BCT Editorial – 4/4/08

This page was last updated on May 20, 2008.

Collective mistake; Editorial; Beaver County Times; April 4, 2008.

The editorial subtitle is “All of us bear responsibility for the current crunch of gasoline and diesel prices.”

Below is a detailed critique of the subject editorial.

“If you think you’re being clobbered by high gasoline prices, just be glad you’re not a truck driver.

“The price of diesel fuel is killing them.”

[RWC] What about the railroads and homeowners who using heating oil?

“On Monday, a gallon of diesel fuel cost $4.33 a gallon. According to The Associated Press, that’s $1.49 more than it was a year ago, when it was $2.84 a gallon. In comparison, a gallon of unleaded regular gasoline went from $2.70 a gallon to $3.28 a gallon, a difference of 58 cents.

“Unfortunately, one of their solutions to the problem — eliminating Pennsylvania’s highest-in-the-nation diesel fuel tax of 38.1 cents per gallon — is totally impractical.

“To start with, there’s no guarantee that doing so would reduce the cost of diesel fuel because the state does not determine the price of diesel fuel and gasoline.”

[RWC] I’ve said this before. Editorial writers need to recognize “cost” and “price” are not synonyms.

“Oil-producing countries, oil companies and oil speculators — none of which have our best interests at heart — control the market.”

[RWC] Ah, the old “oil companies … control the market” BS. Apparently the author has never had the pleasure of participating in one of the many oil company cost cutting purges during lean times.

“All it would take is for one of them to hike prices or reduce production to see the benefits of the tax elimination vanish.

“Don’t look for any relief on that front, as the oil executives who appeared before Congress on Tuesday made perfectly clear in their testimony.

“The state also can’t afford the lost revenue, especially at a time when our roads and bridges are crumbling.

“A spokesman for the Pennsylvania Department of Transportation told The AP combined revenue from the gasoline tax — a liquid fuels tax of 12 cents, an oil company franchise tax that is indexed to the wholesale price, and a storage tank fee of 1.1 cents — and the diesel tax amounted to nearly $1.3 billion in the 2006-07 fiscal year.

“The state and federal governments also aren’t necessarily gaining a lot more revenue because of price increases. For the most part, taxes on gasoline and diesel fuel are levied at a fixed per gallon rate, not on the price of the product as a sales tax is. No matter what the price for a gallon of gasoline — $2, $3, $4, $5 and counting — they don’t get a bigger piece of the pie.”

[RWC] I wonder why the editorial neglected to mention the impact of income taxes. The higher prices have resulted in greater oil company profits, and greater profits mean more income tax revenue.

“Instead of reducing or eliminating diesel and gasoline taxes, a fuel surcharge, one that covers the cost of trucking goods around the country, should be imposed.”

[RWC] This sentence confuses me. Who would impose the “fuel surcharge?” Don’t businesses traditionally pass on these costs?

Anyway, since railroads and barges are much more fuel efficient than long-haul trucks, shouldn’t we be happy these high prices may shift some shipping to these more efficient forms of transportation?

“The sad truth is that we are paying the price for our profligate indifference to energy conservation and to developing alternative energy sources.

“As a nation and a people, we all must bear the burden for our collective mistake, not just the truckers.”

[RWC] I’m confused again. Times editorials regularly tell us we’re greedy for not wanting to encourage conservation by raising the price of fuel via taxes. Now that prices have increased by market forces, the Times appears upset. Shouldn’t the Times be happy fuel prices are high?