I try to stay out of politics because, quite frankly, I don’t trust politicians. As much as I try to avoid politics though, domestic energy policies promoting green energy are of huge importance and interest to me. So when Michelle Bachmann supposedly said that she’ll bring back $2.00 a gallon gas, I started thinking…what would it take to bring back $2 a gallon gas?
The rest of the Internet has already taken Bachmann to task, explaining how domestic drilling would be a drop in the bucket compared with our daily oil consumption. How opening up ANWR would result in just a 3-cent drop in gas prices after almost 20 years of drilling. How, the last time we had gas under $2.00 a gallon, America and the rest of the world was gripped by a recession (that may or may not be making a comeback.) Or that if America increases output, countries like Saudi Arabia will probably decrease output, keeping the price of oil favorable for profits. And nevermind that our reliance on oil is putting us at the mercy of unfriendly dictatorships and polluting our air and probably contributing to global warming.
Never mind all of that. Gasoline costs too damn much.
So really, what is there left for me to rehash? Not much. But, if Bachmann somehow wins both the GOP nomination and the 2012 Presidential contest, well, who is to say she won’t stick to that promise of $2.00 a gallon gas. Here’s how I think she could do it.
Step 1: Eliminate Taxes on Big Oil Completely
Depending on who you ask, Big Oil either pays more than their fair share of taxes, or not nearly enough. The top federal rate for taxes is 35%, but thanks to numerous (and generous) tax breaks, subsidies, and deductions, Exxon Mobil had an effective federal tax rate of 17.2%, about half what it ought to be. But for Bachmann and $2.00 a gallon gas, that is still too much.
Exxon says that for every $1 it pays in federal taxes, it pays about $6 in sales, local, and state taxes. So one obvious solution, to me anyways, is to completely eliminate taxes on Big Oil, at every level of government. Exxon alone claims to have paid almost $10 billion in U.S. duties and taxes in 2010 (though just $1.3 billion of that went to the Federal government) so that’s a start. It would also cut down on the workload for the IRS, which employs 35 agents full time to audit only Exxon’s taxes. And for former tax-collect/current small government advocate Michelle Bachmann, it may seem like good politics and good policy despite depleting the coffers of local and state governments. But it isn’t enough.
Step 2: Increase Subsidies to Big Oil
Over the next 10 years, the Big 5 Oil Companies will reap about $77 billion in federal tax credits, breaks, and subsidies. Yet while most Americans want to end these subsidies, Republicans defended them vigorously. Bachmann would have to go beyond defending oil and gas subsidies if she really wants to bring back $2.00 a gallon gas though. Those subsidies just aren’t generous enough, even combined with a 0% tax rate.
With gas prices estimated to only escalate in the next decade, oil subsidies would have to be adjusted annually, to reflect changing economic conditions when it comes to gas and oil. So it’s hard to put a number on what the subsidies should be. So, despite Big Oil raking in $32 billion in profits in the first quarter of 2011, it obviously isn’t enough to bring down gasoline prices. For now, let’s just say the Feds will match Big Oil’s annual profit, effectively doubling it.
The money could come from, say, eliminating all the environmental tax credits, grants, and investments the government has been handing out. While we’re at it, shutting down the EPA will also free up some extra money, and get an annoying monkey off the back of Big Oil. Sort of like a sacrificial lamb. It still probably wouldn’t be enough though.
Step 3: Kill the Federal Gas Tax
Now I’m no economist, but I’ve got to say that with this one-two punch of no taxes and huge subsidies, gas prices would have to come down at least a $1.50 from where they are right now.I mean we’d be literally shoveling money at the oil companies, padding their profits with taxpayer money while showing clear favoritism to one specific industry over every other business that operates in this country. That would bring Bachmann, and the rest of us to within spitting distance of $2.00 a gallon gasoline (at great cost to the government in lost tax revenue and subsidies, of course.) But we still wouldn’t be there. So what else is left to axe?
The gas tax, that’s what. Small government advocates like Bachman would rather die than raise the gas tax at a time like this, despite the well documented need for the money. So the obvious answer here is to completely eliminate the federal gas tax, and instead pass the buck to states to both maintain highways and leave it to them to pass appropriate gas taxes.
While that could lead to long stretches of neglected highways in huge but sparsely populated places like Montana and leave our crumbling infrastructure to already cash-strapped states, it would knock another 17 cents per gallon off the cost of gas. Not the $2.00 a gallon candidate Bachman promised, but at least President Bachman could (rightly) point out that she did everything in the Fed’s power to bring gas prices back to Earth.
Of course, there are so many unforeseen, unimaginable repercussions of such policies that I simply cannot fathom any of them getting passed. And yet for a GOP field that seems to be leaning further and further to the right, there’s no telling where the pandering stops, and the real policy begins. Of course, that goes for any politician, and Democrats (including many in office right now) are no strangers to making campaign promises that they either cannot, or will not, put into effect. But we’re not talking about them right now, are we?
Would Michelle Bachmann seriously try to bring back $2.00 a gallon gas if elected? Hell if I know – but I wouldn’t put it past her!
Chris DeMorro is a writer and gearhead who loves all things automotive, from hybrids to HEMIs. You can read about his slow descent into madness at Sublime Burnout or follow his non-nonsensical ramblings on Twitter @harshcougar.