Bottom line, the gas tax holiday is pandering, and won’t actually help ease the pain. Minnesota actually has one of the lower gas taxes in the nation, even with the increase.

And as for why the legislature increased it, I think maybe, just maybe, they felt like they wanted to do a few transportation infrastructure projects with the money. Maybe fix a few bridges or something wacky like that. And since one of the few taxes dedicated to transportation spending hadn’t been upped in a couple decades, it seemed like a good idea at the time.

When Illinois and Indiana suspended about 7 cents of their state gas taxes in the summer of 2000, prices fell by an average of only 4 cents… Drivers saved no more than $2.50 a month, while each state lost tens of millions of dollars in tax revenue.

A gas tax holiday is going to be about as useful (for its intended purpose) as this stupid stimulus check. Actually it’s going to be less useful.

Biofuels are not presently a sustainable or sane way to try to increase supply. The amount of acreage that would have to be converted to biofuel production to substantially influence supply is staggering. The other way to increase supply is to get more oil. The bulk of the oil reserves in the US are off-limits due to environmental legislation. The bulk of the remaining oil reserves in the world are controlled by state monopolies that are enjoying their record returns. Many of these governments are not spending this oil money to increase or sustain production — they are using it for other political ends. Consequently, the short term prospects for increasing supply look limited (though for political reasons, not because of lack of reserves).

Reducing demand is going to be driven most quickly and cleanly with higher prices. You can already see it in the fact that people are changing their behaviors in response to increasing prices. That’s what creates all of the complaining: change is good when it is forced on someone else. However, oil is a global market and India and China are increasing their demands for oil. This means that a decrease in US consumption is offset by the growing economies abroad consuming more oil.

Summary: higher oil prices are probably here for the next couple years. Eventually demand will taper (perhaps due to economic troubles) and new production capacity will come on line. In the mean time, we will have to make changes to how we consume gas or make sacrifices in other areas of our lives to continue on in the same fashion.