Time for a gas-tax holiday.
When the people lie prostrate, when the people groan under heavy burdens, when the people just can’t take it anymore — and when an election is coming up — that is the time for politicians to relieve everyone’s burden.
A bit.
Treasury Secretary Janet Yellen favors considering a temporary gas-tax holiday to emulate some of the states. Reviving the Keystone oil pipeline — no, not something to consider, she says. But she’s okay with a brief gas-tax break.
Let’s do better.
I propose a millennium-long gas-tax holiday, government-barriers-to-drilling holiday, regulation-of-all-industries holiday. Under my plan, government gets all the way out of the way of all markets so we can all be as prosperous as possible, whether or not a big economic crisis is underway.
But would there be any such crises — long-term and intractable economy-wide crises, I mean — if my plan were enacted?
When government does everything possible to injure the economy and prevent recovery, it takes a long time for markets to bounce back from shocks. If ever.
Un-fetter the markets, though, and economic actors would be able more rapidly to adjust to major jolts. If gas imported from overseas plummets, producers could then quickly adapt by expanding production. They cannot readily do so now because government imposes so many barriers.
The politicians’ preference for modest, namby-pamby reprieves are not only substantially weak, they send the wrong signals. They get doled out as if government were doing us a special favor … by not beating us up so badly for a very little while.
We need freedom. On an ongoing basis.
This is Common Sense. I’m Paul Jacob.
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13 replies on “For a Thousand Years”
Eliminate gas taxes? State and federal? Who will pay for highways and bridges, etc? Simple idea with no thought as to the outcome. Federal fuel tax hasn’t increased since 1993!
Ramp up oil and gas production? Sounds easy but is it?
Your insinuation that roads cannot be funded without a tax on fuel is rather bizarre, Pam, given that you’ve told us that you drive an electric vehicle, which would pay no gasoline or diesel tax. Do you just imagine the roads all evaporating in your bright, electric future?
Even under a regime in which roads are socialistically provided, the state can and does fund roads by means other than taxing fuel.
But socialistic provision is unnecessary, and much thought has been give to “Who would build the roads?” and how they would be funded were provision entirely private. You should familiarize yourself with the economic literature before hoping to convince anyone here that private provision is impossible or undesirable.
From Axios:
State of play: Americans are hitting the road. Refinery capacity is down 5.4% since 2019.
This mismatch is the problem. Refineries are at a nearly full capacity, meaning it will be hard to produce much more gasoline in the short-run.
High prices are essentially the way finite supplies are rationed. The alternative is artificially low prices, combined with shortages.”
“President Biden’s proposed gas tax holiday would have limited benefits, analysts from across the ideological spectrum believe. “The substantive case for the policy is weaker than ever,” said Tobin Marcus, a strategist at Evercore ISI, in a research note.
“Subsidizing demand in a supply crunch would be counterproductive, the size of the tax cut relative to pump prices is marginal, and elevated refinery utilization means more of the benefit would be captured by producers rather than consumers.”
“Refineries are at a nearly full capacity, meaning it will be hard to produce much more gasoline in the short-run.”
Good thing Keystone XL — a land-theft-powered corporate welfare project to help a state-owned Canadian company get its oil to US refineries for export, not US use — got killed, or that situation would be even worse.
It would be best if, in any one thread, you would consolidate your comments.
Refining capacity is not fixed. As with other productive facilities, their provision is a matter of supply and demand, which in the present context are heavily influenced by government policy. Under different policy, other refineries would be built and capacity at existing refineries would be expanded.
“Refining capacity is not fixed.”
True. It’s going down, both in the US and globally.
And that decline is heavily influenced by government policy.
You again display your stupidity! You act like building a new refinery only takes a few months. And ramping up production can be done in days. Neither is true. And you ignore the fact that oil companies are happy with the status quo.
“According to a 2022 survey, the average oil producer operating in the Eagle Ford oilfield in the U.S. needed WTI oil prices to amount to a minimum of 48 U.S. dollars per barrel in order to profitably drill a new well. This compared to a breakeven price of 23 U.S. dollars per barrel for existing wells.Apr 1, 2022”
“While many shale companies can turn a profit with oil between $50 and $60 per barrel, few can survive at cheaper prices without drastic cuts to production and staff. That’s because shale producers must constantly spend money to drill new wells to replace rapidly-depleting production from existing wells.Feb 18, 2022“
Your opinion is not supported by the FACTS!!!
