Democrats fight for higher gas prices

(Flickr / Markus Spiske)

(Flickr / Markus Spiske)

Most Americans are celebrating the 37 percent drop in gas prices over the last year, as the national average for a gallon of regular gasoline hit $2.06 this weekend.

But many Democrats are taking the other side, fighting for higher prices in the form of a gas tax and a ban on oil exports.

Unsurprisingly, the recent drop in gas prices has created a money-making opportunity that some in Washington find hard to turn down. Many Democrats (and some Republicans) are already pushing for a higher gas tax on consumers. Despite existing state and federal taxes of almost 50 cents per gallon, several senators proposed last summer to increase the federal portion by another 12 cents over the next two years, also indexing it to inflation so that it will automatically increase in the future.

This tax increase of $164 billion (ironically called a “Highway Funding and Tax Reduction Proposal”) is back in the discussion due to low gas prices. “I do think that if there’s ever going to be an opportunity to raise the gas tax, the time when gas prices are so low — oil prices are so low — is the time to do it,” said House Minority Leader Nancy Pelosi (D-Calif.).

Supporters say the gas tax increase is needed to shore up financing for the insolvent Highway Trust Fund, which funds transportation projects across the country. As such, Senate Environment and Public Works Chairman James Inhofe (R-Okla.), said the gas tax should more accurately be called a “user fee.”

But this label is misleading, as the Highway Trust Fund has recently been used to fund much more than roads and bridges. “Drivers now see about a quarter of their gas taxes diverted to subsidize mass transit in merely six metro areas and sundry other programs for street cars, ferries, sidewalks, bike lanes, hiking trails, urban planning and even landscaping nationwide,” said a Wall Street Journal editorial last week.

A similar debate is occurring over the ban on exporting crude oil put into place in 1975.  The intention of the ban was to encourage American energy independence, yet it hardly serves that purpose today. A study by ICF International concluded that lifting the ban would substantially increase production, create hundreds of thousands of jobs, and add $38 billion to GDP in 2020.

According to a Wall Street Journal review of studies on the subject, lifting the ban would also reduce gas prices by anywhere from 1.5 to 12 cents per gallon. “Consumers would benefit from small reductions—5 to 10 cents per gallon, in the baseline scenario of a recent study—in the domestic prices of oil products, because those prices depend primarily on the world price of crude oil, which would decline slightly once lower-priced U.S. crudes were available in the international market,” said a report by the Congressional Budget Office.

By expanding the market for oil, consumers clearly will benefit – but most Democrats, environmental groups, and refinery lobbyists won’t hear of it.

Whether supporting a gas tax or a ban on exports, it’s clear that some elected officials view the low gas prices as something to be exploited rather than celebrated.

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One response to “Democrats fight for higher gas prices

  1. Unbelievable that people would fight to put in a tax just when the prices are lower.
    The struggle for power never ceases to amaze me.
    Incidentally, WHY is this a federal issue? The idea of maintenance of roads, etc. should be the states’ jurisdiction.
    We need less federal government involvement, not more.

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