Increased gas prices affect more than driving

Capital Eye by Randi Bjornstad

Even though gas prices have been creeping – or should that be leaping – up for months, the recent increases occasioned by Hurricane Katrina’s interference with oil pumping and refining along the Gulf Coast have boosted the shock effect of pulling up to the gas pump considerably.

For those who can remember when it cost $10 to fill up the 10-gallon tank of a compact car, it was jolting enough to begin paying $15 to fill the tank, not to mention $20 when the price hit the unheard-of level of $2 per gallon.

Now, of course, it costs upwards of $30 to buy that same 10 gallons of gasoline, and as we’ve all experienced, once prices reach a new threshold, they rarely drop back much, even when a crisis has passed.

This new way of life has many implications that we may not have thought much about. Of course, it stands to reason that poor people will be affected much more by the rise in gas prices, just as they are by increasing housing costs and doctor bills, not simply because of the increase in the cost of a gallon of gas but because in many regions of the country poor people tend to drive older, bigger – cheaper – cars that get lower gas mileage than those affordable to their better-off counterparts.

Then there’s the issue of shopping. Many “big box” discount stores tend to be built on the fringes of cities where land is cheap and most residential neighborhoods are relatively far away. Lower-income people will spend more of their disposable income getting there, leaving them with less money to spend on the goods they need, not to mention the big-ticket items they simple want, once they arrive.

If people start spending less, stores obviously will be less profitable, and some of their workers – many of them pretty low-income themselves – could be laid off, hurting local economies even more.

It’s a spiral that could go on indefinitely.

The issue has been worrying a few members of the U.S. Congress lately, among them Rep. Jim McDermott of Washington, who’s come up with a rather novel idea to deal with the problem.

McDermott has introduced H.R. 3712, which he calls the “Gas Stamps Act,” which he intends as a way to help low-income people cope with the big price jumps at the gas pumps following Hurricane Katrina.

Under McDermott’s bill, people who qualify for food stamps and who can demonstrate a need for gasoline would be eligible to receive “gas stamps” for a period of three months, to smooth out the effect of the higher prices.

“The legislation would ensure that each household receiving food stamps could receive as much as $30 per month, or about one tank of gas,” McDermott said in introducing his bill. “The legislation would be paid for by a windfall profits tax on gas and oil companies which are reporting record profits.”

The U.S. Department of Energy says some oil companies have been reaping a huge 400 percent increase in their profits recently, he said.

“No sector of the economy should stand to gain from the pain inflicted on the people in the Gulf as well as average Americans across the country from Hurricane Katrina,” McDermott said.

His bill would levy the windfall profit tax on any sale that exceeds a 15 percent pretax rate of return on any fuel which is a byproduct of crude oil or natural gas, to a maximum of $990 million, to ensure payment for the three-month duration of the gas stamps program.

It’s an intriguing idea, and maybe one that could be applied to other gross inequities between the haves and have-nots in this country as well.

Maybe windfall profits on the sale of real estate could be tapped to provide “housing stamps” for those who can’t afford a place to live. Maybe obscene CEO salaries and bonuses could be whittled down a bit so that low-level workers in those companies could have “clothing stamps.” Maybe companies that price-gouge through their contracts with the federal government should pay back a percentage that could be reallocated as “public education stamps.”

Maybe McDermott’s onto something.