By the way, it only takes a few minutes to get the facts!
No, Pam. You act as if a new refinery cannot be built, as if laws and regulations are not a significant source of how much time it takes to build a refinery.
You really to ask yourself whom you might possibly persuade with your jumble of bald insults, self-contradictions, straw men, and easily exploded claims. You make your opponents look good by contrast.
(Readers visiting this ‘blog for the first time can sample past comments to see Pam’s pattern of behavior.)
You make a fool of yourself with your simplistic ideas! Keep it up. You solutions are devoid of FACTS!!!
And that, Pam, is just one of your bald insults. Whom does it persuade?
Your belabored assertions about refining capacity are not a refutation of Paul’s entry unless refining capacity cannot be changed. Not only can it be, but law and regulation — the very things that Paul wants to change — are part of what slows the rate at which capacity changes.
Refineries are being shuttered and none are/will be built in the near future (10 years).
“June 17 (Reuters) — Since the onset of the global pandemic, the United States has lost nearly 1 million barrels per day of oil refining capacity, with more set to be shuttered in the next few years. These are the refiners that have closed or cut capacity:
LYONDELLBASELL HOUSTON:
CAPACITY: 263,776 barrel-per-day (bpd)
Lyondell said in April of 2022 that it would permanently shut the refinery by year-end 2023, as it was unable to find a buyer and did not want to invest to keep the facility open.
The refinery could be converted into a processor of pyrolysis oils, which can be used to make renewable diesel, but that study will take years. Lyondell could permanently close the refinery ahead of the December 2023 deadline if one of several major production units is shut and cannot quickly return to production. read more
PHILLIPS 66 ALLIANCE, BELLE CHASSE, LA.
CAPACITY: 255,000 bpd
Phillips 66 announced in November 2021 that it would not reopen the Alliance refinery, which was shut in mid-August ahead of Hurricane Ida. The 50-year-old refinery was severely damaged after several feet of water flooded it during the storm.
LIMETREE BAY, ST. CROIX, USVI:
CAPACITY: 210,000 bpd
Limetree Bay Energy shut its St. Croix refinery due to financial problems in May 2021 after only operating for a few months, due to operational setbacks. The refinery had already been idle for a decade before restart. The plant was sold to a Jamaican oil storage facility in December 2021. read more
SHELL CONVENT, ST. JAMES, LOUISIANA
CAPACITY: 240,000 bpd
Shell announced in November 2020 it would be shuttering the refinery after attempts to sell the plant between July and October were unsuccessful. The refinery became unprofitable as COVID-19 spread across the United States.
Shell planned to try to divest the refinery as it considers closing facilities it cannot sell, the company told investors.
MARATHON, MARTINEZ CALIFORNIA, AND GALLUP, NEW MEXICO
CAPACITY: 161,000 bpd (Martinez); 27,000 bpd (Gallup)
Marathon Petroleum said in August 2020 that it would permanently close two refineries in Martinez, California, and Gallup, N.M. in response to lower fuels demand, after idling the facilities following COVID-19 outbreaks in the United States.
The company is converting the Martinez refinery to produce 260 million gallons per year of renewable diesel starting in 2023.
PHILLIPS 66 RODEO, CALIFORNIA
Capacity: 120,200 bpd
U.S. refiner Phillips 66 plans to fully convert its Rodeo, California, crude oil refinery into a renewable fuels plant using cooking oil and food wastes beginning in 2024.
HOLLYFRONTIER, CHEYENNE, WYOMING
Capacity: 52,000 bpd
HollyFrontier Corp said in June 2020 it would convert its Cheyenne refinery into a renewable diesel plant that would produce 6,000 bpd of renewable diesel. The company ceased refinery operations at Cheyenne the following month, making it the first U.S. refinery to close in 2020.
CALCASIEU REFINING — LAKE CHARLES, LOUISIANA
Capacity: 135,500 bpd
Calcasieu Refining shut its Lake Charles plant in early August of 2020, according to the Louisiana Department on Environmental Quality, citing demand loss during the pandemic.”
Your lengthy quotations are avoidance behavior. No one here has argued that America has sufficient active refining capacity. I have repeatedly noted that government policy affects refining capacity and that in application to this constraint Paul is correct in his claim that Biden can act to bring-down gasoline prices.