May 02, 2008

Gas Tax Holiday

I have some thoughts (are your surprised) on the proposed Gas Tax Holiday between Memorial Day and Labor Day this year.

If the tax passes the price of gas at the pump SHOULD drop slightly. However, who is to say the service stations will drop their price? They may want to pocket a little extra for themselves.

What happens after the initial drop of say 25 cents? The price of gas slowly creeps back up over the summer and then after labor day an immediate 25 cent hike!

An example:
The price of gas drops from $3.65 a gallon to $3.40 a gallon for Memorial Day. Over the summer the prices slowly creeps back to $3.60 a gallon and the day after Labor Day: $3.85!

How much would you save?
Let's assume the drop is 25 cents and you use 10 gallons a week over 14 weeks. That is a savings of $35! Big deal. That doesn't help much, it simply makes it look like the Congressmen are trying to do something....something to get themselves re-elected that is!

What can be done?
It all comes down to Supply and Demand. Increase the supply or decrease the demand to lower the price.

No comments: