Indiana Gas Tax Suspension?

No. Absoultely not. Sound funny coming from a Libertarian? Read on.

Gas taxes are a user fee. If you are using gasoline, you are most likely using the roads. Sure, some of this gasoline is used for lawn mowers and other non-road uses, but that just goes to show you how one-size-fits-all solutions invariably are imperfect.

Here's the main thing about gasoline: The commodity belongs to the people who produce it, until it is sold to the people who agree to buy it at a particular price. Frankly, I don’t believe the producers of gasoline have nearly as much to explain for the variable nature of day-to-day prices as consumers do for their ability to wail and moan without doing a single thing to alter their consumption.

In economics, the phenomenon is called “price elasticity”. In the case of gasoline, the price is highly elastic: it is being shown that consumers are willing to buy the product without regard to price.

It was eye-opening for me to sit in an economics class seven years ago and watch the professor give an impromptu demonstration of price elasticity. The class was mainly comprised of working professionals pursuing an MBA. At the time, gas was about $1.40/gal. He had everyone stand up. He said, “gasoline is now $2/gallon. Sit down if you stop buying”. Nobody sat down. “$3/gallon”. A small handful of people sat down. He increased at $1 increments, and at $6/gallon, almost half the room was still standing. I was also still standing.

In that light, it is entirely possible that gasoline is actually underpriced, and has been for years. The market is bearing these prices, all while being decried as ‘outrageous’. Actions speak louder than words. Truth be told, if gas goes to $8/gallon, I'll still be buying and driving

Also interestingly in this class, there was a group that did their price elasticity project on bus riders. The fare was $1/ride with transfer. They found by surveying actual riders that their average rider surveyed would continue to ride the bus up to about $4/ride.

The conclusions we reached were that people made choices that caused them to be dependent upon transportation. Mainly, they choose to live far from their workplaces.

I have no sympathy for the person who choose to buy an SUV when gas was at $1.80/gal on the assumption the price would never rise, or who argues that because they made that choice, the oil producer and retailer owe them an ever-flat price. Likewise for the person who works downtown and lives in the city. You helped create sprawl? Suffer your commute and its costs!

We are such a society that wants to have its cake and eat it too.

So, to the point- no, the governor shouldn’t suspend the gas tax. The taxes pay for the roads. Saying one is in favor of suspending the gas tax is saying they favor the roads crumbling while promoting their use of them. Short-sighted foolishness.

Doug Masson explains his opposition to suspending the gas tax saying, "that would amount to the State subsidizing oil company profits". I disagree. Suspending the tax would subsidize the choices that make higher prices uncomfortable, such as driving an SUV if you can only marginally afford to do so; or, such as living 40 miles from work.

Price has a function. Higher prices will make people more interested in alternative fuels, smaller vehicles, living closer to work, and walking more.

Don't bemoan the oil companies for selling to willing buyers at any profit margin. Would you bemoan your customers choosing to do business with you at your price? Or, your employer to hire you at your wage?

Get a grip, folks.