularly decree guidance to us, the people, so that we can ‘learn the proper way in which we are to act for the betterment of everyone.’ Policies that deal with such ideas as the environment, social welfare, and healthcare all sound magnanimous in the beginning, but then you end up with a Clean Water Act that requires certain areas of the US to actually pollute the water just to reach the minimum standard, or OSHA requiring workers to wear life preservers while working on a bridge over a dry river bed in the desert. Its all very funny until you realize the brunt of the jokes are on your wallet.

We should always remember that government has grown with the availability of cash. It created the FED and eliminated the gold standard for easy access to fiat money, but where that is not politically expedient, there is always taxation. Once the government learns to live on the budget available (or create-able), it is next to impossible for it to decrease its spending. Remember, also, in government parlance, a decrease in the rate of INCREASE is a CUT in the budget.

So here again, we sit today with yet another fine example of government buffoonery. We hear incessantly about the need to conserve. Conserve our water, our electricity and our fuel. It is the latter that provides us our table at the next comedy sketch. You see, we use fuel, gasoline, oil, and are told that our consumption is injurious to the planet. That we should conserve, find other forms of bio-fuels and switch to electric cars. But it is never just that simple. So in 2008, people took heed of this government pronouncement of propriety and conserved. Of course $4 gasoline is a good motivator. Then the financial crisis struck and people were more than happy to control their expenses. The benefit of this is the price of gasoline has fallen dramatically, providing the American public with financial relief just when it was needed. It also has had a positive effect by limiting the authoritative control of OPEC nations over the much needed commodity and diminishing their power base.

So government has gotten the answer they desired, except for one small fact. The government relies on gasoline taxes that are paid when we purchase fuel for our cars. But when we don’t purchase fuel, this tax base is dwindled away and the politicians get nervous that their source of power might be removed. So what’s the answer they give? Punish us for not buying enough fuel by raising the taxes on gasoline as much as 50% a gallon.

“So, we did what you said and now you are going to penalize us by taxing our concerted effort to ‘help the environment.’ Well thank you so much. I elected you why again?”

But lets think this through, the government wants bio-fuel and electric cars. Auto makers are intently working on hydrogen fuel cells, even air powered cars. If a majority of people make these kind of switches, what do you think happens to gasoline consumption? So, in 1, 2, or 5 years are we going to see yet another series of tax hikes on fuel because we have noticeably turning green? As government continues to raise taxes on gasoline, like the $3 to $4 dollar tax hike proposed by members of the left in this country, people will look for alternatives. As the alternatives like bio fuels, assume the tax burden of oil, people will again look for an answer. And when there is not enough fuel consumption to provide a tax base for their spending addiction, where will they turn? Electricity and hydrogen.

Imagine your electric bill today. Mine is about $0.06 per KWhr. With an electric car needing roughly 33 KWhrs to refuel and provide 100 to 120 miles of driving, it cost me $2.38. Whereas the current fuel cost would be $13 with the new government tax on gasoline. Out of that amount the government would take $4.90. If they are not getting that cash from gasoline, you can bet they are going to get it from electricity. But how do they do that while allowing us to power our homes with electricity at the current rate? More than likely they won’t. Once the government gets the “taste” of electricity taxes, they will certainly find more reasons to spent that cash and for all of us to assume our ‘bound duty to our country’s environmental survivability.’

The government never seems to understand that increasing a tax only pushes that item out of reach for some portion of the populace, thus limiting consumption and the tax base. Continuing to raise taxes to make up the short fall, only decreases the amount of tax they could potential receive. And when that tax/price combination exceeds a market level of acceptance, then that product is replaced and the tax dies or must shift to a new source. The fact that gasoline may eventually die off ( or be taxed off) and be replaced by electricity as a source of taxation, should have each of us calling our representatives and explaining exactly how silly and non-sensical their current short term band-aids are for our well-being.