The average price of regular unleaded gasoline was $3.96 this week, an increase of 38 percent over the same time last year. US Senator Rand Paul (R-Kentucky) on Tuesday proposed to temporarily reduce that cost by 18.4 cent cents by suspending the federal gas tax. Under the freshman lawmaker’s plan, the highway trust fund would be replenished by reducing payments made to foreign governments.
“Let’s have a gas tax holiday,” Paul said in a floor speech. “Let’s take the money from foreign aid and let’s give it back to the American people who worked hard to earn it…. That would help people, that would lower the price of gasoline and that would be a stimulus to the economy.”
A four-month suspension would cost about $10 billion, about as much as the US spends on monetary assistance overseas. Paul blasted Senate Democrats for attempting to impose financial penalties on the five largest petroleum firms, which earned record profits last year, as a means of reducing the price at the pump.
“Their solution is to raise taxes on oil companies,” Paul said. “Do you know what taxes are? Taxes are simply a cost. If you run a business and I raise your costs, you’ll raise your prices. So let’s see, prices are too high, so we’re going to raise the costs which will raise the prices further. It makes absolutely no sense.”
Last year, ExxonMobil’s net income of $30.5 billion was just 8.2 percent of its $370 billion in sales, including all of the firms business ventures beyond oil. Many other industries enjoy much higher profit margins, such as beverage companies, computer equipment suppliers, pharmaceutical companies and the manufacturing sector.
Senator Tom Coburn (R-Oklahoma) argued that members of Congress shared the bulk of the blame for the high price of gasoline by running deficits of $1.5 trillion a year. He suggested fiscal restraint as a cost reduction measure.
“Do my colleagues know why oil is expensive today?” Coburn said. “It is because the dollar is on its back and oil is priced in dollars. If we want the price of oil to go down, as it has this week and the tail end of last week, we want the value of the dollar to go up, because the world trades oil in dollars. Why is the dollar down? The dollar is down because an incompetent Congress continues to spend money we don’t have on things we don’t absolutely need. If we want the dollar to improve in value, what we have to do is hold the Congress accountable for doing what they were elected to do, which is live within our means.”