[jaskyle]

A 4th point missing in this blog post is the simple fact that producers and gas stations can easily start adjusting the price up again, wiping out the 18-20 cents per gallon consumers would be saving in an effort to gain that as new profit. Then when the tax holiday ends, gas prices would jump back up to an even higher price with no guarantees that prices would decrease to pre-tax holiday levels.

[pridkett]

And there’s a natural experiment in New England. Connecticut has suspended it’s gas tax until the end of the year - that’s $0.25/gal less in fuel costs. Rhode Island and Massachusetts have not.

In April when this first happened, gas prices in CT dropped fell quickly from being $0.05/gal more than MA and $0.10/gal more than RI to being $0.20/gal less than MA and $0.15/gal less than RI. Basically, there was a $0.25 drop in prices.

But, over time, that difference has whittled away to the point where gas in CT is about $0.05/gal cheaper than both MA and RI.

Looks like they knew people were looking for the discount at first and now that’s slowly ebbing away and CT will be in for a shock on January 1st. And much further down the road as the state has sacrificed its transportation coffers for nothing.

data were eyeballed from a graph on gasbuddy.com - https://charts.gasbuddy.com/ch.gaschart?Country=USA&Crude=f&...

[nostrademons]

That's the 2nd point, about a gas tax holiday primarily benefitting producers because the supply of gasoline is largely inelastic. The mechanism by which it benefits producers is that they raise prices to capture the former gas tax, which consumers can do nothing about because there is no more gas supply to be had.

[KerrAvon]

Congress can specifically address that point if they choose to pass legislation on this topic.

[milkytron]

Can they though? Is congress allowed to control how much profit a company can make on the market?

[gizmo686]

One of Congress's powers is to regulate interstate commerce. The scope of that power has been stretched to be commically large; but profit controls in the gas market clearly fall within that power.

Price/profit controls have been done numerous times in the US to verying degrees of success.

[wbsss4412]

Yes, why wouldn’t they be?

[maxerickson]

They can just not change the prices and pocket the tax holiday.

(assuming that the holiday legislation doesn't actually institute direct price controls)