I've been thinking about gas prices ever since we ended up using a credit card to buy $5 worth of gas at a station charging $5.21 a gallon for high test. We were perilously low, blink blink blink, but only needed enough to get a few miles closer to home, where the gas is expensive enough, but not $5.21/gallon expensive. Or really, let's round up and call it $5.22/gallon - who do they think they're fooling with their nine tenths of a cent?
But here's the thing. In the grand scheme of things, gas isn't expensive enough; it ought to cost more, because it should be taxed to the hilt. I did a quick and dirty google search to try and suss out the tax situation, that is, what part of the price of gas is tax related. What I came up with is so all-over-the-map and apples to oranges as to be pretty much useless, but here's a sampling, of just New York:
To further complicate matters, two of the above links rank the states by tax burden. But the Tax Foundation puts New York first, and Bankrate says "people in North Carolina pay the highest in state and federal gas taxes, at 57.55 cents per gallon. Georgians pay the lowest, at 25.9 cents per gallon." So, who knows? Gas taxes seem to lack any transparency.
For argument's sake, let's say that the gas tax in New York amounts to 50¢ a gallon. If gas costs $5/gallon, that means the tax is about 10% of the cost, and the fuel portion is about $4.50/gallon. In England, taxes on gas are about 60% of the price at the pump. Extrapolating out from the UK numbers, and assuming a base, untaxed fuel price of $4.50/gallon, gas in the US would be about $10.62/gallon if taxes were 60% of the price.
$10.62/gallon might well make people think twice about what kind/size/weight car to drive, and maybe even about driving at all. Right?
The other thing that's happened in the past year or so, though not everywhere, is that there's been a resurgence of cash vs. credit pricing. Honestly, I don't know how the gas stations get away with it - isn't charging more for credit card usage illegal? I suppose they argue that it's a cash discount - but isn't a cash discount essentially the same thing as a credit card surcharge? And they've got you in a bind - the more expensive the gas is, the more money it takes to fill the tank, and I don't know about you, but I charge everything and hardly use cash except at the farmers market. And at five bucks a gallon, putting 20 gallons in the tank is, yes Virginia, one hundred smackeroos, which I don't like carrying around on a regular basis.
Incidentally, high gas prices aren't the President's fault. They're a result of market factors. And not that it's going anywhere, given the hot rhetoric surrounding taxation, but as Richard Thaler points out "at least two of the candidates have shown that they understand the underlying economics. In the past, both President Obama and Mr. Romney have acknowledged that higher gas prices have an upside: they give car owners the right incentives, and if the high prices stem in part from higher fuel taxes, the deficit can be trimmed."
Right. Higher gas prices would be a good thing on multiple fronts.
I guess I'll buy a folding bicycle instead.