Bad gas holiday

This isn’t an idea designed to get you through the summer, it’s an idea designed to get them through an election.
Barack Obama

It turns out that economists think the so-called gas tax holiday is a really bad idea.

I think it's crap. It's the kind of shameless pandering I expect from McCain, and now Clinton gave me one more reason to be glad I voted for Obama. Regarding the gas tax holiday, Obama had this to say:

It would last for three months and it would save you on average half a tank of gas, $25 to $30. That’s what Senator Clinton and Senator McCain are proposing to deal with the gas crisis. This isn’t an idea designed to get you through the summer, it’s an idea designed to get them through an election.

Spot on, as usual.

Better yet, many economists don't think we'll even see that half-tank of gas. Suspending the gas tax won't have any effect on the gasoline supply. However, demand will increase and with it, the price at the pump. We will end up spending just as much money on gasoline, except now more of that money goes to oil producers.

As Paul Krugman said on this issue, "It’s Econ 101: the tax cut really goes to the oil companies."