Gas Prices

March 31, 2000

Seems like everyone is talking about gas prices these days. Recently truckers were in Washington protesting the prices. Many politicians fear that a gallon of gas will cost more than two dollars by this summer when people are vacationing. And everyone has a solution.

Long term solutions will be the best bet. This would include tough dealings with Arab nations and drilling for more oil in America. But most people want to talk about a quick-fix short-term solution.

Many political groups are calling for Congress to repeal the 4.3 cent-per-gallon gasoline tax imposed during the Clinton budget agreement of 1993. After all, the tax was enacted to reduce the federal deficit, and that goal have been achieved.

In fact, during the 1990s, the pre-tax price of gasoline at the pump actually declined from 88 cents per gallon to 86 cents (as of last November). So much of the increase in the price of gasoline during that decade was due to taxes: 27 cents in 1990 to 43 cents today.

Economists point out that cutting the tax would not cut the cost of gasoline. If the price did fall a few cents, motorists might actually buy more gas. But since the supply of gas is limited, the price would probably rise to pre-tax-cut levels.

So donít expect a tax cut. Gas companies are enjoying the profits, government wants the taxes, and Al Gore sees the current crisis as a way to informally implement some of the Kyoto accords and reduce global warming. I hate to say it, but I think gas prices will stay high and even go higher in the short run. Thatís why we need to return to some of those long-term solutions.

Iím Kerby Anderson of Probe Ministries, and thatís my opinion.