When the cost of gas spikes, how about taking off the TAX so it's immediately more affordable?

Question

So slap it back on when the cost of oil goes back down...

Answer 1

This wouldn't help.  Companies price the gas according to demand and supply.  If the tax is removed, that effectively brings the cost of gas down, so companies then have more room to increase the price without upsetting the equilibrium.  In other words, the money would go to the oil companies rather than the government.  

This is true in the short run.  In Europe, where the tax is often more than the cost of the gas itself, the theory would break down because of the inelasticity of the demand curve.

Answer 2

Tax money is needed to keep the roads under good repair. If you want cheaper gas there is one sure fire fix. USE LESS. It's a supply and demand thing. In 1974 the government instituted a mandatory 55mph nationwide speed limit. It was in response to record high oil prices. Here we are again. Record high prices. And no talk of reducing the speed limit. I drive 1000 miles a week to get to my customers. I've slowed to the speed limit and have seen my mileage go up 15%. If everyone would just slow down, gas usage would drop. If usage drops, supply goes up. Voila! Cheaper gas. But the public is to stubborn. We want it all. Big cars, big engines, drive 20 over and low cost gas. I say re-institute the 55mph limit. What's the hurry? Unless you're late for surgery, slow down. Leave a little sooner. Save gas. Next time you drive, try it. Slow down and check the mileage. My 15% increase in mileage just reduced my gas prices from $3 a gallon to $2.55.

Answer 3

and when the oil prices don't go down??

gas tax pays for highway reconstruction and repair. you can't be flimsy with taxes that way. the roads where i live are bad enough as it is so i don't need worse roads.

Answer 4

That's FUNNY. It will never happen. No tax ever goes away, even the so-called "temporary" ones.

Answer 5

I seriously doubt that removing tax will affect prices - oil companies will immediately compensate for all potential savings.