This Friday’s shoot-the-shit topic is a discussion of the proposed state and federal increases in gasoline taxes.
Taking advantage of the fact that oil prices have been steadily falling, several states have already begun to increase fuel taxes . Effective 1 January 2015, Maryland will add 2.9 cents per gallon; Pennsylvania will increase gasoline taxes by 9.8 cents per gallon and 13.2 cents per gallon of diesel fuel and Virginians will see an increase of 5.1 cents per gallon.
Congress is also considering as much as a 12 cent increase per gallon of gasoline, diesel fuels will probably be higher. The amount of the increase has not been disclosed so the 12 cents is an estimate base on the $100 billion gap Congress needs to cover. Diesel fuels will of course be higher.
How you the voters are expected to view this is with a mind set that says “well it’s just 20 to 30 cents more per gallon. However, that 20 to 30 cents per gallon will have the following impact across the total economy.
Higher transportation costs
Higher power generating cost
Higher food prices
Less disposable income for households
… on and on as it trickles through the economy at large
The magnitude of the tax increases is best understood when you look at the fact that in 2013, about 134.51 billion gallons (or 3.20 billion barrels) of gasoline were consumed in the United States, that is a daily average of about 368.51 million gallons (or 8.77 million barrels). I don’t have the 2014 figures yet but you can easily what the hit to the economy will be.
These taxes are on a per gallon basis so they will remain regardless of what the wholesale price of gasoline is. Sadly, this comes at a time when consumers need all of the disposable income they can get to gen up the economy and get the unemployment and underemployment situation under control.
I say it’s piss poor timing. What do you think?
You’ve all seen the stock market correcting with “Wall Streeters” complaining about “plumetting” oil prices. Don’t sweat it! The decline in oil prices and the falling price at the pumps leave consumers with more disposable income, which will translate to stronger sales for your business. This is by far more beneficial to the overall economy than what Wall Street does. With increased production in the U.S. we are very close to realizing an economist’s greatest “coming home fuck fantasy” and that is a competitive oil market. I’ll explain.
OPEC is a cartel of oil producing nations; its sole purpose for existing is to regulate supply and thereby oil prices. With increased oil production in the U.S. world supply increases. If OPEC reduces production to reduce supply they now run the risk of losing market share so they must continue pumping oil. Now you have competition. GOOD!
Here’s what I would ask you all to do. Contact your elected officials insist that the U.S. be allowed to export, globally, oil and its byproducts and that those exports get taxed and not you. Do it!
Let’s us know what you think. As with all shoot-the-shits no rules apply !
Have A Great Weekend Everyone!