Low gas price, good economics

Most people who read this column drive, so here’s an early Christmas present: Log onto seattlegasprices.com and you’ll find the lowest price of gasoline in your community. Just click on the name of your hometown. Right now, it’s selling for $1.59 in Auburn, $1.60 in Covington, $1.62 in Kent, $1.77 in Bellevue, $1.89 in Redmond and $1.64 in Renton. Five months ago it was more than $4 a gallon. Nice trend.

Most people who read this column drive, so here’s an early Christmas present: Log onto seattlegasprices.com and you’ll find the lowest price of gasoline in your community. Just click on the name of your hometown. Right now, it’s selling for $1.59 in Auburn, $1.60 in Covington, $1.62 in Kent, $1.77 in Bellevue, $1.89 in Redmond and $1.64 in Renton. Five months ago it was more than $4 a gallon. Nice trend.

But how long will it stay that way?

It’s not that oil prices are expected to spike sometime soon (there are surely people predicting this, but they are the same experts who told us last summer that we would never see gasoline for less than $3 a gallon again in our lifetime). The problem is government, specifically the agencies within it and their political allies who are at war with the notion of cheap gasoline. The Seattle P-I, for example, suggests raising the gas tax until it costs about $2 a gallon. That would mean an immediate gas tax increase of 25 to 40 cents per gallon. They aren’t alone. The Washington Post would like to see the federal gasoline tax of 18 cents triple.

The reasons for this are many. They point out that inexpensive gasoline encourages more driving, more driving means more traffic congestion, a deeper carbon footprint and more imported oil from regimes, including those which hate us. It means less financial incentive to pay more for a hybrid or invest in electric car technology. It means less willingness to embrace alternatives to carbon based energy, such as wind power, solar, nuclear, etc, etc. It means fewer people on mass transit when more and more money is being invested in it.

In short, there are all sorts of reasons being given for artificially keeping the price of gasoline high, as they do in Europe and China. To all of them I have a simple question:

How do higher gas prices help the economy?

Let’s bring it a little closer to home. Say you drive 1,000 miles a month (about 33 miles a day) and your vehicle gets 16 miles per gallon. That’s 62.5 gallons of gasoline a month. At $1.75 a gallon, you’re spending about $109 for gas. Last December, when the price was $3 a gallon, you were paying $187.

Why would you and your family be better off with $78 less each month? Or $50? Or $25?

And why are companies that are laying off workers and cutting back hours for existing employees better off spending more on their revenue on transportation costs? Higher fuel means it costs more to ship goods and receive them. How does that help create jobs? Barack Obama wants to cut working people’s taxes. Why? To pay higher state and local gas taxes?

We keep being told over and over again that priority No. 1 is getting the economy back on track. How does artificially inflating the price of gasoline do that?

So here’s my modest suggestion. As long as the economy’s in a recession that appears to be getting worse, why don’t we focus on keeping people’s taxes low so they can pay their bills and the private sector can find it marginally more affordable to hire more employees, or at least keep the ones they have?


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Don C. Brunell is a business analyst, writer and columnist. He retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and lives in Vancouver. He can be contacted at thebrunells@msn.com.
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