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Good: Gas prices tumbled! Bad: New taxes? - Trade Only Today

Good: Gas prices tumbled! Bad: New taxes?

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The New Year has opened with some positive news but don’t expect the mainstream media to give it much coverage. After all, to them only bad news is good news!

The good news is gas prices at the pump have dropped faster than a Marine recruit doing push ups. The even better news is that it’s leaving real money in consumer’s checking accounts these days. And, with our boat show season now hitting stride -- Houston exceeded expectations for opening weekend and dozens of other major shows kick off next weekend – extra money for consumers comes just at the right time.

Here’s what I mean. It’s a fact that every time the price of gas at the pump drops just one thin dime it makes $12 billion in cash available for American consumers to spend elsewhere. So, the drop in gas prices from the recent high of $4.00/gal. down to today’s approximately $1.50/gal. is leaving $300 billion in cash in consumer’s bank accounts. That’s like a massive tax cut and it will have an unheralded positive economic impact.

Add more good news that comes from reports that President-elect Obama’s stimulus plan will likely include another $150 billion in tax cuts for consumers and $100 billion in cuts for businesses. Throw in another $500 billion in government spending and the $700-plus billion package should go a long way to boosting the consumer spending outlook.

Of course, my optimism is predicated on the fact that neither Congress nor the states do anything stupid – like raise gas taxes! For example, Rep. Peter DeFazio of Oregon says as we use less fuel “the gas tax isn’t going to fill the bill,” meaning a hike in the gas tax could be justified to fund roads and transportation programs. Or, why not bleed consumers by requiring drivers to report their mileage when they register their vehicles and taxing those miles?

Yes, governors in Idaho and Rhode Island have suggested that idea. Why, Oregon has even run a “mileage tax” experiment using 300 GPS transponder-equipped cars that work wirelessly with two gas stations allowing drivers to pay their theoretical mileage tax just as they do their gas tax.

What are these guys thinking? With the country struggling in a deep recession and American consumers finally getting a break at the gas pump, a diverse group ranging from brain-dead politicians to self-serving members of the Infrastructure Financing Commission thinks it’s a good idea to raise taxes on gas or mileage to fund projects. Hey, I got an idea: how about cutting expenses!

But, let’s set this talk about taxes aside. The fact is I like the picture that’s forming right now in time for our boat shows. Specifically, we need to focus on such things as: Unemployment is rising, yes, but most people are still working and secure in their jobs; Gas prices aren’t painful or even news anymore leaving us all more money to spend elsewhere; Forget ’08, operating a boat in 2009 will be a great deal cheaper. Our government is planning to boost our cash position even more, and as fast as possible, too; Interest rates remain low and there is money for boat loans for solid buyers, at least.

Finally, I think consumers are (1) tired of all the negativity that concluded ’08 and, accordingly, (2) will see ’09 in much more positive terms. I think most boat shows will reflect an upbeat outlook and will exceed expectations, too.

Happy New Year!

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