With gasoline prices plummeting, I see that every major state has enacted some form of an emergency gas tax to help fill the diminishing coffers and patch up gaping holes in budgets. It may be one of those rare bits of good news stemming from the radical deflation of commodities. I am surprised that California doesn't have one, and I figure that New Jersey, one of the states with horrible finances (perhaps among the worst, although not rivaling California or Michigan), will put one in place shortly. I think we continually underestimate the impact of still lower gasoline prices on a host of industries. Ford (NYSE: F) (Cramer's Take) could get a windfall because it still has a big line of heavy duty gas guzzlers that are immensely popular. General Motors (NYSE: GM) (Cramer's Take) is a hard call because of its ownership structure, although I am sure it will pop with the GMAC deal. I'd sell it.
If United Parcel Service (NYSE:UPS) (Cramer's Take) had any traffic, it has a huge fuel surcharge that it can slowly diminish to help the margins. YRC Worldwide (NASDAQ: YRCW) (Cramer's Take) had a great one, but I think that company is now a goner. Obviously, I have already discussed the retail benefit, but it looks like that didn't matter much.
If we could get strapped states less strapped and if we could get stimulus going, we might have a chance to avert the longest slowdown we have had in 70 years. Gasoline's a good prop, so are government borrowings, so are lower mortgages.
Unfortunately, unless we make every institution a bank, we are not going to get the credit we so badly need flowing again.
At the time of publication, Cramer had no positions in the stocks mentioned.
RELATED LINKS:
GMAC Cleared to Become Bank
Oil Prices Hovering Above $36/Barrel
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO.











Reader Comments (Page 1 of 1)
12-26-2008 @ 11:31AM
Steve said...
Jim, what we need is a permanent federal gas tax of a couple of dollars that goes to infrastructure. It's time for the SUV to die.
12-26-2008 @ 11:54AM
sgentilejr said...
Higher taxes during a economic downturn is the WORST thing to do.
The downturn is the result of people having less money in their pockets to spend and taking more money from their already empty pockets will just make the downturn worse and last longer.
People already cannot pay their mortgages and credit card debts...are higher taxes going to help them????
12-26-2008 @ 12:00PM
sgentilejr said...
Cramer is totally out of touch with reality and he just does not get it.
Honestly, I doubt Cramer even knows what a gallon of milk or a loaf of bread actually costs today.
Gasoline use is still going down even with the lower gasoline prices today because people with empty pockets cannot afford it even at $1.45 per gallon. Raising the tax takes moneny out of consumers pockets and the less they have the worse the economy will grow and the more businesses that will go out of business..
12-26-2008 @ 12:02PM
sgentilejr said...
Crmer was hyping Chesapeak Energy (CHK) shares when they were $60 and today they are $15. He is entirely clueless. He is really lucky that he does not have to work for a living and actually produce something other than the bad advice he gives.
12-26-2008 @ 12:05PM
Steve said...
It's not time to go back to the ways that got us into this mess in the first place. We can build a reasonable and sustainable economy that keeps our money in the US. The gas tax is really on the countries that we're giving all of our wealth to, let's keep that money here, creating good American jobs.
12-26-2008 @ 12:05PM
Greg said...
It seems the state gasoline tax is a good idea. As a burden to the average driver it surely won't approach the average premium of about $1.50 I've paid for gas during the last two years, above the $1.75 I'm paying locally today. Auto customers who windfall Ford by purchasing a low mpg vehicle in response to currently falling gasoline prices will be facing a bitter headwind as the economy recovers, gasoline use picks up, and prices return to the $3.50 and higher levels. That is, if they are not sooner disappointed by OPEC members who may wake up and make significant cuts to production to achieve the $70 per barrel their budgets were based on. After all, they do have a limited resource and selling it at $30 a barrel when $70 and up is achievable doesn't make economic sense. Better to cut sales 10% and double income. Fortunate for us, OPEC members are more adept at begger thy neighbor than watching out for the associations greater good.
12-26-2008 @ 12:43PM
R Hartmann said...
This country needs to get spending under control. But for the time being, any new expense, like taxes, would have the opposite effect of putting us in a deeper recession. If you overspend your recources it is time to go bankrupt. Large companies who layoff 1000's are part of the problem. We should shorten the work eek to 32 hours.
12-26-2008 @ 1:17PM
PAUL said...
SCREW CRAMER AND THE HORSE HE RODE IN ON.
