A GROUP of moguls and powerbrokers gather in their splendid headquarters. As aides and flunkies scurry about, the barons are coming to an agreement on the price of gasoline. Should they raise it? Lower it? Leave it alone? Whatever they decide, drivers everywhere will bear the consequences, for the moguls' influence reaches every gas pump in America.
It doesn't take long. These powerful men and women know what they want. They are hungry for more money. And so, from their elegant chambers, the order goes forth: Raise gasoline prices. Across the land, every filling station swiftly complies. There is nothing customers can do about it. Those who wish to buy gasoline must pay the surcharge the moguls have decreed.
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Fiction? Not at all. This scenario actually happened. Collaboration did take place. The price of gasoline was artificially hiked, and the people who hiked it were motivated by a hunger for more money.
Who were these collaborators? A group of profit-swollen oil industry plutocrats? A handful of Persian Gulf petro-sheiks? A criminal consortium plotting to wreck the domestic oil market?
No. The powerful cabal that deliberately jacked up the price of gasoline, forcing Americans to pay billions of dollars more than the market value, was -- the Congress of the United States.
In May 1993, the federal gasoline tax was raised to 18.3 cents a gallon. That vote marked the third time in just over a decade that Congress had increased the tax. Since December 1982, the federal levy on gasoline has exploded 357 percent -- even as the price of gasoline has trended steadily downward.
Of course, for the last few weeks, as every driver knows, prices at the pump have been a dime or two higher than usual. There's no mystery about why: Inventories were down because of the unusually long winter, a fire in California that closed a Shell Oil refinery, and Saddam Hussein's obduracy in keeping 500,000 barrels a day of Iraqi crude off the international market.
No reputable economist or oil expert in the world would attribute the current surge in gasoline prices to anything but the normal interplay of supply and demand.
 US Rep. Edward Markey, gasoline price-gouger extraordinaire |
Sniffing a chance to turn motorists' ire to political advantage, US Representative Edward Markey (D-Mass.) pandered to the TV cameras last week. Tossing around criminal accusations of "price-fixing, collusion, or deliberate efforts to limit supply," he called for the Energy and Justice departments to investigate the oil industry. "Naked greed!" he hissed. "Oil company overcharges!"
Even for Markey, who excels at antibusiness cheap shots, this was egregious. It was grandstanding of the trashiest sort, and if it wasn't libel, it came awfully close. Nobody believes that price-fixing is behind the latest price spike. "We think it's unlikely that there's collusion or anything illegal going on here," Markey's own aide admitted on Friday -- even as his boss was making exactly those charges.
And who is Markey, pray, to talk about gouging? No one is more responsible for inflating the price of gasoline than politicians like him. It isn't the cost of crude oil that accounts for the lion's share of gas prices. It isn't refining. It isn't marketing or distribution. All of those cost considerably less today (in real terms) than they did 15 years ago.
It's taxes.
In 1981, federal and state taxes made up just 12 percent of the retail price of gasoline. Last year, they accounted for 35 percent. The typical driver now pays 42 cents a gallon in taxes -- in some states, far more. Rhode Island and California drivers pay 47 cents in taxes for each gallon they buy. Connecticut drivers, a whopping 53 cents. "The average US consumer," reports the Wall Street Journal, "is paying 72 percent more in gas taxes than a decade ago." Talk about colluding to squeeze more money out of American drivers! It's Congress and the statehouses, not the oil companies, that have been ripping off motorists unmercifully.
Which is why Senate Majority Leader Bob Dole and House Speaker Newt Gingrich are absolutely right to call for rolling back the 1993 increase in the federal gasoline tax. The pity is that they didn't call for it 18 months ago, when their party won control of Congress. The only reason the "Clinton gas tax" is being targeted now is because Republicans want to show that they, too, can "do something" about higher gasoline prices.
But the reason to repeal the gas tax increase is not to undo a temporary jolt at the pump. It is that the increase should never have been passed in the first place. And the reason it should never have been passed is that taxes in America are already far too high. Wasn't that why Republicans unanimously opposed the '93 tax package in the first place?
Markey can demagogue about price-fixing; the Justice and Energy departments can probe for collusion. It's pretty clear who's been gouging US drivers. When the federal gasoline tax was hiked in 1983, Markey voted yes. When it was hiked in 1990, he voted yes. When it was hiked in 1993, he voted yes. If it weren't for the Ed Markeys of this country, gasoline would be 30 percent cheaper. Think about that the next time you fill up.