The Gas Rebate

Tuesday, May 02, 2006
In what might be one of the most asinine things I have heard of in the last few weeks, Republicans want to give $100 rebates to people so they can buy gas. Seriously. Who are these Republicans? Republicans are supposed to be about reducing the role of government (not that they really ever do that, but they are supposed to). Now they want to do this "wealth transfer" between oil companies and consumers.

The plan would work by giving as a one-time rebate to each taxpayer of $100. Of course nothing comes for free, the plan would cost an estimated $10 billion. To pay for this, gas companies would be taxed on their oil reserves.

People. Think About It. This idea makes no sense. It makes about as much sense as having a "windfall" tax on oil companies. There is NO way to be sure who pays the burden of a tax. Just because someone writes a check for the tax does not mean he actually bears the burden. Faced with this additional cost of a tax, what do you think the oil companies would do? Do you really thnk they will just sit there and let their profits take a hit? We have seen quite conclusively that consumers are willing to pay whatever is necessary to drive their cars. Is it really hard to imagine that oil companies will pass on the cost of the tax to the consumer? What makes it worse is that it might actually cost the consumers MORE than they get in the rebate when you factor in overhead cost and the like.

Any plan to try and help consumers at the pump is a political show. They only thing that will work is for either oil companies to somehow increase the amount of oil they are finding and producing or for consumers to demand less gasoline. Anything else is just an accounting trick.


Anonymous said...

I couldn't agree with you more. The Congressional plan has several other provisions but I see this one as being tacked on as a PR gimic that they thought would appease the masses - they expected to be "greeted as liberators" and instead people are pissed off at this lame, not-well-thought-out tactic. I find that quite amusing.