Mr. Adams, for himself, Mr. Garwood, and Mr. Dollins, submits;

A BILL

Where as the office of the Secretary of Energy and the Department of Commerce and the American Automobile Association state that the price of an average gallon of gasoline in this nation tops $ 1.90 as of 6/30/04

Noting that the amount of Federal Tax per gallon is $ .184 as of 10/1/1997,

Nothing that this disproportional hurts the poor and people who depend on private transportation,

This bill will allow for the temporary reduction of the Federal Gasoline Tax over the next five years.

1] That, immediately upon enactment of this legislation, the US Federal Gasoline tax will be changed on all gasoline products (including diesel, gasohol, and ethanol) as follows:
$0.124 as of 1/1/2005;
$0.094 as of 7/1/2005;
$0.074 as of 1/1/2006;
$0.064 as of 7/1/2006;
$0.054 as of 1/1/2007; and
$0.044 as of 7/1/2007.

2] That, prior to January 1, 2008, Congress shall reconsider whether to make the current rate permanent, to procede on the following adjustments to the gas tax rate, or to make other changes deemed necessary:
$0.074 as of 1/1/2008;
$0.104 as of 7/1/2008;
$0.144 as of 1/1/2009; and
$0.184 as of 7/1/2009.

3] That, prior to each adjustment, the Treasury Department should report back to the Congress on the impact the tax has had on the gasoline price, the current and project change in revenue from the tax, and other matters related thereto. The Congress must use this data in making the decision set out in Section 2 of this Act.

4] This law shall be in effect for a period of 5 years from the date of passage.

Madame Chair,
I oppose this bill for at least 2 broad reasons:

First:
Lowering the gas tax by any amount would alter the equation of supply and demand in a way that is contrary to conservation and any quest for energy independence. It would remove any economic incentive that our national fleet may have towards conservation. Rather the bill would increase consumption. Such an action is philosophically opposed to the many bills we have in process aimed at energy independence, and disrupts any kind of systematic approach toward that goal.

Second:
Lowering the gasoline tax is based on the unwarranted perception of "relief" for American consumers. The US average price for gasoline is already lower than 101 other countries on this planet, there is no crisis in gasoline prices here when we look at that. Our energy predicament derives from 3 decades of poor market choices in vehicles.

As a nation we are but 4.6% of the world's population and yet we consume nearly 40% of the refined gasoline on the planet. We consume 25% of the world's crude oil reserves. This is truly poor stewardship.

Our national fleet of vehicles is the least efficient on the planet. To cite examples of which I have specific knowledge, our national fleet is a full 40% less efficient than vehicles manufactured under EU mpg rules. Our numbers compare equaly poorly with Japan, and most recently with China as well, to name only a few industrial nations.

This bill is simply bad policy on top of the bad market choices we have made as a nation.

Summary:
The bill is contrary to stated policy objectives toward enery independence by altering the supply-demand equation towrads increased consumption. The bill is based upon the incorrect premise of a price crisis. Any step in this direction is self defeating of subsequent bills aimed at energy independence, and corrupts any consistent policy toward that goal.

I yield

This post has been edited by tompea on Nov 27 2004, 01:00 AM

Madame Chair, I do ask to properly propose my amendment. I would like to offer an amendment to the legislation as follows:

The legislation shall be amended to read as follows

1] That, immediately upon enactment of this legislation, the US Federal Gasoline tax will be changed on all gasoline products (including diesel, gasohol, and ethanol) as follows:
$0.090 as of 1/1/2005;
$0.070 as of 7/1/2005;
$0.050 as of 1/1/2006;
$0.030 as of 7/1/2006;
$0.010 as of 1/1/2007; and
$0.000 as of 7/1/2007.

2] That, prior to January 1, 2008, Congress shall reconsider whether to make the current rate permanent, to procede on the following adjustments to the gas tax rate, or to make other changes deemed necessary:
$0.010 as of 1/1/2008;
$0.020 as of 7/1/2008;
$0.030 as of 1/1/2009; and
$0.050 as of 7/1/2009.

3] That, prior to each adjustment, the Treasury Department should report back to the Congress on the impact the tax has had on the gasoline price, the current and project change in revenue from the tax, and other matters related thereto. The Congress must use this data in making the decision set out in Section 2 of this Act.

Madame Chair,
I object to the amendment.

I object for all of the reasons noted in my previous comments on this bill, and an inflation adjusted analysis below. In brief summary those prior comments were:

1) The bill would alter the law of supply and demand in a way that would inhibit motivations to conserve, and actually promote consumption, thus damaging efforts at energy independence.

2) Secondly, the bill is premised on the incorrect notion that gasoline prices are in some kind of consumer crisis. In addition to my comments above as to why this premise is invalid I offer the following analysis from Dr Irwin Kellner of Hofstra Univ.

The inflation adjusted price/gal for motor fuels, as recently as June 2004 is nearly at an all time low. Gasoline today is 39% cheaper/gal than in 1918 when records were first kept, and is 34% cheaper today than in 1981 its most recent inflation adjusted peak.

The inflation adjusted price in 1918 was around $2.97/gal. The next highest year was 1981, when the inflation adjusted value of gas was around $2.77/gal. This is a far cry from the analysis presented in this bill.

Additionally, it needs to be noted that:
Gasoline can be seen as a part of a vehicle�s operating expense, which includes items such as tires, oil and general maintenance. In 2004, these "opertaing expenses" represented only 23 percent of the cost of owning and operating a typical car or light truck.

This is down from 42 percent of vehicle ownership costs in 1960. The biggest costs associated with owning a motor vehicle are those that are fixed. These include depreciation, financing, insurance, license and registration fees, and their proportion of the cost of vehicle ownership, and it is here that the cost of driving has risen, NOT at the gasoline pump.

Summary:
The bill is premised upon a false basis of aprice crisis.
The bill would damage American motivations to conserve, and thus impact our energy independence.

Passing this bill would put us in the position of working for energy independence and then blocking that very goal.

I yield

This post has been edited by tompea on Nov 27 2004, 09:26 PM

Madame Chair,

I agree with my friend from CT. I also would like to add that although I support relief for our consumers in these days of the rising cost of gasoline (I supported the Rural Gas Tax Relief for example) we have to remember that we have a huge deficit and the less we take in the further we will go into debt.

I yield.

Ms. Chair:

I oppose for the reason that the higher the taxes, the lower the demand.

I yield.

Madame Chair,

The gentleman from Connecticut brings up a interesting point. We have for years had some of the lowest gas prices in the world.

These low prices seem to have created the illiusion that gasoline is always going to be around. This idea of an unending supply of of gas may also have contributed to the manufacturing of larger vehicles whose mpg is awful. If people had to pay 5 dollars per gallon, maybe then they would think twice about buying some car that gets 3 miles to the gallon.

I yield