Wednesday, April 26, 2006 :::
The Governor is backing away from any budget deal that includes a gas tax hike:
With the General Assembly deadlocked on the budget because of a battle over a transportation-financing package, Kaine said "the right way to solve it is without a gas tax" boost. The state's levy currently is 17.5 cents a gallon.
This does call into question a portion of the Senate budget proposal that would raise the wholesale gas tax ("socking it to the Saudis," in the words of some). It's amazing what the real world can do to even the best laid plans.
There was also this bit, which was more troubling:
Despite his tough talk in a time of $3 a gallon or more, Kaine suggested to a caller he wasn't blaming station operators.
Most studies, he said, show the rocketing increases "are not profits to gas station operators." Instead, "it's oil company profits," and operators still are operating at tiny margins of profit, he said.
There's little question that individual station operators work on thin margins, just as there is no question that large oil companies have reaped enormous profits from the run-up in oil and gas prices.
But there is also no question that it is very easy in such times to bash the oil companies for reaping the benefits of high demand. Too easy. If there is a sudden rush on milk, and prices rise 30 or 40 percent, do we see politicians of either party rushing to the nearest microphone to bash the unconscionable profits of milk producers? No. If anything, we see them work even harder to maintain price supports for domestic producers.
And if anything, it's here that politicians should be questioning oil companies (and by extension, themselves). The President called for the suspension of tax credits for deep sea oil exploration just yesterday. That's good -- there is no reason to further pollute the tax code for the benefit of corporations that are both flush with cash and have a powerful market incentive to conduct such operations on their own dime. But again, a provision like this would not exist unless Congress had allowed it into the (increasingly counterproductive) energy bill passed last year. And of course, big oil's lobbyists are to blame for this as well.
The most ironic thing to come out of all of this is that consumer confidence is at its highest point in four years.
Prices for gas may be rising. And politicians are scrambling to cover their fannies. But the drag on confidence just isn't there. Yet.
::: posted by Norman Leahy at 4/26/2006