Next Bipartisan Move in Congress May Be to Raise Gas Tax

In the short term, low gas prices are considered by most Americans as a good thing. After all, filling up the tank at $1.80/gallon gives the average consumer a little more disposable income to work with, which will lead to a slight increase in spending activity on other goods and services.

Many Americans, however, fail to see the long-term effects this not only has on the domestic oil industry (which has been covered on IVN), but on low- and middle-income consumers. According to The Hill, Republican lawmakers who promised not to raise taxes on Americans on the campaign trail are now considering the possibility of raising the federal gas tax for the first time in 20 years.

Democratic leaders, including U.S. House Minority Leader Nancy Pelosi (D-Calif.) and U.S. Senator Dick Durbin (D-Ill.), say “now is the time” to raise the 18.4 cent-per-gallon tax to pay for improvements to the nation’s infrastructure. And some Republican lawmakers are open to the idea.

“I just think that option is there, it’s clearly one of the options,” said Sen. Jim Inhofe (R-Okla.). Inhofe is the new chairman of the Senate Committee on Environment and Public Works.

The gas tax has not changed in two decades, and once it is raised, it is not likely lawmakers will revisit it when gas prices spike again. This will just create a heavier burden on low- and middle-income households who are finding the daily commute to work a little less stressful because of six-year-low gas prices.

Gas prices are not going to stay at the current levels forever. Eventually, they will rise again, and how high they rise will depend on the state of the domestic oil industry when the Saudis decide to stop glutting the global market with excess oil. Some theorize that the Saudis are working with the U.S. government to cripple the Russian economy (which depends heavily on oil production), but even if this was true, it is damaging the Russian economy at the expense of the U.S.’s oil industry, and major U.S. companies that rely on the domestic oil industry — like the United States Steel Corporation.

If the domestic oil industry is not strong enough to keep oil prices in check, Americans could see gas prices reach historic highs when the Saudis decides to tighten the spigot again. This is not meant to scare American consumers, but to put the issue in perspective. An increase in the gas tax will place a heavier burden on American households that hurt the most when the price of gas is high — specifically, low-income households.

For lawmakers, the time may be right to raise the federal gas tax, because it is a time when people will neither care nor pay attention because they are enjoying low prices at the pump. Yet, when gas prices do spike again, it will no longer be an issue the media will focus on, and people will likely forget about it. This is how Congress likes to operate.

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