Both Clinton and McCain’s call for a gas tax holiday would make a neglible impact on your wallet and is nothing more than an election year stunt to win votes.
Clinton campaign spokesperson Geoff Garin said in a conference call this week that the proposal would save each driver $70. The Clinton campaign did not respond to our request to clarify how it arrived at that figure. But the non-partisan American Association of State Highway and Transportation Officialsestimates that the total savings for the average American motorist works out to about $28; for a two-car household, that would be $54.
And there’s no reason to assume that oil companies would pass the 18.4 cent tax cut on to consumers, although I’m sure they’d lower the price somewhat to mitigate bad PR.
With the supply of gasoline pretty much fixed (at least in the short term), the increased demand triggered by the price cut will lead consumers to bid up the price of gas. Len Burman, of the nonpartisan Tax Policy Center, says eliminating the federal tax won’t actually lower the price of gas because "supply constraints will push pump prices near their pre-holiday levels." He goes on to warn that "If that didn’t happen, there would be shortages." The libertarian Cato Institute’s Jerry Taylor agrees that a short-term gas tax holiday will have "little impact on pump prices."
You can get the full economist lowdown at Who will reap the benefits of a gas tax holiday? I clipped part of her conclusion below, but you should read the whole thing.
Hillary Clinton’s proposal is particularly stupid, in my humble opinion, because it tries to get the money back from the oil companies with a windfall profits tax. Tax incidence is tax incidence: if the oil companies can make consumers pay most of the excise tax, then probably consumers can stick them with your windfall profits tax too.