The Wonk Room

RNC Celebrates Windfall For Oil Companies

The Republican National Committee has put out a press release defending Sen. John McCain’s (R-AZ) proposal to suspend federal gas taxes over the summer. The press release claims that the proposal “would save Americans over $6 billion“:

Sen. John McCain Has Proposed Immediate Gas Tax Relief, Which Would Save Americans Over $6 Billion:

Sen. John McCain’s Gas Tax Relief Would Last From Memorial Day To Labor Day. “Hard-working American families are suffering from higher gasoline prices. John McCain calls on Congress to suspend the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day.” (John McCain For President Website, www.johnmccain.com, Accessed 4/22/08)

“A USA TODAY Analysis Showed That McCain’s Gas-Tax Proposal Could Save Motorists $6.8 Billion In Taxes During The Summer.” (Kathy Kiely, “Gas-Tax Holiday Among McCain’s Plans For Economy,” USA Today, 4/16/08)

The RNC fails to provide a link to the USA Today story. Here’s what the article actually says:

A USA TODAY analysis showed that McCain’s gas-tax proposal could save motorists $6.8 billion in taxes during the summer. Len Burman of the non-partisan Urban Institute said the money won’t necessarily go back to consumers. Refineries already are running high to meet summertime gasoline needs, Burman said, so if demand for gas increases, so will prices. He said that means “a huge windfall for refiners,” not consumers.

Reuters reiterates: “Economists said that since refineries cannot increase their supply of gasoline in the space of a few summer months, lower prices will just boost demand and the benefits will flow to oil companies, not consumers.”