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For those who feel like the gas tax holiday will be a great thing to have, please take this into consideration. Just because the 18 cent per gallon tax is eliminated doesn’t mean that retailers will necessarily drop prices by a similar amount. In fact, they may turn the gas tax holiday into a gas profit holiday.

Most gas stations make 10 cents per gallon or less in profits. Some just break even on gas. The reason for this is that they use the gas to get you there, and then profit off of the soda, beer and snacks that are in their convenience store. If a retailer could make a few extra dollars on the sale of gasoline they would.

Imagine that a retailer currently earns 5 cents per gallon. When the holiday in enacted, prices should theoretically drop 18 cents per gallon. Imagine that instead prices drop by only 13 cents per gallon. If this happened, there would be an additional 5 cents per gallon in savings that would not be passed on to the consumer. Guess where those five cents go? That’s right, into the pockets of the gas station owners. The gas station just increased their summer gas profits by 100%. Not too shabby. Even if the station dropped it 17 cents, that left over cent would give the station owners an additional 20% in profit for the summer. Once again, not too shabby.

Click on the following link to see what respondents to a CBS poll thought about the proposed gas tax holiday. The results clearly show that many see it as a political stunt to gain favor.