Former Energy Sec. Says Zero Chance for Gas Tax Hike

Comedian Chris Rock once said, "You don't pay taxes – they take taxes." What if you didn't know the difference from rising market prices and additional taxes, say on gasoline? You'd likely just pay up since despite an increase in more fuel efficient car offerings and a push toward wider electric vehicle adoption, there still aren't many substitutes for gasoline in cars these days. So what happens right now? 

Well, according to Sens. Bob Corker (Tennessee) and Chris Murphy (Connecticut), the answer is to raise the gas tax for the first time since 1993 to support the modernization of the U.S. transportation system. The problem is that idea isn't really going to fly with most Americans -- you know, voters. 

I spoke with former U.S. Energy Secretary Spencer Abraham about his views on the proposed gas tax and he bluntly said, "There is a zero percent chance of a gas tax passing." Abraham, who doesn't believe Congress would pass a gas tax or any other tax anytime soon, believes a gas tax will hit working families and the middle class disproportionately hard so it doesn't make sense politically. In fact, Abraham told me,"the political realities to pass a gas tax in the U.S. is extraordinarily remote in the absence of crisis." He went on to say that in the wake of the 9/11 tragedy and the years that followed, the U.S. didn't raise the gas tax despite a greater reliance on foreign oil.

The problem with raising the federal gas tax is that contrary to the Dow Jones Industrial Average being in record-territory, the U.S. is actually still fighting tooth and nail to come out of the worst recession since the Great Depression. So the timing of any gas hike isn't great and would likely have to be phased in gradually, if at all, in order to ease further pain at the pump. 

I'm more inclined to support a methodical federal gas tax increase only if the U.S. government accompanies it by major tax relief somewhere else. This is an idea supported by Abraham who believes "the only way a gas tax will work would be if was coupled with a dramatic tax cut in other areas facing working-class Americans." 

Now there are some who argue we should abandon the federal gas tax altogether since by doing so it would boost consumer disposable income at a time many Americans need it most. My take is by tossing the gas tax out the window, the government would force individual states to recoup the lost money for road and bridge repair. That's certainly harder than it sounds, but it could also fast-track energy innovation and cleaner transportation under the right guidance.

The problem with this idea is that states may look to offset the federal gas tax with higher sales or property taxes. Ultimately, this idea is really robbing Peter to pay Paul.

At the end of the day, Americans shouldn't have to pay for the government's inability to manage their transportation budget. Additionally, as we've seen with recent past timetables to make decisions on the federal budget deficit, debt ceiling, and Keystone XL, leaving politicians to meet even more deadlines to offset a new rise in the gas tax is as smart as driving a car with no tires at the Daytona 500. That makes me agree with Abraham that raising the gas tax is a move that won't see the light of day anytime soon. 

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John Licata

John Licata is the Founder & Chief Energy Strategist of Blue Phoenix Inc. You can follow John on Twitter @bluephoenixinc

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