Posted by Jed Lewison on Sat May 3, 2008 at 1:01 PM Pacific

The biggest gas tax holiday assumption of them all

Obama: "It's a Shell
game. Literally."

Forget for a moment that the best-case scenario for the gas tax holiday would only save a typical driver $30, probably even a little less. Forget about whether or not the gas tax holiday would increase demand, causing another spike in prices. Forget about the temporary, short-term nature of the plan. Forget about the fact that it will never pass Congress. And even forget about the questions of how to finance it.

On what basis should we believe that the gas companies would pass along the full $0.18/gallon to consumers?

The assumption behind the holiday appears to be that if the gas-tax were lifted, gas stations would keep their pre-tax prices constant, resulting in an $0.18/gallon drop in prices. But how realistic is that? Certainly, there would be market pressures to pass along some of that savings to consumers, but would they pass along the full amount? And how would we ever know?

The biggest gas tax holiday assumption of them all

Obama: "It's a Shell
game. Literally."

Forget for a moment that the best-case scenario for the gas tax holiday would only save a typical driver $30, probably even a little less. Forget about whether or not the gas tax holiday would increase demand, causing another spike in prices. Forget about the temporary, short-term nature of the plan. Forget about the fact that it will never pass Congress. And even forget about the questions of how to finance it.

On what basis should we believe that the gas companies would pass along the full $0.18/gallon to consumers?

The assumption behind the holiday appears to be that if the gas-tax were lifted, gas stations would keep their pre-tax prices constant, resulting in an $0.18/gallon drop in prices. But how realistic is that? Certainly, there would be market pressures to pass along some of that savings to consumers, but would they pass along the full amount? And how would we ever know?