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Energy

Gas Prices Rocket Up, Threaten Recovery: Will Government Cut The Gas Tax?

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By Douglas A. McIntyre Updated Published
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A report from the AAA that polls 100,000 service stations shows that average  gasoline prices are up 20% over the last month to $2.42 for a gallon of regular. With oil above $65 and rising and the summer driving season at its beginning, there is a reasonable chance that the number will go higher.

US consumer discretionary income is still under tremendous pressure as are margins a most businesses, so an increase in oil-related products and gas could undermine what appears to be the early stages of a recovery.

The federal government may be able to do something to lessen the blow of rising oil prices, but it would sharply increase the deficit.

The federal gas tax is currently $.184 a gallon. The average state gas tax is closer to $.30.

In 2008, the government brought in $29.6 billion from taxes on gas and diesel.  Temporarily suspending the tax would save Americans who drive long distances and business that rely on trucking for a substantial portion of their monthly costs. It would also require the Treasury to fill another hole by borrowing more money in the form of bonds, putting more pressure on rising interest rates.

If the government is going to stay out of the business of keeping gas prices low, it will have to deal with the fact that the recovery could be thrown off kilter.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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