Fueling the Pinch: Lawmakers debate gas price solutions
Federal and state officials say they’re doing what they can to ease the pain consumers are feeling from high gasoline prices.
Still unclear, though, is how much of a difference those elected leaders truly can make.
Two of the most talked about proposals, one at the state level and one at the federal level, focus on rolling back some of the taxes imposed on every gallon of fuel.
A contingent of Republicans in the Illinois House recently called a news conference to demand consideration of a stalled proposal to suspend the state sales tax on gasoline. They got nowhere.
The legislation, House Bill 6318, would have granted a “gas tax holiday” through Sept. 15, lifting the state’s 80 percent portion of the 6.25 percent sales tax on gasoline.
Lawmakers and then-Gov. George Ryan took the same action for six months in the second half of 2000, when they were responding to gas prices approaching $2 a gallon.
A supporter of the new proposal, Republican Rep. Bill Mitchell of Forsyth, said it’s needed “to give working families a break.”
Mitchell said saving 20 cents a gallon, as backers of the new gas tax holiday estimate, would be significant to drivers.
State Sen. Dale Risinger, R-Peoria, also supports another gas tax holiday.
“It would be significant to take that sales tax off,” he said. “Would it solve the problem? No. But would it make it better? Yes. I mean, every penny at this point.”
Peoria’s other state senator, Democrat David Koehler, doesn’t support lifting the state portion of the sales tax on gasoline, arguing it would encourage more consumption.
“(Then) we’re right back where we started because I’m a firm believer that if we were to drop the tax on gas and give consumers a break, that would last about two days and the price would be right back” up due to higher demand, he said. “That’s not the solution.”
The no-tax tradeoff
Lifting the state tax would come at a price because governments benefit from that money, said another opponent, state Rep. Lou Lang, D-Skokie.
"What is clear (from the 2000 tax holiday) is it cost the state of Illinois and local municipalities millions and millions of dollars because we took that gas tax off,” he said.
In Washington, D.C., and on the presidential campaign trail, some elected leaders have spoken of temporarily suspending the federal motor fuel tax. That tax amounts to 18.4 cents for a gallon of gasoline, though it’s closer to 13 cents for a gallon of gasoline blended with ethanol.
While the main presidential candidates are divided on the issue, three members of Illinois’ congressional delegation — Democratic Sen. Dick Durbin and U.S. Reps. Ray LaHood and Phil Hare — share similar views.
“If you suspend the tax, who’s to say that they don’t raise the price of gasoline?” said LaHood, R-Peoria. “I think it’s a little bit of a scheme or a gimmick that probably has a nice ring to it but doesn’t do much.”
Suspending the tax would mean losing revenue that goes into a trust fund to help build roads, LaHood noted.
“It would be taking away an enormous amount of money that we’ve used very efficiently,” LaHood said. “It’s one of the most efficient uses of the tax dollar — set aside a certain amount of money so you can continue to have good roads.”
Still, LaHood said, he might be willing to vote for such a tax rollback if it were part of a more comprehensive plan that includes other energy-related provisions. For instance, LaHood favors requiring auto manufacturers to boost mileage standards and permitting oil drilling in the Arctic National Wildlife Refuge in Alaska.
Durbin, who blames the oil industry for skyrocketing gas prices, said lifting the federal tax “isn’t really worth the effort when you consider how little it would save.
“It takes money out of the Highway Trust Fund that we use to repair the highways. So what a bargain,” said Durbin, a Springfield Democrat.
Hare also is skeptical about suspending the federal tax, which he says could save the average person about $25 during a two- or three-month period.
Other options emerge
On another front, the U.S. Congress voted in mid-May to temporarily stop filling the Strategic Petroleum Reserve. The reserve is an emergency stockpile that the U.S. Department of Energy maintains.
President Bush signed the plan into law on May 19.
The reserve is about 97 percent full, which is plenty under current circumstances, Hare said. The suspension will remain in effect for the rest of the year, unless the average price of crude oil drops below $75 a barrel.
Hare estimates the move will lower gas prices by 5 to 24 cents per gallon.
Hare also is among supporters of a U.S. House measure that would impose a “windfall profits tax” on oil companies whenever profit from the sale of crude oil, natural gas or similar products “exceeds a reasonable profit.” A new panel, the Reasonable Profits Board, would decide what constitutes a reasonable profit.
The proposal, dubbed the Gas Price Spike Act of 2008, was introduced in early May and awaits action in the U.S. House.
Also, the Federal Trade Commission announced in May it will conduct an investigation into the record-high fuel prices.
Part of the solution, nearly everyone agrees, will be for consumers to change their usage habits.
“We have to set our sights on solving this long term,” Koehler said. “And long term means that we cannot keep driving the same gas-guzzling vehicles that we’re driving and think that we’re ever going to find an easy way out of this.”
Hare added: “I don’t think there’s any one particular magic bullet here that’s going to cause gas prices to go down.”
Adriana Colindres can be reached at (217) 782-6292 or firstname.lastname@example.org.