Frost wrote the article, he didn't conduct the study.

I hate to tell you this, but I've just seen three or four "Clinton supporters" who said point-blank that they don't support the proposed gas tax holiday. I just posted a comment myself in a different diary saying that I don't think it's an especially great idea.

Supporting it or not isn't really the point of Clinton supporters.  I think most of us are less in support of it and are merely attempting to point out that the hysterical reaction by Obama supporters to the proposal is the real stupidity here.

and Bush would veto any windfall profits tax. So it's a stupid idea.

Lies, Damn Lies and Statistics.

In a state gas tax holiday, dealers may have reasons to lower prices at the pump.  Lower prices temporarily allow for greater competition against gas from other states.  (They also allow dealers to wrongly blame the holiday for high gas prices in the first place.) Because of its low gas tax, New Jersey attracts consumers from from Pennsylvania and Delaware.  

There's nothing in a national gas tax holiday to provide such incentive.  

So an economist is the standard of proof for every policy proposal now? That's fine with me, but lets apply this standard to every policy from every politician.

No more NYT hitpieces, politico reports, or Washington Post slant pieces. Only economists count.

Let's have a real conversation about this, ok?

As you may know, I wrote a detailed diary exploring these issues over the weekend.  At the time, I was assaulted by Obama supporters for daring to refute the ideologies expressed by some economists in opinion pieces and interviews.  Nevertheless, I presented factual data, and maintained that these economists were being too quick to judge, and had not properly considered all of the factors.

I have to be honest - now that two academic studies have come out, validating everything I said as I stood up against the ideologues, I'm pretty damned proud. :)  [the other study, which has received less attention, specifically focused on the federal gas tax]

So, here is the no-spin version of what we know:

(1) Tax incidence (who bears the burden of a tax) depends on two factors: the elasticity of demand, and the elasticity of supply.

(2) In the case where both demand and supply are prefectly inelastic, tax incidence should be 50/50.

(3) Demand for gasoline is almost perfectly inelastic in the short-term.

(4) The most recent academic study of state gas tax concludes that the consumer bears about 60% of the cost.

(5) The most recent academic study of federal gas tax concludes that the consumer bears about 50% of the cost.

None of this is up for debate.

(6) Several factors impacting the elasticity of supply have changed since these studies were conducted.  Specifically - refineries are now operating below capacity AND are reporting levels of surplus inventory that are above historic averages for this time of year.

From this, it is reasonable to conclude (though not certain) that supply has become more elastic.  If that is so, consumers would realize more than 50% of the savings.

(7) Something that neither of these studies could have considered: how does an excess profits tax impact all of this?  Again, it is reasonable to conclude that this would create a strong disincentive for raising price - taxing profits greatly reduces marginal revenue, while marginal costs would remain unchanged.

Summary: It is reasonable to expect that at least $4 billion of the $8 billion relief package would be captured by consumers, and therefore serve as a modest stimulus.  Given the additional factors (excess profits tax, excess supply, underutilized capacity), I would expect it to be greater than this.  Certainly, there is zero basis whatsoever to believe that $0 billion would go to consumers - all data and every study conducted on the subject refutes the Obama campaign's talking points on this.  And in no case would Big Oil capture additional profits - it is only a question of how much goes to consumers vs. how much is recaptured into the Highway Trust Fund via the excess profits tax.

Semi-related Food for Thought: The gas tax is one of the most regressive taxes in our entire system.  The proportion of income that a low-income household spends on gas is vastly higher than that same ratio for a high-income household.  Seen as a perecent of income, therefore, the gas tax puts an undue burden on those least able to bear it.  Alleviating and eventually restructuring this tax is the progressive thing to do.  (Also note that, in the longrun, we will need to find another way to fund our HTF.  Even at peak consumption, the gas tax is not sufficient, and we know consumption will decline over the coming years as we diversify our energy portfolio.)

How it relates to the candidates: Obama is not "bad" or "elitist" for not pursuing this modest relief package.  However, the rationale for the package is sound.  If Clinton is guilty of pandering, she has done so in a way that would provide genuine (albiet minor) short-term relief to those in need, and with no negative consequence.  What is "pandering" to some will be seen as "responsiveness" to another.

My purpose is not to advocate for the Holiday per se, but rather to put to rest the flawed logic that has been used to (falsely) suggest it would have a number of negative consequences.  There is simply no support for those assertions, and in fact the support we have runs contrary to them.