Senate Leaders Consider New Gas Tax

Gas Pump

Sen. Lindsey Graham, R-S.C., John Kerry, D-Mass., and Joseph Lieberman, I-Conn., are planning to release a plan for a climate and energy bill by Earth Day on April 22. In a rare occurrence, these leaders are considering a new tax on gasoline to help win Republican and oil industry support for proposed legislation. In fact, the tax—probably about 15 cents a gallon—was conceived with input from a number of oil companies.

The long-term potential for hybrid and electric cars to become mainstream consumer options depends, to a large degree, on gas prices. Despite professing a desire to end America’s dependence on oil, the country’s political leadership—Republican and Democrat—have historically steered away from higher gas taxes. Instead, the US government has preferred mandates and incentives—much less direct and less effective methods of shifting US drivers to more efficient vehicles, including hybrids and electric cars.

Democrats face a tough battle to pass any kind of energy or climate legislation, and will need to appease Republicans and industry to make it happen. The bill from Kerry, Graham and Lieberman includes expansion of offshore oil drilling and major new incentives for nuclear power plant construction.

Passing the Cost to the Pumps

Even a number of oil companies are on board, apparently because the new proposal would conceivably cost the industry less than other proposals on the table. The American Petroleum Institute’s president Jack Gerrard told Greenwire that a gas tax would give a “the most transparent signal” about the costs of a climate program. “Unlike the House bill’s cap-and-trade system, oil companies would pass through the costs with signs at the gas pump letting people know they’re paying more because of US efforts to deal with climate change.” Others speculate that it’s a set up—because a direct tax will make it easier for the oil companies to fight than a cap-and-trade system.

So far, Graham is the only Republican publicly supporting the gas tax idea. But in a twist, it might be Democrats in the long-term that kill a higher gas tax—even one as mild as 15 cents a gallon. Democrats don’t want to get blasted for the higher prices at the pumps this summer or to face anti-tax outrage from “tea party” activists.

New electric-drive vehicles, like the Chevy Volt and Nissan Leaf hitting the market in late 2010, are expected to be very popular among early adopters of new technologies. But the ultimate size of the market for hybrids and electric cars—after the first wave of early adopters and after consumer incentives have subsided—will greatly depend on the price of a gallon of gas in the United States, which remains low by world standards.

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  • Yegor

    All cars should electric or hybrids because they use less gas:
    1) it reduces air pollution – improves peoples health;
    2) possibly slows climate change;
    3) improves any country independence by reducing dependence on oil;
    4) it reduces support for the terrorism.

  • Mothrock

    And it is cheap! If you are getting 50 mpg+ or running electric, a 15 cent increase is not going to break the bank for you.

  • jim l

    yeah lets pump up the price more. that will help the economy LOL

  • Eric

    If the oil companies are for it, there has to be something up their sleeve.

  • FamilyGuy

    I still see smokers smoking, even though those cancer sticks are wicked taxed.

    My buddy has a “car” that gets 12 MPG and he’s proud of it. I don’t see the $0.15/gallon stopping him from that driving that beastie.

  • Bruce

    We need to be talking dollars (of tax) not cents. European gas cost $8 to 10$ per gallon. They pay the same for oil. The difference is tax. And politicians know how to protect those that “can’t afford it.”

  • Joe

    CLIMATE CHANGE is CLIMATE HOX. I want to get off FOREIGN OIL to make the United States, independent of other countries. But a gas tax now is not a good idea, with the economy still in limbo.

  • TD

    How can anyone not believe that climate change is happening? You may disagree with how much man affects climate change, but to deny it is occurring is to ignore melting glaciers and melting ice caps. All one, who cares to look, needs to do is look at circa 1900 pictures of the Alps, Glacier National Park or Kilamanjaro and compare them to current photos. The glaciers in the current photos are all substantially smaller. There is no doubt the ice is melting. Maybe we’re not the cause, but you know what I damn well hope we are because otherwise there is nothing we can do about it and we are screwed.

  • Samie

    Unless you use the tax as a way to make up for military costs and health care costs, I see no point in this. A mild tax vs. a cap and trade, yes the industry will laugh and take the 15 cents.

    If you take a market stance on this you will end all subsidizes that distort the real market price of gasoline. This means taxpayer waste of reduced tax rates and subsidies for oil companies will end. Next if hedging and greed catch up to industry (again) at least those dumb enough to blame the government for everything cannot complain about high gasoline prices. The market and it’s investors will determine the price often without disclosing the true supply or amount of significant discovery. Also, gas tax can be the best way to curve consumer behavior BUT at the same time create irrational “green washing” by industries and more outcry to reduce federal gasoline taxes to save consumers pennies at the pump (though it adds up & no one wants unpaved roads or pot holes in their community)

    The government should continue to push electric powered vehicles as a true alternative to pumping your consumer car with “fuel”. Distribution for most traditional industries needs to stay the same without little change to market controls, this where green washing like E85 comes in.

