Wednesday, April 14, 2010

Lindsey Graham, not even people in SC like you

Lindsey Graham is at it again. The Republican (supposedly) Senator from South Carolina is behind efforts supporting a national tax in the range of 0.15 cents per gallon. The gas tax is in response to the energy bill currently floating downstream in Congress.

From what I gather from this LA Times article, this is the why: Gas companies (and Lindsey Graham, too, I guess) are afraid the Democrat's energy plan, the cap-and-trade boondoggle, or cap-and-tax, is going to pass. So, instead of fighting horrible legislation, they are proposing a national gas tax in it's place. Here's the quote:
"In this case, though, several oil companies are floating the tax plan because it figures to cost them far less than other climate proposals, including a climate bill the House passed last year."
They (gas companies and Graham) believe that by introducing the tax, drivers will drive less, thus lowering emissions. Hooray, global warming solved!

There are just way to many problems with this legislation for me to go into too much depth, but I'll try to highlight a few items.

This is going to hurt everyone but oil companies and senators with federal gas cards. Everyone is driving less now, or even working at home, because they know it's cheaper to car pool or to simply drive fewer miles. My Nissan Sentra generally takes about 13 gallons a week. At 2.80 per gallon, that is 36.40. Now, by adding only 0.15 to each gallon, that puts my gas costs at 38.35. Not a big jump by any means, only about $2.00 a week. But when you look at the bigger picture, and people do start driving less, the tax is simply going back into the general budget of oil and gas companies, and not doing what it is supposed to do,
"fund a variety of programs that would reduce industrial emissions, including helping manufacturers reduce energy use or boost wind and solar power installations by electric utilities."
Let's assume that everyone continues driving the same. A tax this small really wouldn't hurt families that much. Where you would see some damage is small businesses, especially those with a fleet of vehicles. Imagine you are a small business owner, and you have five company cars that use about 40 gallons a week. This tax now costs you an extra $30 a week. And if you keep a tight budget, that is an extra $1,560 a year. Now we are in business. Your customers start to pay a few cents more for their services, and that big company cookout with steaks just became hamburgers from Wendy's. Any tax that significantly increases the burden on business, big or small, will ultimately be paid for by consumers.

Now let's pretend people start driving less. Since people are driving less, less gasoline is being purchased, and less tax money is being raised. This would, in an ironic twist, hurt the gas companies because people are not buying their products. It also hurts gas station owners since people would not stop in to get gas and their sodas and chips every day. Don't forget, stations are simply distribution points. This would hurt manufacturers and distributors of said products like Coke, Pepsi, Lance, and Frito-Lay.

Any product tax or surcharge has never gone away. I've seen previous employers introduce surcharges on other products to make up for overall revenues lost. It's a lose-lose situation. Customers see an immediate $1.50 hike on their bill, and disconnect service. Those that continue to keep the service, end up paying more because there are fewer people trying to support the company. So, a few months after the surcharge introduction, base rates go up $1.50. Then more people stop being customers. And the cycle continues.

It is unfortunate that Senator Graham and gas and oil executives have already caved in and are not doing anything to stop the Ramdown Cramdown. Public sentiment is a huge wave, and they are paddling away from it instead of riding it into shore.

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