Suspending the 18.4 Cents/Gallon Tax This Summer Sounds like a good idea, on the face of it. Cut the 18.4 cents-per-gallon Federal gas tax and customers will save roughly $2-3 each visit to the pump during the summer, right? What's not to like? Well, don't ask whether it makes sense to encourage burning more fossil fuel or whether we should raid the highway trust fund when bridges are collapsing. Think about how to lower gas prices to boost the economy. Here's the problem: Refineries run near capacity every summer as families rack up miles on their vacations. That's one reason why gas prices always jump in the summer. If [the] excise tax cut did translate into lower prices, we'd want to drive even more and burn more gasoline. Since the oil patch can't boost production much without building new refineries, the price has to go back up. -- Commentary by Leonard E. Burman, Urban Institute, April 18, 2008 Another concern, raised by Dean Baker in the American Prospect: We have a fixed amount of gas entering the market, the question is simply what price clears the market. In this context, if we reduce or eliminate the gas tax, the price doesn't change, the lower tax will simply allow Exxon and other oil companies to keep more profits (unless of course they were lying about running their refineries at capacity). Since most people do not have much familiarity with economics, the media should be informing the public about the impact of [this] proposal.