Me: (Celebratory) Gas prices are finally
coming down! I can finally afford to pay my bills!
Dad: (Celebratory) Gas prices are finally
coming down, now we can raise gas taxes!
Opener
When I first
moved out on my own gas prices were somewhere between $1.06 per gallon and
$1.25. I budget down to the last penny, and those prices stayed pretty stable
until we entered the War on Terror. Suddenly we suffered gas price shocks. By
mid 2004, gas was over $2.00 a gallon, by late 2005, $3.00, and by mid 2008,
$4.00. We can debate over what caused the gas shocks, but needless to say that
going from filling up my tank from $10.00 a fill up to $55.00, when I was, at
the time filling up at least twice a week, made quite a negative impact on my
budget. Think about this. That is a price hike from $40 a month to $220.00.
By some
miracle, Bush managed to get it fixed, and prices fell to $1.83 a gallon, but
by mid 2009, it was already up over $3.00 again, and pushing $4.00 a gallon. In
the time since gasoline began to spike, I, and millions like me, who had been
living paycheck to paycheck on a tight budget, had no choice but to use credit
cards to fill up when my budget fell short. Sadly, I could not make adjustments
fast enough to keep up with the price shocks. Credit cards begat advanced
payday loans, begat even more credit cards, pawn loans, and eventually a
bankruptcy.
I did the
best I could to restructure my budget after that, studied economics, and
adapter an Austrian Economic view, since the spend happy ways of Keynesianism
had proven personally disastrous, but my wife ended up losing her job and was
out of work for an extended period of time, leading to credit cards, and
advanced payday loans, the works. Eventually, her father passed away, but since
he lived in Iowa, I literally had to choose between paying rent, and $4.00 a
gallon for a cross country trip. Needless to say, I lost the apartment.
I had to move to Tooele, but I work in Salt Lake. Our gas
expenditures have doubled, while our wages have stagnated. Needless to say,
that the recent drop in gas prices has been a much needed relief. However, my
own party is threatening to muck it up. Some Utah Republicans are pushing for a
ten cent per gallon tax increase. Meanwhile, the federal Republicans want to
tack on an additional 12 cent per gallon tax increase. At present, the state
tax is (x), while the federal gas tax is (y). This would bring the total cost
of gas taxes you pay to (z) per gallon. The present price of gas per gallon is
(a). Adding the additional taxes to that price it would bring it right back up
to (b). Unbelievable.
The excuse is “we need it to pay for roads.” They lament… lament… the fact that gas taxes have not
been increased since 1997. That should be being heralded as an accomplishment!
After all, the Republicans are supposed to be the ones concerned with kitchen
table issues! How many Republicans swore up and down that they would never vote
for a policy that would increase your costs of living? And if you live in Utah,
thanks to our unique caucus system, how many of those candidates looked you
literally in the face and swore this to you, not generally, but personally? For
me, as someone who has been involved in Utah’s political scene since 2006, quite
a few. And now I am just getting excuses from some (thankfully not all) of
those same people!
“We have to do it!” They proclaim. Well I have to eat, and I
have been waiting for the oil prices to normalize for quite some time. Why?
Because oil prices have been one of the largest contributors to the massive
inflation we have been experiencing, even though no one has been willing to
talk about it. In fact, to avoid talking about inflation, the Obama
administration has excised Energy and food costs from their economic reports,
so that they can claim, falsely, that we only have a 2% inflation rate. Add
those two back in, and inflation has actually been closer to 10%, until
recently. I have cited this previously, please refer to my previous works, I’m
not doing it again.
How did this happen? Well, there are a lot of things that
factor into it, but the oil shocks have been a major contributor. You see, when
all this began, oil was a measly $10.00 a barrel. The increase in oil prices
caused an increase in the cost of refinement, and consequently gas. The
increased gas prices caused the price of transportation, and consequently
shipping, to explode. Hence the reason you used to pay .60 cents for a
chocolate bar, but are now paying $1.20 for a smaller bar of chocolate. It’s
not just chocolate that has gone up. Eggs, milk, bread, everything, all because
of the exploding cost of oil. Naturally, this caused the cost of energy
production to climb, impacting electricity and natural gas, and of course
housing. Why do you think that there were so many people who suddenly found
themselves unable to pay their house payment in 2007? Take a look at this
chart. The housing market began to have problems just as gas prices started to
surge again, peaking at the summer of 2008, just as the 2008 election was under
way, and Lehman Bros ended up collapsing. Much blame has been passed around,
over the years, but almost no one else has made this connection, because far
too many economists, Republican and Democrat, are rich and too far removed from
the problems of Main Street to notice.
