Wednesday, May 18, 2011

Inflation & Gas Prices

I'd heard that inflation- the decline in value of the U.S. Dollar- had something to do with rising gas prices. I finally found some actual numbers.

These guys say that inflation has added a bit over 56 cents to the price of a gallon of gas since 2008. As the article says, that doesn't explain it all as there's many factors that go into the price of gas. That's obvious as the price of oil has risen 150 percent since 2008 but the value of the dollar has declined only 14 percent.

Still, yet another reason to get our national finances in order.

Oh, in case you haven't heard, the folks in Washington are mulling yet another gas tax. This one would be a driver tax and would tax be based on how many miles you drive. The idea being that miles driven cause more wear on infrastructure than simply how much gas one buys. Doesn't really make sense to me since one generally drives more the more gas they buy.

There's some talk of replacing the current federal per- gallon tax with the driver tax. My guess is, if they go ahead with this, we'll likely end up with both.


At 9:44 PM, Anonymous Anonymous said...

Roads are expen$sive. You should go on the county website or the city and look at some of the agenda items about paving contracts. Big money for not a whole lot of asphalt.

At 10:25 AM, Anonymous Anonymous said...

This is pretty simple Fred.

They have these new fangled cars called hy-brids and even newer fangled cars called "electrics" and they don't use as much gas, or no gas at all. Therefore as more and more of these are sold and driven, the gas tax revenue collected by the government will go down, but the expense of maintaining the roads will continue to rise.

So the driver tax is an attempt by the gov to recapture some of this. Hybrids and electrics do use the roads and it is fair that they should pay part of the cost. But the idea of tracking people by gps to tax them is right out of George Orwell. We need a better and less invasive tax scheme than gps tracking.

At 3:41 PM, Anonymous Eric Kirk said...

Something economic conservatives don't get about the inconsistency in their arguments. If the prices are truly governed by supply and demand, then the taxes should be nearly irrelevant to the price. When taxes or any base costs go up, the producer can only transfer it to the consumer if the consumer is willing to pay it and competitors are not truly competing, since inherent costs have nothing to do with supply or demand.

We learned this with tobacco taxes. When we first jumped the taxes by 25 cents a pack, the industry argued that it was regressive and would be coming out of the consumer's pocket. But then something happened. Consumers didn't want to pay it, and reduced their consumption. By some economist accounts the increase in price actually caused by the taxes in the long run were between 10 and 15 cents instead of 25 cents. That meant the industry had to eat the rest. But unfortunately, it had no impact on supply since their overhead profits are ridiculous due to the addiction factor. They just made 10 to 15 fewer pennies per pack and continued to finance the campaign against them.

At 8:42 PM, Anonymous Anonymous said...

Eric Vang Kirk, a chump who's an expert on EVERYTHING.


Post a Comment

<< Home