Gas tax cut or infrastructure spending: A false choice

As our forefathers labored in Philadelphia to draft what would become the enduring Constitution of the United States they were careful to not only divide power among three branches of government but to also create a national legislature of two chambers with the specific intent of having the U.S. Senate being the “cooling saucer” to, as James Madison said, “provide a necessary fence” against passions.

Events of the past few months have indeed proved the wisdom of the framers in creating a federal government, which while at times is frustratingly slow, also does not act hastily and foolishly in reaction to transitory events.

A perfect example is the set of cross-currents created by skyrocketing fuel prices and the parallel need to invest in the nation’s infrastructure. The two are tied together as gasoline taxes, both federal and state, are a significant source of funding for the maintenance and improvement of our roads and bridges.

Last month when the Fern Hollow Bridge in Pittsburgh collapsed into the valley below the need to invest more money in infrastructure dominated the national agenda. Congress, in a rare burst of bipartisan support, passed a gigantic so-called infrastructure bill that directed most of the new spending to the Left’s radical environmental agenda but did indeed provide significant dollars for traditional infrastructure.

Domestic oil and gas production was dramatically reduced in 2020 and 2021 due to a drop in demand as folks sheltered in place during the COVID-19 pandemic. But, as demand has returned to normal production has not. The canceling of the Keystone XL pipeline, the ban on drilling on federal lands, the added regulatory hurdles among other factors have prevented the expansion of the domestic supply.

It is an incontrovertible law of economics that when demand exceeds supply the price of the product will go up. So despite the fact, the United States sits on more than enough gas and oil to be energy self-sufficient government constraints on the industry has produced a shortage which triggered the rise in prices at the pump.

The cost of gasoline and home heating products has become so high consumer pressure is on elected officials to do something. This has given rise to calls at both the state and national levels to reduce or temporarily suspend gasoline taxes. Tax cuts are generally a good thing, but such action here would be akin to treating the symptoms rather than the disease.

Ulrik Boesen, senior policy analyst at the Tax Foundation, points out that the 18.4 cents per gallon federal gasoline tax “contributes the majority of the money to federal highway funding of roads and bridges. If you take that away for any period, you end up having to backfill that money with more deficit spending.” More deficit spending, he concluded, will “increase inflationary pressures.” In other words, a suspension of the federal gasoline tax would make the current historically high inflation rate even higher.

Pennsylvania currently levies the highest gasoline tax in the nation at 58.7-cents per gallon. That tax provides funds not only for road and bridge maintenance and repair but also for a variety of state and local municipal needs. A reduction or suspension of the state’s gasoline tax would, as at the federal level, require a backfill in revenue from some other source — or a temporary reduction in infrastructure spending.

It would appear growing demands for more infrastructure spending and lower fuel taxes are at cross purposes. But there is a more realistic — and effective — solution: address the root causes of the problem.

It is time for the government at all levels to take its boot off the throat of the fossil fuel industry and allow the free market to dictate the development of our natural resources. By allowing demand, rather than ideologically-driven policies, to dictate supply we can lower fuel costs while also addressing our infrastructure needs.