The summer driving season isn't even here yet, and the issue of rising gas prices is heating up on the campaign trail.
So what are the candidates running for the White House promising to do about the problem?
What is each candidate promising to do about the rising gas prices?
— Name withheld, Glendale, Calif.
The combination of a presidential election campaign and gasoline prices over $4 a gallon is a volatile mixture. No one knows where prices are headed this summer. Nonetheless, if you see a $5-a-gallon story on the front page of msnbc.com before November, expect to hear more promises from the candidates.
Unfortunately, nothing said so far will have much — if any — impact on gasoline prices. Here, according to Reuters, is where the candidates stand on the issue:
Sen. Hillary Clinton’s most visible proposal to date has been suspending the 18.4-cents-per-gallon federal tax on gasoline this summer. The New York Democrat also wants to investigate oil companies and energy traders for possible market manipulation.
And she wants to try to lower the price of oil by releasing crude oil from the U.S. Strategic Petroleum Reserve — the stockpile intended to keep the military supplied in case of a cut-off of supplies by a foreign oil producer.
Republican Sen. John McCain also wants to suspend the federal gasoline tax from May 22 to Sept. 1, and suspend filling the oil reserve. (The Bush administration Friday bowed to congressional pressure and said it would stop adding oil to the reserve.)
Clinton's Democratic opponent, Sen. Barack Obama, also wants to investigate the oil industry and stop filling the reserve. But he has said the gas tax “holiday” is a bad idea because it would encourage more consumption and would only save drivers $25.
The gas tax holiday has gotten a lot of attention, but nobody is suggesting it would lower the underlying price of gasoline. The main reason gasoline prices are rising is that the price of crude oil is rising.
There’s some debate about the impact of a gas tax holiday on consumption. But to the extent that higher prices are beginning to cut into demand, which could ease pressure on prices, you would reverse that trend if you knocked 18 cents off the price of each gallon.
Obama’s math is pretty good: At 12,000 miles per year, you’ll drive roughly 3,000 miles during the summer months. Assuming you get 20 miles per gallon, you’ll burn through 150 gallons. At 18.5 cents each, that would save you $27.75.
On the other hand, if you figured out how to get to work one day a week without your car (or worked from home) you could save much more. You’d also have a real impact on demand, and therefore, on prices. Assuming you drive 30 miles round-trip to work, in three months you would save 19.5 gallons (at 20 mpg). Based on the latest weekly average pump price of $3.72 a gallon, that adds up to more than $72. At $4 a gallon, you'd save $78.
Riding your bike to work would help in two ways: Your car would burn less gas, and you'd lose weight. Americans are now pumping an extra 938 million gallons a year because of the added weight gained by the average driver since 1960, according to a study by researchers at the University of Illinois at Urbana-Champaign and Virginia Commonwealth University.)
Doing away with gas taxes would also rob the federal budget of money for rebuilding crumbling roads and bridges, which is where your gas tax pennies go to die. Clinton’s answer to that is to make oil companies foot the bill for the lost taxes. (Why not just fix all the roads and bridges and send them the bill?)
Investigating the oil industry and energy traders also sounds great, but it’s been done. Most state attorneys general have been looking hard for evidence of price gouging; none has found any so far. The Federal Trade Commission took a look in 2005 and concluded that “market factors" were the primary drivers of price increases.
As for suspending shipments to the Strategic Petroleum Reserve, it’s a drop in the barrel. The 703 million barrels currently in storage represents about 8 days' worth of global demand. The roughly 2 million barrels that were being added to the SPR each month would keep the world market supplied for about a minute.
Do I have to declare a capital gain if I inherit a second home, sell it and then reinvest it in another second home?
— Jane G. Ore.
Yes, but if you sell it right away there should be little or no capital gain. The “basis” — the number you subtract from the sale price (minus any transaction costs) to figure your gain — is the value of the house when you inherited it, not when it was purchased by the person who bequeathed it to you. In this market, the house is unlikely to appreciate much — especially if you price it for sale aggressively, based on a fresh appraisal. So you can pretty much eliminate the gain.
If you did have a gain, there are ways to roll it over into another property, but it’s a complicated process with restrictions that make it most useful for investors who buy and sell homes over time.
In any case, you should review all this with the attorney handling the estate.
My husband and I have negotiated with his grandmother to buy part of her farm. They have no money to pay for the land survey, so we are paying it and it will come out of the final amount that we both agreed to. I know we need to do a title search and I have someone who is a paralegal to do so and will do it at no cost to me. We are unsure of where to go from here. What are the next steps to take? Do we need a lawyer? Why?
— Kellie S., Willard, Ky
Yes, you need a lawyer — because every real estate transaction is different.
And if you miss something when you set up this one, you may end up — sometime way off in the future — costing yourself much more than the few hundred dollars a lawyer will cost you.