Bob Tippee
Steadily rising gasoline prices in an election year will intensify pressure on politicians to curb consumption.
Indeed, persistently strong demand is a big reason futures prices on the New York Mercantile Exchange surged through a series of record high closings this week, most recently $1.4005/gal for the June contract on May 13.
Growth in gasoline use is occurring while inventories, while rising lately, remain abnormally low and as prices for crude oil rise.
Wayward lawmakers think they should act on consumption.
One version of the omnibus energy bill now being dismembered in Congress called for executive-branch action to reduce oil consumption by 1 million b/d from projected levels by 2013.
That's always the wrong approach—and not only because nobody knows what consumption will be in 2013.
It's best to leave consumption to the market. Always.
By that principle, not to mention common sense, government also should refrain from encouraging gasoline consumption.
It's doing so now with generous tax breaks for sport utility vehicles (SUVs).
In a provision designed to help farmers invest capital, federal tax law offers generous deductions to the owners of small-businesses who buy light trucks.
Because the law treats SUVs as light trucks, the provision has helped doctors, lawyers, and other such distinctly nonfarm business people buy outsize passenger vehicles.
It has helped them a lot, in fact. An economic-stimulus law enacted last year raised the basic deduction for light-truck and SUV purchases from $25,000 to $100,000 and sweetened other dimensions of the tax break.
Sensing lunacy, lawmakers have proposed a rollback of the deduction for SUVs to $25,000 and a statutory distinction between SUVs and real trucks.
Here's hoping those measures pass. An even better idea is to eliminate the SUV deduction altogether.
People who want SUVs and are willing to pay for all the gasoline they use should be free to buy them.
To encourage purchases of SUVs by people who would probably otherwise buy sedans or minivans with smaller appetites for fuel, however, makes no sense.
To continue doing so while a strained gasoline market tempts politicians to flirt with consumption controls is perverse.
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