Oil climbed to as much as $150 and has now fallen to $46 a
barrel. It can, and will fall back to $10.00 a barrel if Wall Street and our
government can resists the urge to act stupidly. The potential is there for all
prices to follow a downward trend. Of course, the panicky folks on Wall Street
will point out that gas prices have not yet led to overall lower prices. Of
course, that has yet to happen because many expect the gas prices to shoot
right back up when either the United States, or OPEC cuts production. And if
they don’t, the Government’s ill advised attempts to regulate and stop
fracking, (a process for collecting Oil that has been going on for the better
part of a century and is nothing new), might force US oil and petroleum
producers to scale back, which will, of course, trigger the oil prices to go
right back up.
Because there is that looming fear of an oil rebound, most
other industries are not yet comfortable adjusting prices. If, however, by
summer prices have not gone back up, you will start to see the various markets
out there begin to correct. Some might refer to this process as deflation, a
term Keynesian Economists use to frighten people, but don’t be afraid. This
process is hard on Wall Street, at first, but is a boon to Main Street, making
it so that we are able to do more with our meager wages. And eventually that
more will translate into increased sales, and as more is sold, Wall Street will
make more money, and they too, will begin to rebound. Then we will have stable
and gradual growth, rather than the booms and busts we keep putting ourselves
with our inflationary policies.
Naturally, as prices stabilize, the cost of construction will
adjust too, nullifying the need for the increased tax in the first place.
However, with the state wanting to add a .10 per gallon increase, and the feds
wanting to add .12 cents per gallon, we are staring down the barrel of a .22
cent per gallon tax increase. Imagine if you had been paying $25.00 to fill up
your 11 gallon gas tank, this will drive that price up to 27.42 a fill up. This
might not seem like much, but until recently, my 11 gallon gas tank was taking
$55.00 to fill. This new tax would drive that price to $57.42. And this is just
an economy car… it’s quickly approaching $100 for a tank of gas. But take my
Dad’s Forerunner, which he estimates takes 20 gallons of gas. In recent months
it’s taken as much as $60.00 to fill it up. This tax would add $4.40 to his
total costs, should oil rebound, making it $64.40 for a tank of gas.
If you’re still not convinced consider this. I have to fill
up twice a week to get to work. My dad has to fill his car once a week. This
new tax would add $9.68 to my total gas charges for the month, making it
$449.68 a month just to get to work. For my father, whose tank is larger, his
costs go up to $257.60, which is less over all, but in larger bursts, since he
has to pay more, less frequently. Per year, this tax increase would bring my
annual gas charges to 5,396.16 per year, and my father’s to 3091.20. Now are
you getting scared? These numbers are, or course, based on the average of what
we had been paying prior to the price drops. But I am using these numbers
because there is government action on the horizon, by way of pending EPA
regulations, that will impact US Oil developers, and consequently the price of
oil. With prices at their current levels my annual costs are expected to be
2400.00 a year, and if the government doesn’t muck this up, and oil falls to
$10.00 a barrel, that will being my gasoline costs to under $2,000.00. You’ll
have to pardon my lack of an exact number, but this car has never seen $10.00 a
barrel oil, so I don’t know how much it would cost to fill it with the prices
that low, but I cannot imagine it would be much.
But consider also the volatility of gas prices at large. Just
this week gas prices at this local 7-11 location (gesture to 7-11) jumped up 12
cents, from 1.77 a gallon, to $1.89 a gallon. The market got spooked, both by
the sudden death of the Saudi King, and by talk of gas tax hikes. Also, this
week, the Daily Sigil posted an article
stating that if we’re not careful, gas prices could reach $5.00 a gallon and
very quickly. (http://dailysignal.com/2015/01/25/5-gallon-gas-way-expert-thinks/?utm_source=facebook&utm_medium=social) Gas taxes increases will only exacerbate
that.
