Thursday, April 27, 2006

Oily Open Forum

Alan Schlesinger is calling for the federal and state governments to suspend the gas tax for the summer. Well, at least he's thinking big.

He also wants to give oil companies more tax incentives to increase oil refinery capacity in the United States. Now there's an industry that's just crying out for more tax breaks!

In other gas-related news, zone pricing may soon be history in Connecticut.

Gas prices at the Mobil around the corner from me have been hovering at $2.99 for a couple of days, now. How about you?

What else is new today?

2 comments:

ctkeith said...

Lieberman and Collins are now proposing abolishing FEMA.Tis was THE PREMEIR Federal agency before Lieberman Destroyed it by combining it with the joke that is known as the Dept. Of Homeland security.

Joe Liebermans time as the Chair of the Homeland Security Committee is reason enough to Dump him.The Idiot has made everything he's touched Less safe since 9/11 including ISRAEL.

Joe Lieberman is Osama Bin Ladens wet Dream as a Senato.Only W has given Osama bigger belly laughs.

GMR said...

There are a couple of issues at play here.

First, I'm all for tax cuts. Usually every time. I think income taxes should be lower, and in fact, I think most taxes should be lower.

However, I am not an anarchist, and I realize that the government needs to pay for stuff. I think that a lot of the "stuff" is unnecessary, but there is obviously some stuff that is necessary.

I don't have a problem with the concept of gas taxes. Frankly, I think that gas taxes and tolls, plus automobile registration fees and speeding tickets should basically cover the cost of building and maintaining our roads. Don't use this money for other stuff, and don't have regular taxes go into roads. Roads should basically be a separate budget, and gas taxes and tolls should be at whatever level is necessary to bring in the money to maintain and build the infrastructure. So not charging a gas tax doesn't seem all that realistic of a scenario.

Now, drivers near the border of MA or RI or NY can drive to those states if CT taxes are much higher than the neighboring states, so in some cases, raising the gas tax may actually lower revenue as people either drive less or fill up across the border. So CT needs to be mindful of what the neighboring states are charging (we're lower than NY but higher than MA or RI). CT is a small state: we aren't CO or WY, where most of the population has to drive for hours to cross the state line. Like all taxes, raising the rate may or may not actually raise the total amount brought in (raise the price high enough, and virtually everyone will run for the border to fill up over there).

Next, zone pricing. I'm not really in favor of the state meddling in how private companies can price their product. Does every oil company really practice zone pricing so that lower Fairfield county gas stations have to buy at higher prices than the rest of the state? It seems to me that if this were the case, some enterprising oil company would then try to grab more of the market by undercutting the others in Fairfield County. It just seems rather dubious that there's a true market failure here. Why doesn't some smaller oil company, like Getty or Citgo, undercut the big firms in Fairfield county?

Refineries. There hasn't been a refinery built in the US since 1976 or something like that (although existing refineries have been upgraded). This is another kink in the supply chain. There are all sorts of environmental restrictions against new refineries, and of course no one wants a refinery in their backyard. Add the problem that different states require different blends of gasoline, and you've got something of a refinery bottleneck.