In an Econobrowswer post critical of this tax holiday, Menzie Chinn also brought up the incidence of the tax issue but he suggested that maybe consumers get half of it. Even still - $0.09 per gallon really does sound like peanuts.

Another sign of the falling away of the hold that Reaganite / New Right / Third Way ideology had on public discourse:

“el mercado, por sí mismo, es incapaz de generar condiciones de vida digna para la gente, y por eso se requiere la acción rectora y rectificadora del Estado”.

http://www.jornada.unam.mx/2008/04/29/index.php?section=politica&article=008n1pol

That's Felipe Calderon, Mexico's Harvard-educated, right wing President, announcing a new set of coordinating social programs which supposedly will aim at the root causes of Mexico's extrem poverty:

"...the market, by itself, is incapable of generating the conditions of a dignified life for the people, and for this reason is required the guidance and regulation of the State."

Calderon in his speech repeats how superior his approach is to the "populism" of unnamed others, presumably Mexican leftists like Andres Manuel Lopez Obrador and, of course, continental bogey-man Hugo Chavez.

But Calderon didn't used to really approach things this way. Something pressed him to it. And it wasn't his supporters in the International Republican Institute.

Clinton's support for his "tax holiday" merely confirms her right-wing credentials. Not only will this do nothing to alleviate the rising cost of fuel, it will decimate the government's ability to repair our crumbling infrastructure.

No major politician has the guts to tell the truth: that we have seen the end of cheap gas and we desperately need to shift our resources from war making to creating a sustainable infrastructure and a green economy.

Photo op.

Minneapolis bridge.

Now.

Bumpersticker: "Free pothole with fillup."

You are mixing producers and refiners in your analysis. Refiners have been killed in the recent run up of oil. Refiners like Valero and Tesoro have been crushed, and they fail to refine at capacity because it is barely profitable.

Our energy reporter has seen sources in the industry say refining capacity is in the low 80 percentile.

Production may be another story, but conflating the two proves a mistake.

Dean,

Data from the EIA

http://tonto.eia.doe.gov/dnav/pet/hist/wpuleus3w.htm

indicate that current refinery percent utilization is running in the low to mid 80s, which is below recent trends for this time of year. It would appear that the refiners could increase output if it were profitable for them to do so.

Regards,
Tom

Not only will this do nothing to alleviate the rising cost of fuel, it will decimate the government's ability to repair our crumbling infrastructure.

Clinton's plan relies on taxing oil companies to put that money back in the budget.

eRobin,

Senator Clinton is not stupid and neither am I. There is a chance that a cut in the gas tax for the summer could pass Congress and be signed by Bush. There is absolutely ZERO chance that a windfall profit tax will be passed.

By wrongly implying that a cut in the gas tax would actually help consumers, Clinton is making it far more likely that the oil industry will get a big tax break this summer.

eRobin,
Senator Clinton is not stupid and neither am I. There is a chance that a cut in the gas tax for the summer could pass Congress and be signed by Bush. There is absolutely ZERO chance that a windfall profit tax will be passed.

Not by Bush, but you forget the obvious that he only has a few more months in office... You may not be stupid (you aren't), but you are omitting the obvious...

Like the other day on your discussion of 'open source' books, you forget that your scenario would require university and schools to use the 'same books', but in reality the problem there is that there are too many books, with too little volume, and pure supply/demand and investment cost often inflates price - not copyright law. The anti-copyright open source people always make those claims, but in reality it's a supply/demand curve problem - pure and simple...

Even if you save 9 cents a gallon, just how many gallons went into the vehicle anyway? I have a 13-gallon tank. I can't afford to fill it every week, and I certainly don't run it onto empty. I put maybe six gallons in; that only adds up to a candy bar for cryin' out loud.

Want to save gas? Drive LESS. Use public transit, carpooling, ridesharing services, or a bicycle or walking to get around.

Tom: Dean isn't too interested in facts. Read the most recent EIA report on inventories and you will notice an unusually large amount of refining going into jet fuel and diesel (where the margins are). Refiners won't produce gasoline in the U.S., because the necessary margin to compensate them for their risk would drive gas prices to levels that the U.S. consumer can't handle. Instead they don't ramp up production in the spring and shift to commercial fuels, where the price hike can be consumed.

The important point is that there IS surplus gasoline refining capacity. The capacity is not being utilized because refining crude oil into gasoline is barely a break-even business.

The big profits are being made producing crude oil, and in that market prices are set globally. It's going to take several steps to make a connection between the federal gas tax and "big oil" profits.

"No major politician has the guts to tell the truth: that we have seen the end of cheap gas and we desperately need to shift our resources from war making to creating a sustainable infrastructure and a green economy."