For those of you who know me, you know I am no fan of George
W. Bush, but he did have this adage which I agree. Never balance the budget on
the backs of the poor. And balancing the budget is what is needed. In the
1-26-14 issue of the Deseret News, we learned, in the article, “Lawmakers
looking to pump up gas tax this session,” by Lisa Riley Roche, that the
Republican congress created a budget for construction projects that takes us
clear to 2040. Utah Department of Transportation Executive Director Carlos
Braceras told the paper that, “We do not have a hole, but we see one in front
of us, and we’re trying to fill it before we get to it.” Indeed, an 11.6
billion dollar hole is on the horizon… the distant horizon. The very, very very
distant horizon. The very, very very… (Monty Python clip “Get on with it!.”)
Well anyway…
Did you catch that? In other words, we have, right now,
enough to complete the projects on going, but ten, twenty years out? Eh, not so
much. It would seem to me, reasonable, to insist that we fix the budget then.
Realign priorities, cancel superfluous projects. By his own admission, we have
time. We also have been running the state on a surplus, so we could use that to
offset some of the budget cuts. But instead, House Speaker Greg Hughes
(R-Draper) is insisting that Republicans do the “hard thing” and raise taxes.
The hard thing is to adjust the budget to accommodate the realities of their
overly ambitious construction plans. Raising taxes is a cop out. Raising taxes
is lazy.
There is always be another way of dealing with our budgetary
problems. By their own accounts, there is no immediate need to raise taxes, so
why are they doing it? Maybe to spit in the face of the Conservatives who
elected them? Republicans DO do that. I will never understand why. The
Democrats coddle their base, Republicans are embarrassed by ours. Perhaps they
are trying to appease the very liberal press based out of Salt Lake. Perhaps,
they are trying to appease Salt Lake, a liberal bastion in an otherwise
Conservative State. I don’t know. But what I do know is that more than one of
these guys personally promised me, looked me in the eyes and promised me that
they would not vote for anything that makes it harder for me to put food on my
table. It was that promise which coaxed me out of semi-retirement from
political activism, a very tiring and stressful occupation if you’re anywhere
right of center… It will be interesting to see if that promise is upheld or
violated.
Tragically, there are some among us who don’t know there is
no immediate crisis for our roads, and are calling on me to back off this
issue… you know, cause gas tax is just a user fee. Well, in that case, I want a
new vendor. What? If T-Mobile raises my rates, I get to switch to Verizon. If I
don’t like that the Government’s going to raise my “user fee” then I should be
able to switch out there too. Of course it can’t happen because the party of
Capitalism and Free Markets is suddenly petrified of privatization.
Not only that, but this argument smacks of Elizabeth Warrant
(Good for you clip) and Barack Obama. (You didn’t build that.) I didn’t create
this system, I have to work within it. Were we wise enough to set up a system
where driving was not a necessity to work, to go to market, and were gas not a
necessity to that process, then we could have this discussion. However,
discussing the gas tax as a “user fee” treats gasoline, and roads, as though
they were luxuries. It is as obnoxious of a comment as the aforementioned
quotes by Elizabeth Warren, and Barack Obama, and as unintentionally
insensitive to the poor and downtrodden as Mitt Romney’s 47% remarks… except
referring to the gas tax as a user fee isn’t a matter of questionable context,
where Mitt Romney’s 47% remark is.
There’s a lot to disagree with Bush 43 on. However, his brand
of Compassionate Conservatism did, I think accurately identify the need to
balance the budget without hurting the poor. And so I implore you. Please don’t
hurt me. If you agree with me, help me to spread this message by taking a
picture in front of the local gas station holding this sign. (Conjure: sign
#pleasedon’thurtme.) It is my sincere hope that if we work together, and fast,
we can stop our elected officials from putting the breaks on our personal
recoveries, by hastening the return of high gas prices. And if this ends up
being just me, well then I can say I gave hashtag activism an honest try.
How has lower gas prices helped you out? And do you wonder if
the gas tax hike talk is an effort to undermine Obama’s getting credit for
lower prices? Keep it civil, but post your comments below.
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