    Instead, those laughing at the 15 cents will get their way with more ethanol and biofuels along with offshore drilling that will supply American’s with years not decades of small percentages of petroleum. Also expect natural gas to sneak into this legislation also… Oh by the way oil that is produced domestically can and often does ends up on the world market which can translate to oil produced domestically never being used by Americans.

    If the media plays possum, again and does not ask real questions, I’m sure this used car type of legislation will get through Congress including a nice green photo op for our politicians.

  • DC

    American Tax Policy when it comes to fossil-fuels is an absolute joke. You heavily subsidize fossil-fuels on both ends, production and consumption, yet complain endlessly when the cost goes up even a modest amount. Americans pay nothing close to world-standards, nor do US pump prices even come close to reflecting the externalized costs of FF dependency. Your oil companies “support” this because it is easier for them to shift the blame on the evil goverment ,plus its a lot easier to fight than than a lot of the alternatives that are being proposed. They possible suppose a tax is easier to roll back at some future point too. Cap-and-trade is a ineffectual scam, but it would add costs on both ends so natuarally, they prefer this feeble tax hike more. Your gov’t should be looking at a dollar a gallon increase…too start. Its very simple, to encourage positive behavior-heavily tax dangerous toxic susbstances like FF’s , insteading of encourageing them with massive public subsides, along with strong-non negotiable mandates dont hurt either.

  • davg

    i’m all for hybrids, and electrics, and etc. autos…
    i dont agree with lots of little taxes on gas though, lots of small business owners would be really hurt by higher prices on gas for there trucks, its part of there livelyhood, and hybrids/electrics are not a good option for most truck drives (the real ones, not the “bro’s”)

    slowly tax gas after the 2015, 35mpg average cafe date

  • Charles

    I have suggest this before, we need to increase the fuel tax at a slow rate so that people know what is coming. Something like $0.02 per month for at least four years and maybe as long as ten. To keep from putting some businesses out of business, about 75% of the added tax should be treated as an income tax credit. This means a little bit of extra book keeping for businesses, but very little added cost. The idea is to make people want to save fuel. Almost everybody thinks that it would be good for America if we did save fuel. Lots of reasons why, such as global warming, reducing funding of terrorists, and lowering the trade deficit.

  • jmb

    Hey Yegor ! There currently isnt enough material to make batteries only to make your plan work !

  • Chukcha_1

    15c a gallon eh? Let’s see…

    10c stays in the pockets of government bureaucrats.
    3c will actually end up in the pockets of oil companies.
    2c will go towards renovations of Bob Lutz and other CEO’s mansions.

    Way to go America! You’re getting better at allowing you senators to milk the middle class for even more billions. I think this tax should be taken only from the supposed “servants of the people” i.e. the government employees and senators them self.

  • Anonymous

    Hey Bruce, you must be doing alright.

  • RPC57

    Oh Yeah…And how well is that working out??? Socialism galore. This is just another ploy to gain more control over everyone’s independence. If the oil cos. and auto industry had not taken the easy way out since the ’70’s, we wouldn’t be in this mess to begin with! I have seen it 1st hand. So now they’re buying Congress AGAIN, to make the average Joe pay for their mistakes and/or their new research, which we’ll PAY FOR AGAIN down the road, by having to buy the products of which they’ll have exclusive patents or monopolies, charging whatever price they want!
    Prices at the pump have increased at least 65% in a year’s time and are still increasing, all the while demand has gone down. So go figure….ever took economics???

  • Had-Enough

    The government is now out of control. Now is not the time for any tax increases. Let’s vote these bums out.

  • MJ777

    .15$? That is crazy.. It should be more like a $1 increase. Turn around and give the money back in tax breaks for the poor people that complain about it. But the bottom line a $1 tax on gas would reduce our dependence on forigen oil. The price of gas IS going to go up around 4$ a gallon here soon(especially once the Economy picks up)… The question is, is big oil going to pocket that extra $1, or is the American govement going to pocket it?

  • Samie

    Who are these people???

    Taxes go to building roads and yes fixing potholes you don’t get these things for free. Another example you scream for lower property taxes yet you are shocked when school districts layoff teachers, as this comes from poor budget planning and reducing revenue streams…

    Too much of this no new taxes now, or no cap and trade, no carbon tax, or no environmental legislation is garbage. You end-up paying for these things in the long-run if you take a status quo approach to everything. We as a nation are not even close to the top industrialized taxed nations and about 50% of Americans don’t pay any federal income taxes….I’m not even sure why people refuse to show more personal responsibility for their choices either. When in doubt drink a beer, burn some tires, and blame the government….

  • Shines

    I’d say this is a Republican / oil company tactic timed to get Democrats out of office. I don’t think the Dems are stupid enough to raise taxes months before an election. If they do they WILL get voted out…
    Maybe after November LOL 😉

  • Charles


    I would vote for an honest politician who told me that he/she was going to raise my taxes. We cannot cut spending enough or get rid of enough inefficiencies and fraud to make a dent in the national debt. It is going to take tax increases across the board. All short term income (stocks and bonds sales held for two years or less, stock dividends and interest) should be treated as earned income. We also need to raise the top tax bracket to at least 66%.

    By the way in 2008 we did vote the bums out.

