Not surprisingly, the spokesperson for the Democrats on this issue has been
President Clinton; Sen. Bob Dole (R-Kan.) initially spearheaded Republican
efforts (Dole resigned his Senate seat in mid-May to focus his efforts on
his presidential campaign). At issue is the 4.3 cents-per-gal motor-fuel
tax that was enacted by Congress in 1993 as part of an omnibus deficit-reduction
measure. This portion of the current 18.3 cent-per-gal fuel tax does not
go into the Highway Trust Fund that subsidizes highway maintenance and construction;
it is instead used to help reduce the federal deficit. (The tax dropped
from 18.4 cents per gal at the beginning of the year when legislation expired
for an additional 0.1 cent per gal that went to fund the cleanup of leaking
underground storage tanks.
With the current price of a gallon of gasoline approximately 20 cents higher
than the December 1995 price-in some parts of the country, premium is selling
for over $2 per gal-each party is making efforts to decrease the cost of
gasoline (or at least keep it from rising) and, it is hoped, increase the
number of votes the party will receive in November.
Dole pulled the Senate's version of the bill off the floor on May 14; Democrats
would not allow a vote on the gas-tax repeal unless Republicans agreed to
a straightforward vote on raising the minimum wage to $5.15/hour. At press
time, neither issue had been resolved.
While the efforts may be well-intentioned despite the debate's political
undertones, there is little to support either side's attempt to bring the
cost of gasoline down. These elevated prices are the result of several factors,
including a bitterly cold winter that increased the demand for heating oil
(which slowed refineries' gasoline production) and a delay by the United
Nations in lifting the embargo on in-expensive crude oil from Iran. Consequently,
there is a reduction in available crude oil and a reduced amount of gasoline
already refined. According to the AASHTO Journal, analysts predict the supply
problem is a temporary one, and prices are expected to at least stabilize
by June.
Because of these factors, the elimination of the gas tax added in 1993 would
do little to modify the actual cost of gasoline. However, both parties favor,
to some degree, a temporary (6 or 7 years) elimination of this 4.3 cents
tax, and each side wants to take credit for the rollback. This is where
the political nature of the issue takes over.
At a May 3 Senate hearing to discuss a possible repeal of the tax, the partisan
posturing was so flagrant that Sen. John Breaux (Dp;La.) felt compelled
to ask the witnesses at the hearing to be patient "while we finish
the opening rounds of our political conventions."
Meanwhile, President Clinton has decided to release oil from the nation's
strategic oil reserves. Sales are scheduled to begin on May 13, and approximately
15 million barrels of crude will ultimately be sold. Despite the administration's
optimism, this action is not expected to have much of an impact on gas prices:
The U.S. consumes the equivalent of 17 million barrels of oil a day.
And while both parties struggle to find a way to get the 4.3 cents gas tax
repealed in a way they can take credit for, most economists feel that, instead
of being too high, the gas tax is too low. According to a report in the
Wall Street Journal, more than half of the economists surveyed at a February
conference felt the gas tax should actually be at least $1 per gal. Other
supporters of increased fuel taxes range from Federal Reserve Board Chairman
Alan Greenspan to political gadfly Ross Perot.
Whatever the outcome of the current struggle on Capitol Hill, the price of gasoline is not expected to decline in the near future. The tax in question does not go to the Highway Trust Fund, so roadway funds are not yet in jeopardy (how to replace funds lost by the potential tax repeal have not been determined; so the trust could be in danger). This issue, which has swallowed so much TV airtime, newsprint and taxpayer dollars really isn't about gasoline, consumer needs or taxes. It's just presidential politics.
