Why a gas tax ‘holiday’ is a bad economic idea

Let’s start with drugs. There are eight major drug makers in the Standard & Poor's 500; collectively they made $36.2 billion over the past 12 months on revenues of $237.2 billion. That means they pocketed about 15 cents of every dollar’s worth of product sold. Not bad.

How about software? The seven big companies in the sector (including Microsoft, which jointly owns msnbc.com with NBC Universal) took in $92.3 billion in revenues and earned $23.6 billion in profits, or about 25 cents on every dollar.

Banking? Despite their problems with subprime loans, the eight big “money center” banks in the S&P 500 took in profits of $41.3 billion on revenues of $267.3 billion, about 15 cents on the dollar.

Now let’s look at the three oil majors in the S&P 500. In the last 12 months, ExxonMobil, Chevron and ConocoPhillips took in $833.7 billion in revenues but reported profits of $71.8 billion. That works out to about 8.6 cents of profit for every dollar's worth of crude.

Refiners fared even worse. They sold $293.6 billion worth of gasoline and other fuels and made $11.9 billion in profits, or about 4 cents on the dollar.

We got our data from MSN Money's Stock Screener.

I was in high school when the last "Energy Crisis " hit. Then-President Carter set the speed limit back to 55 mph, no doubt saving fuel. Why have I not even heard this mentioned as a way to combat fuel prices/consumption?
— Bob M., Norwalk, Ohio

In urban areas, more than half the states already limit speeds on the Interstate to 55. And while lowering the speed limit elsewhere might help, it would be great if we could first enforce the limits we’ve already got.

Slowing down — and not driving like a maniac — can have a major impact on gas mileage. Though some critics have disputed the savings from the government-imposed speed limit in the 1970s, trucking companies today seem to believe otherwise; some have recently installed “governors” to cap the maximum speed of their fleets and save money. Airlines are slowing down their flights to save fuel.

There’s also plenty of research showing that your driving style is a major factor in determining the number of miles squeeze out of each tank of gas. Zooming away from one stoplight and slamming on the brakes a few yards before you get to the next one really zaps your mileage. And it’s really annoying for the rest of us.

If we could all increase mileage by as little as 15 percent, the impact on gas prices would be huge. Since hitting a seasonal low of 8.9 million barrels per day in January, gasoline consumption rose to 9.4 million barrels by the end of April — a gain of nearly 6 percent. Pump prices, meanwhile, rose by about 60 cents a gallon. When supplies are tight, it doesn’t take much of a change in demand to make a big difference in price.

So how do we cut demand? The government could certainly do more to promote conservation, a solution famously derided by the White House as a “personal virtue” that has no business in U.S. energy policy. The resulting energy policy means we have to figure out how to conserve anyway — because we can barely afford to fill up our SUVs without selling old jewelry.

But there’s no reason we need government to order us to cut back. Trade in your gas guzzler for a car that gets better mileage. Just one day a week, work from home or find another way to get to the office. Obey the speed limit.

And stop driving like a jerk.

Is it true that oil prices have been purposely manipulated to permit drilling in Alaska (ANWAR) and in other areas of the U.S. that are protected?
- C. J., Canfield, Ohio

No.

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