Dealer Outlook

Trade Only Dealer Outlook Blog

Good: Gas prices tumbled! Bad: New taxes?

The New Year has opened with some positive news but donít expect the mainstream media to give it much coverage. After all, to them only bad news is good news!

The good news is gas prices at the pump have dropped faster than a Marine recruit doing push ups. The even better news is that itís leaving real money in consumerís checking accounts these days. And, with our boat show season now hitting stride — Houston exceeded expectations for opening weekend and dozens of other major shows kick off next weekend Ė extra money for consumers comes just at the right time.

Hereís what I mean. Itís a fact that every time the price of gas at the pump drops just one thin dime it makes $12 billion in cash available for American consumers to spend elsewhere. So, the drop in gas prices from the recent high of $4.00/gal. down to todayís approximately $1.50/gal. is leaving $300 billion in cash in consumerís bank accounts. Thatís like a massive tax cut and it will have an unheralded positive economic impact.

Add more good news that comes from reports that President-elect Obamaís stimulus plan will likely include another $150 billion in tax cuts for consumers and $100 billion in cuts for businesses. Throw in another $500 billion in government spending and the $700-plus billion package should go a long way to boosting the consumer spending outlook.

Of course, my optimism is predicated on the fact that neither Congress nor the states do anything stupid Ė like raise gas taxes! For example, Rep. Peter DeFazio of Oregon says as we use less fuel ďthe gas tax isnít going to fill the bill,Ē meaning a hike in the gas tax could be justified to fund roads and transportation programs. Or, why not bleed consumers by requiring drivers to report their mileage when they register their vehicles and taxing those miles?

Yes, governors in Idaho and Rhode Island have suggested that idea. Why, Oregon has even run a ďmileage taxĒ experiment using 300 GPS transponder-equipped cars that work wirelessly with two gas stations allowing drivers to pay their theoretical mileage tax just as they do their gas tax.

What are these guys thinking? With the country struggling in a deep recession and American consumers finally getting a break at the gas pump, a diverse group ranging from brain-dead politicians to self-serving members of the Infrastructure Financing Commission thinks itís a good idea to raise taxes on gas or mileage to fund projects. Hey, I got an idea: how about cutting expenses!

But, letís set this talk about taxes aside. The fact is I like the picture thatís forming right now in time for our boat shows. Specifically, we need to focus on such things as: Unemployment is rising, yes, but most people are still working and secure in their jobs; Gas prices arenít painful or even news anymore leaving us all more money to spend elsewhere; Forget í08, operating a boat in 2009 will be a great deal cheaper. Our government is planning to boost our cash position even more, and as fast as possible, too; Interest rates remain low and there is money for boat loans for solid buyers, at least.

Finally, I think consumers are (1) tired of all the negativity that concluded í08 and, accordingly, (2) will see í09 in much more positive terms. I think most boat shows will reflect an upbeat outlook and will exceed expectations, too.

Happy New Year!

Comments

5 comments on “Good: Gas prices tumbled! Bad: New taxes?

  1. John Wisse

    Unfortunately Norm — in the time it took for you to write and post your blog on this subject, retail gasoline prices in Ohio shot up 50 cents per gallon over the past 7 days. Additionally, it was just announced that a 62-member state task force in Ohio has recommended a gasoline sales tax increase from 28 cents to 41 cents per gallon to offset higher road project costs, which is a 46 percent tax increase. It simply goes to show how volatile the whole subject matter of fuel prices can be and how unstable prices actually remain. Suffice it to say, the key to turning our industry around is to be selling memories– the boating experiences — and with those opportunities ahead, yes I’d agree the glass is more than half full.

  2. Doug Reimel

    We guys Michigan is going to beat all other states. They are going to cancel the 19 cent per gallon road use tax and replace it with a 19 PERCENT road use tax because revenues are down. Keep in mind this is in addition to the 6 PERCENT sales tax. This is in addition to the federal tax. Our own government is the greatest deterent to economic growth. Money in your hands gets spent and the government makes money. That thougt has been traded to the government needs your money directly from your pocket because the government knows better how to spend your hard earned dollars than you do. AFter all there is alot of government and welfare recepients that are depending on you working

  3. Schwarzel

    Lets face facts we are going to get screwed. Price of oil is down now but the DC sink heads will pass a tax to put more money in their pockets. THEY WANT 4.00 dollar gas. It is inline with the “green” thing. Can’t have you buying boats or SUV’s heaven forbid! When are we as a INDUSTRY going to say STOP use your head let’s have some COMMON sense in how we tax and govern?

  4. Mad dog

    Norm,
    It sounds like Ohio is becoming the new tax wasteland of the midwest. If John Wisse is right and Ohio officials follow this nutty idea new gas taxes, Buckeyes may become the currency of the state. Add the possibility of a federal gas tax increase and gas is $4.00 a gallon again. It already costs you a first born child to move a boats through on Ohio roads and new increases will require a second child payment by next year. It is Ohio’s form of birth control.

  5. Bob the boater

    The problem with the Obama tax cuts, is that it gives tax cuts to people who don’t really pay much in taxes in the first place. The people who are paying a large percentage of their income in taxes, are not going to see cuts. With the current political climate, they will likely see tax increases, as Obama attempts to “spread the wealth around.” Unfortunately, I think these high tax paying individuals, probably fall smack into the middle of the potential boat buying market demographic. In a previous post, Norm mentioned selling smaller, more affordable boats, to get people into the boating lifestyle. If you agree with my above analysis and speculation, this is where manufacturers and dealers can see more growth potential.

Leave a Reply

Your email address will not be published. Required fields are marked *

Comments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Comments Policy.