Charles, it is even worse than that: Bush promised to veto any bill containing tax credits for alternative energy.

January 2009 cannot arrive fast enough.

"Refiners won't produce gasoline in the U.S., because the necessary margin to compensate them for their risk would drive gas prices to levels that the U.S. consumer can't handle."

Sorry, but I don't get it. Why in the world a price "that the U.S. consumer can't handle" be the problem of the refiners? Doesn't look like a big problem for the producers, right?

And for sure do not let the public know there has been an EXTRA TAX tacked on by the oil monopolies of about $1.20/gal. Compare that with the Federal tax of $0.184/gal. Even more FOR SURE don't call this extra tax, TRIBUTE (wealth paid to emperors by subjugated groups and enforced by force or the threat of force, currently the "Law") . Instead, just call it profit--that is something we all believe in like: The Flag, America, and Apple Pie, and "We are the greatest country in the entire world (and of all time)!"

Baker fails to consider the essential reason for the lack of reporting--it is not mainly incompetence on the part of reporters, it is described by the following quote:
"The Central Intelligence Agency owns everyone of any significance in the major media."
-- William Colby, former CIA Director

See also the book: Into the Buzzsaw: Leading Journalists Expose the Myth of a Free Press; Edited by Kristina Borjesson; Foreword by Gore Vidal

The above failure of Baker raises the question whether he is part of the long term plan to misdirect people's attention, whether consciously or unconsciously.

"No normal human being wants to hear the truth. ... What remains in the world... is a series of long-tested and solidly agreeable lies." -- H.L. Mencken

wtf wrote, ...but in reality the problem there is that there are too many books, with too little volume, and pure supply/demand and investment cost often inflates price - not copyright law.

Nonsensical. If textbooks were open source, there'd be essentially one textbook for most subjects, since a competent instructor could clip from various (open) sources. So your claim about "volume" is vacuous.

It would seem that the price of gasoline is high because of a world-wide shortage of crude, not because of decisions by refiners, so whether or not the latter are running at full capacity (likely not if there is really a shortage of crude) is not really critical. Almost half of US consumption is provided by domestic production, so as we know domestic oil companies are making big profits, and these could only be increased by removing taxes.

But surely there are data on the role of independent refiners and other intermediates and what happens to them in a supply crisis - from the 1973-1980 period. Certainly retail gas sellers were severely squeezed at that time, and the "service station" ceased to exist - now the sale of gas is largely something to bring customers into the convenience store.

Dean-

Can you respond to the points about refineries? I've been making the exact same argument you are, but if it's true that refineries are running below capacity, that seems to complicate the picture.

It would seem that the price of gasoline is high because of a world-wide shortage of crude, not because of decisions by refiners

But oil, unlike refined gasoline, trades in a global market. So reducing the gas tax could increase the share of world oil coming to the US.

lemuel,
Paul Krugman makes a good point about the refineries. Even though there is available capacity, now is the time they're building inventory for the summer, and their maintenance and production schedules for the next few months are pretty much locked in.

The proposed tax cut has not been implemented yet, and by the time it is, it will probably be too late to have any material impact on summer gas supply.

Paul Krugman makes a good point about the refineries. Even though there is available capacity, now is the time they're building inventory for the summer, and their maintenance and production schedules for the next few months are pretty much locked in.

Except that utilization rates were lower this spring than in the same months in any past year since 1991. So this doesn't seem to be a seasonal effect, but genuine excess capacity at the refineries.

Again, I've made exactly this same argument on various blogs. But this worries me. Dean really needs to address the fact that refineries appear to be running well below full capacity.

Even though a person earning minimum wage would benefit from saving $26 to $50 for the summer, how many minimum wage earners can even afford a car in the first place?

Also, won't this tax holiday encourage NEGATIVE behaviour - namely encouraging people to drive MORE when they really need to drive LESS?

On top of that, a tax holiday would drive up DEMAND, right?

Finally, the worst case scenario is that the holiday becomes real and the windfall profit tax doesn't. What is Clinton's backup plan in case that becomes reality?

One should always hope for the best and plan for the worst. Is this the sign of a smart President? I think not.

Didn't Clinton propose that the highway funds fed by the gas tax be refunded by a "windfall profit" tax on oil companies? Why is this never mentioned? The tax money lost to the pothole fund would be replaced.

Jeez.

Refiners won't produce gasoline in the U.S., because the necessary margin to compensate them for their risk would drive gas prices to levels that the U.S. consumer can't handle. Instead they don't ramp up production in the spring and shift to commercial fuels, where the price hike can be consumed.