WASHINGTON -- A federal gasoline tax increase may still be in play, although Senate Democratic leaders are reluctant to embrace the idea, despite pressure from some members, as they search for ways to rebuild the nation's infrastructure, reported The Hill.
"At this point, the caucus is not ready to sign off on a gas tax or any tax increase," Senate Majority Leader Harry Reid (D-Nev.) told reporters late last week. The issue arose because there is strong Democratic support for passing a multi-year transportation authorization bill, the report said.
Democrats said the transportation authorization bill would create jobs and make the economy more efficient by easing the transport of goods. But the money is not there unless the gasoline tax is raised or another major revenue source is found, they said.
Talk of a higher gasoline tax came up during Senate Democrats' two-day retreat at The Boar's Head Inn in Charlottesville, Va., where they discussed other funding proposals, the Hill said.
Raising the gasoline tax, which has not risen since 1993, would increase revenue. It is currently at 18.4 cents per gallon. When lawmakers voted to raise the tax in 1990 and 1993, it was for deficit reduction.
A Senate Democratic aide said the proposal to raise the gasoline tax, pushed by Senator Tom Carper (D-Del.) in Charlottesville, "did not generate much support. There was much more of a consensus around ending subsidies for the oil-and-gas industry."
Carper and Senator George Voinovich (R-Ohio) urged President Barack Obama's debt commission last November to consider recommending raising the federal gasoline tax to pay for infrastructure projects. (Click here for previous CSP Daily News coverage.)
The White House opposes raising the gasoline tax, said the report.
The debt commission proposed a 15-cent increase in the gasoline tax, prompting some Democratic senators to say they might support it.
Sen. Mark Udall (D-Colo.) noted the fiscal commission recommended that Congress "bite the bullet" and raise the tax, even though it would be unpopular at first glance. He said he thinks the public could be convinced. "You'll know it's a user fee, it goes into our highways and our transit system. That makes sense. That's the kind of thing that the public, if you show them the return on their tax dollars, they'll be supportive. "In the context of the deficit commission approach, where it's all interlocking, I could support it," said Udall.
Senator Mark Pryor (D-Ark.) said he could support a gasoline tax increase, "but it all depends on the details. Gas prices are going up again and people are very sensitive to the price at the pump right now. But I will say this, the gas tax is your classic user fee. Unless you use the highways, you don't pay the gas tax. And also, the good news is cars are becoming much more energy efficient--cars and trucks are becoming more efficient, so people are using fewer gallons per person per year. They may not be paying more in gas taxes per year because they're more fuel efficient today than they were in the past."
Senator Tom Coburn (R-Okla.), one of the most conservative members of the Senate, would not rule out supporting a gasoline tax increase as part of a broad deficit-reduction plan. His support could give Democrats important political cover, the Hill said.
Coburn is working with Democrats such as Senate Budget Committee Chairman Kent Conrad (D-N.D.) on a legislative package to implement the commission's recommendations. "It's too soon to speculate about bill language. Everything is on the table. No sacred cow will receive amnesty," John Hart, Coburn's spokesperson, told the paper.
Conrad said the gasoline tax is "not popular," and might be an unfair way of raising revenue. "With the advent of electric cars, with the advent of hybrids and competing fuels, a gas tax is increasingly separated from being a fair system for raising money for roads, bridges and the rest," he said.
High fuel prices are putting the squeeze on drivers' wallets just as they are starting to feel better about the economy, said an Associated Press report. They are also forcing tough choices on small-business owners who are loathe to charge more for fear of losing cost-conscious customers.
Gasoline prices rose 4% last week to a national average of $3.29 per gallon. That's the highest level ever for this time of year, when prices are typically low. And with unrest in the Middle East and North Africa lifting the price of oil to the $100-a-barrel range, analysts say pump prices are likely headed higher.
Analysts and economists worry that by lowering profits for businesses and reducing disposable income for drivers, high gasoline prices could slow the recovering economy.
Over a year, analysts estimate, oil at $100 a barrel would reduce U.S. economic growth by 0.2 or 0.3 of a percentage point. Rather than grow an estimated 3.7% this year, the economy would expand 3.4% or 3.5%. That would likely mean less hiring and higher unemployment.
Americans are less prepared to absorb the spike in gasoline prices than they were the last time prices rose this high, in 2008, because unemployment is higher and real estate values are lower, David Portalatin, an analyst for the market research firm NPD Group, told the news agency.
It has been four months since gasoline rose beyond $3 per gallon. During that time, drivers have spent $14 billion more on gasoline than they did a year ago, Portalatin said.
Diane Swonk, chief economist at Mesirow Financial in Chicago, told AP that this year's cut in payroll taxes offers consumers a buffer against higher fuel prices. Still, she expects all but the wealthiest Americans to cut back on discretionary spending. And the longer prices stay high, the more damage they do.For every 25-cent increase in the price of gasoline, the nation spends an extra $3 billion filling up its cars and trucks, Tom Kloza, chief oil analyst at the Oil Price Information Service, Wall, N.J., told AP.
For Jay Ricker, who owns 51 convenience stores in Indiana that sell gasoline under BP and Marathon brands, that is less money for the "affordable luxuries" he offers--cappuccinos and candy bars that people enjoy, but can do without. "I hate these high prices," Ricker, CEO of Ricker Oil, Anderson, Ind., told the news agency. "People don't want to come in and buy something I make money off."
Drivers often get angry when gasoline prices spike for reasons that are not apparent, such as refinery problems or overseas demand for oil. This time, though, the dramatic news reports from the Middle East are making customers more understanding, said Scott Hartman, CEO of Rutter's Farm Stores. York, Pa.-based Rutter's owns 56 c-stores and gas stations in Pennsylvania.
"Whenever you see chaos in the Middle East, people expect higher prices, and this has been more widespread than most of us have seen in our lifetimes," he told AP. "It's quite clear our customers know what's going on."Click herefor a gasoline tax map from the American Petroleum Institute (API).