To use a recycled analogy, the federal government is tilting at windmills regarding stratospheric petroleum prices. Every floated solution – the latest is a summertime federal gasoline tax suspension – assumes this fuel crisis is temporary, and requires a short-term solution.

Yet the conventional wisdom at every gas pump, from sea to shining sea, is these prices are neither temporary nor solvable in the short-term. And consumers are not behaving like they are.

The latest evidence came Friday, when The New York Times reported sales of compact cars jumped in April, while trucks and sport-utilities plummeted. One industry observer said, strikingly, the SUV era is “over.”

If consumers are making long-term plans regarding fuel consumption, so should policy-makers.

Suspending the gasoline tax, 18.4 cents/gallon, for the summer is great politics for presidential candidates, like Sen. Hillary Clinton and Sen. John McCain, but fails economics, public administration and ecology.

Demand for gasoline increases in summer, the impetus for the suspension. Elevated demand, however, will spike consumption and therefore prices – regardless of taxes. Yet a suspension will put a gaping (estimated at $9 billion) hole in the debt-ridden federal budget. Taxpayers may only save a few dimes on still-escalating prices.

Some suggest filling this budget divot with taxes on oil company profits, but these new levies are problematic – they will likely be passed on to consumers through the pump.

There is a straight-face test failing as well. In places such as Rangeley and Oquossoc, for example, which have some of Maine’s highest gas prices, an 18.4 cent/gallon summertime reduction in prices is only paper improvement.

At $3.80/gallon, or $3.60/gallon, the pump price is still crippling, for locals and tourists alike.

The worst part, though, is the suspension is temporary. After Labor Day, prices will spike when it ends, which will turn consumers ugly. (We grumble when it rises a few cents.) The government should avoid a scenario in which, if gas prices continue to rise as predicted, it must make them jump more than 18 cents overnight.

A simple turn cannot replace decades of myopia about America’s energy consumption. Some wise observers – outside government – are daring to say more taxes on gasoline, not less, are needed.

Increasing taxes would dissuade consumption, which is the only surefire way to end this crisis.

But consumers should consider petroleum prices are beyond government control – despite promises. Though government action and inaction shoulders some blame, real progress against prices starts at home.

April’s automotive numbers hint consumers know this is true, which is why we cannot afford to behave like these fuel prices are temporary.

Nor can we afford proposals – such as the tax suspension – which insist that they are.


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