  • pindego

    So we are to tax the consumer for climate change? What corporate taxes are levied on the largest polluters? This is complete garbage, I applaud the fact that our inept congress has decided to finally address something we have all known for several years/decades pollution = bad. Again our esteemed congressmen and women have completely gotten it wrong.

    In 2008 we did vote bums out and elected crooks an criminals.

  • veek

    Theoretically, a gas tax is a great idea.
    Higher fuel costs are among the few variables to show a consistently positive correlation with lower fuel consumption and greater attention to efficiency. This can be seen throughout the world, not just in the USA.

    In practice, a gas tax is a mixed idea.
    Americans seem to have a profound skepticism of the competence and intentions of federally-elected officials, and looking over the last 20 years, this seems well justified. I would definitely support a “fenced” tax, which would be used only for specific purposes (such as infrastructure maintenance, alternative energy research, education, or debt reduction) but would regretfully not support a tax where the proceeds are just diverted into “general revenue.” which means greater power for politicians who have a proven track record of abusing it.

  • 0293x0d

    Sure, we’re all supposed to drive those teeeny weeeny electric/hybid cars. I live on a farm. I haul bags of feed and huge round bales of hay….how am I gonna cram one of those in a Prius? People need to realize — one size does NOT fit all in this country, just like a gas tax will NOT affect everyone equally. Not everyone lives in an urban setting where they can take mass transit or walk places. I’m 32 mi RT from the closest town/post office on dirt roads. Gas taxes will hit me alot harder with the pickup trucks and the ATV (cattle herding) than it will others.

    Why don’t they focus on JOBS?? Oh wait — it’s easier to focus on everything BUT jobs for this administration.

  • MidevilWarmPeriod

    Sorry But AGW is a hoax!!!!!! Climate Gate is what caused Copenhagen summit to fail. You say if you want proof look at Alpes photos blah blah blah. Phil Jones head professor at East Anglia university the head of the IPCC “Intergovernmental panel on climate change” had to admit the earth has been cooling for 15years. IN fact In the investigation of climate gate “leaked emails between climate change experts” has proven a effort to con the world… Don’t believe me Google CLIMATE GATE. Just because climate change exists dose not mean we cause it and also dose not mean were dead. FACT in the mid evil warm period temps spiked a few degrees higher on average then they returned to normal. Fact There was also a mini ice age in the mid-evil period. So Please calm down on killing economics and trying to play god without at least questioning.

  • Samie

    Anytime I read comments like 0293x0d or
    MidevilWarmPeriod I wonder how one-sided people can get, that is applying simple ideas to complex problems.

    Farmers are not dumb, if you look you see off market Isuzu, Rangers, and/or Nissan 4 cyl. stick-shift trucks in their operations. Most reasonable farmers make decisions between V-6, V-8, 4×4, and diesel equipment. You act like every farmer needs a quad-cap V8 to be a farmer, when in fact farmers can be some of the most fuel conscious people out there. So no you don’t see many Prius vehicles but you will notice in many cases fuel saving equipment is required in most of these small business operations.

    I don’t live in a basement and if you do believe in in-the-moment- theories ok so what? There are negative externalities and hidden costs in our energy consumption along with inelastic fueling schemes which most so called fake conservatives have championed. In this oligopoly approach new markets are discouraged (flooding interests w/ the same biofuel, E85, flex-fuel, and ethanol schemes to confuse people about energy independence) instead of opening up independent ways of distribution and diversifying our energy needs. This of course takes long-term commitments and not fly-by-night more of the same fueling schemes.

    Without long-term smart growth in the economy by fixing our regulatory system, and investment into human capital, new jobs will be sporadic but yet we risk going back into a recession if we think long-term and fix much of the short-term economic modeling done in the last twenty years. Business as usual will not cut it and we will as with the deficit be paying for old complacent ideas/ideologies sooner or later.

  • Joe

    Global Warming was debunked by the very Scientist, all the nut jobs like AL Gore were quoting incorrectly. But the scientist says there is not enough information to prove or disprove and more study has to be done and Cap & Trade etc, should not be done on insufficient data. To waste money. Global Hoax

  • Mike R

    We don’t need any GAS TAXES!! People who are only making $68.00 a week off Unemployment don’t appreciate Higher Gas Taxes, when they don’t have Jobs to AFFORD IT!!


    We gave them NAFTA, and they took JOBS and SHIPPED THEM OVERSEAS, and CLOSED DOWN FACTORIES in America.

    So why then should the American Public become Responsible for Paying Higher Gas TAXES when many of them are UNEMPLOYED, or UNDER EMPLOYED??

  • Dan Nortel

    “Even a number of oil companies are on board, apparently because the new proposal would conceivably cost the industry less than other proposals on the table.”

    Well, let’s see if they tax consumers it won’t cost them a penny, right?

    I guess speculating and gouging isn’t enough anymore. We need to be charged even more for wanting to be able to drive back and forth to work.

    Boo, hiss, us!

  • tapra1

    pass through the costs with signs at the gas pump letting people know they’re paying more because of US efforts to deal with climate change.”LLA Tech