John McCain wants a federal gas tax holiday from Memorial Day to Labor Day.

Hillary’s amenable to the idea; Obama calls it a “bad idea.”

The Wall Street Journal notes that back when he was an Illinois state legislator, Obama liked the idea, back when gas prices were downlight delightful compared to today’s:

In Illinois in 2000, Sen. Obama voted for a six-month, five-percentage point break on the state’s 6.25% gas sales tax. The reduction of the tax, which goes into a general revenue fund, passed on a 55-1 vote and included measures designed to ensure that the benefits of the tax break reached consumers. At one point, Sen. Obama jokingly asked on the Senate floor whether it would be possible to install placards on gas-station pumps telling motorists he had helped win temporary price relief.When some state legislators tried to make the suspension permanent before it expired, Sen. Obama spoke out against that measure but defended his vote for the holiday, according to transcripts posted on the legislature’s Web site.
“I originally voted for the suspension because I thought that it was extraordinary circumstances, given the huge hike in prices,” he said at the time. Gas prices averaged $1.52 a gallon in March 2000.

A big question is whether retailers would pass the savings on to customers. The Illinois state one at that time would have reduced the price about 9 or 10 cents a gallon. The Federal tax today is 18.4 cents per gallon and 24.4 cents per gallon on diesel.

(Also note that the candidates are debating a proposal that would come and go before any of them become president.)

The problem is what while this would reduce the tax payments to the Highway Trust Fund, it is one of the few options that would provide some relief in the near future. Take a look at suggested options from Arkansas Democrats for an example: Drilling in ANWR, which won’t happen with their party in charge of Congress. Others want “a Justice Department investigation into market manipulation.” Because the federal government has never done that before.

The Federal Trade Commission’s investigation of post-Katrina gas prices found:

15 examples of pricing at the refining, wholesale, or retail level that fit the relevant legislation’s definition of evidence of “price gouging.” Other factors such as regional or local market trends, however, appeared to explain these firms’ prices in nearly all cases. Further, the report reiterated the FTC’s position that federal gasoline price gouging legislation, in addition to being difficult to enforce, could cause more problems for consumers than it solves, and that competitive market forces should be allowed to determine the price of gasoline that drivers pay at the pump.
During the time period examined, the testimony states, the Commission found:
No evidence to suggest that refiners manipulated prices through any means, including running their refineries below full productive capacity to restrict supply, altering their refinery output to produce less gasoline, or diverting gasoline from markets in the United States to less lucrative foreign markets. The evidence indicated that these firms produced as much gasoline as they economically could, using computer models to determine their most profitable slate of products. No evidence to suggest that refinery expansion decisions over the past 20 years resulted from either unilateral or coordinated attempts to manipulate prices. Rather, the pace of capacity growth resulted from competitive market forces. No evidence to suggest that petroleum pipeline companies made rate or expansion decisions in order to manipulate gasoline prices. No evidence to suggest that oil companies reduced inventory to increase or manipulate prices or exacerbate the effects of price spikes generally, or due to hurricane-related supply disruptions in particular. Inventory levels have declined, but the decline represents a decades-long trend to lower costs that is consistent with other manufacturing industries. In setting inventory levels, companies try to plan for unexpected supply disruptions by examining supply needs from past disruptions. No situations that might allow one firm – or a small collusive group – to manipulate gasoline futures prices by using storage assets to restrict gasoline movements into New York Harbor, the key delivery point for gasoline futures contracts.