12-26-2008 @ 2:01PM
lou said...
Wasn't high gas prices the final blow that brought down our economic house of cards? How dare the states raise taxes on gas. How about state leaders and employees taking a few pay cuts and how about a few of them being laid-off to help balance their books instead. Welcome them to the real world.
12-26-2008 @ 5:52PM
crlchs said...
The reason the price of oil/gas has been plummeting is so that they'll have an excuse when the stick us with a gas tax, which they (the oil companies/state governments) have been planning for months now. They couldn't impose it with the price of gas at $4.00 a gallon, so they've conveniently manipulated the prices down -- Exxon leading the charge at being the lowest, you know right there, something is going on -- and once the gas tax gets imposed across the board, guess what? Bada bing! Up go the gas prices again. I'd say, $4.00+ by August 2009. We're just unsuspecting, ignorant pawns in the hands of the oil companies. Exxon has it's greedy hands in the pockets of every American. And we don't even know it.
12-26-2008 @ 8:00PM
beachpaul said...
Ford just called back one thousand workers to build F 150 trucks. No one cares. The government will bail every one out. There is a huge reckoning coming. I wouldn't be thinking of taking advantage of anything right now. Get liquid. Repeating the same behavior expecting a different result is the definition of insanity.
12-26-2008 @ 10:15PM
Robert said...
With gas prices so low it is the perfect time to lock in your gas price. You can buy gas in bulk at Tomorrow's Gas.
When you need it you can redeem it. try it at www.tomorrowsgas.com
12-27-2008 @ 4:46AM
BELLCORD said...
" 70% OF AMERICAN POPULATION TO DIE BY FEBUARY".....BUT THE GOOD NEWS...
12-27-2008 @ 7:07AM
Enrique said...
Hey, these politicians aren't representing us, the American people. No, this is the new royalty. The new nobility is the press, the lobbyists, and big buisiness. We're just the pawns. That's why one has to be rich to get into politics. Since we take what the parties give us, we deserve what we get until we finally cut our ties with royalty like we did to create this country. We still ahve taxation without representation.
12-29-2008 @ 4:19PM
BHarrison said...
Previously, the states purportedly did relatively okay with the tax revenues on gasoline at $1.70 per gal (remember when it was a lot less?).
If petroleum pricing is down (for asphalt, etc.) then why do the states need substantially MORE tax revenues to maintain the highways and bridges? Okay, perhaps there is a lot of bridge work that needs to be done, so sell bonds for this.
Governments (Federal, state, and local) have simply become bloated from the tax revenues that they received during the previous years of economic "boom". They are no different than private businesses, UNLESS we want to become a fully socialized society. Everyone, including the state governments are trying to "game" the economic situation . . . well, the working people are going to have damn little left over from all of this taxation and price increases (such a groceries, etc.)
Everything has just become too chaotic. There are going to be MANY MILLIONS of people who are financially devastated by all of this. The middle class is becoming substantially reduced. "Discretionalry disposable incomes" have substantially vaporized into nothing.
So, if the world markeet price for petroleum is FINALLY reduced, the states want to increase the gasoline taxes . . . they will just use this to subsidize their state budgets in other areas.
It is similar to what they did in Florida with the Lottery. The State Congress merely reduced the budget for education by the amount that the Lottery contributed towards education . . . and being true politicians . . . they found ways to use the "saved money" in other ways . . . and the educational system got the shaft.
12-30-2008 @ 9:24AM
NICK said...
I love the way you ass holes want to hit the little guy with your stupid new gas tax laws, people like you and your buddy AL GORE are stupid. Let's go after the millions of dollars you have made of the backs of the poor stiffs. You and your MSNBC thugs pushing this green shit makes me sick. I put you in the same line of thugs as your CEO and Madoff.
12-30-2008 @ 4:40PM
howard said...
wouldn't a reverse sliding scale gas tax be the better solution? one that goes down as the price of gas rises?
having driven over all the US and done so for many years, i don't have a problem with the PROPER use of gas taxes. invest them into the road and highway infrastructure iteself. that makes sense.
i don't think it's fair to move gas tax revenues to general state expenses in other areas.
if we the drivers pay it, it should benefit us. otherwise, it's taxation without representation.
and if by some wild chance, there is a balance in the gas tax fund, i support investing it into domestic energy benefiting the taxpapers directly.
tell Exxon...either you invest here or we will.