Gas Tax Holiday: Good Politics, Bad Finance

An 18-cent decrease in the price of gas is minimal. With retail gas prices and petroleum prices reaching all-time highs, a small decrease in the price rates to have little effect on demand, and supply appears sufficient based on inventories. Summer drives might actually enjoy some benefit.

This argument was made further in an article appearing at Salon.com by George Frost. The author notes Obama supported a similar proposal to cut state gas taxes while in the state Senate in Illinois. Obama now says he regrets voting for the measure. But the only study of the gas tax cut showed that consumers benefitted some at the pump.

In the end, the gas tax cut would have little fiscal consequence and could help some struggling consumers at the pump. It's an innocuous idea that the media has mistakenly analyzed and overblown.