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Pump prices are coming back, so forget about that tax hike!

A customer puts gas into a vehicle at the U-gas station in Miami.
Getty Images
A customer puts gas into a vehicle at the U-gas station in Miami.

It wasn't even two months ago that voices from both sides of the political aisle were clamoring for a boost in federal gas taxes. The reasoning from a majority of Democrats and even some Republicans was that with gas prices plummeting on a daily basis, this was the best time to hike taxes and replenish the federal highway trust fund. After all, U.S. roads and bridges do need a lot more maintenance and that takes lots more money, right?

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Well, I have one word for all those brainiacs in Washington who were so sure this was their chance to boost taxes with the least possible pushback from public: "Oops!" That's because a funny thing happened when the politicians weren't looking. Gas prices have now risen for more than 40 days in a row according to AAA, and that's despite the fact that crude oil prices haven't really rebounded during that period. And not only is this a development that proves the Washington "experts" misread the political winds, but it's just the latest example that politicians simply don't understand the free market.

Back in January when it seemed like everyone else was calling for gas tax hikes, I called for Democrats and Republicans to hold off and first root out the waste in the Highway Trust Fund. But the recent reversal in pump prices serves as a strong argument for eliminating the gas tax completely and funding our crucial infrastructure maintenance and repair in another way. One of the better ideas on how to do that comes from CNBC contributor James Pethokoukis, who believes the individual states should be allowed to decide how to raise money and how much to spend on infrastructure. Barring that, Pethokoukis favors the idea of freezing gas taxes and creating a national infrastructure bank that would give us a better idea where and how the money is being spent.

But getting back to the main point, no tax revenue or tax rate is really safe as long as so many politicians in Washington continue to misunderstand, ignore, or foolishly try to fight the free market. Too many of the Senators and Congressmen supporting a gas tax hike in January sounded as if they didn't even realize that pump prices could shoot right back up as they indeed have. That includes Republicans like Senators Bob Corker and John Thune. And no one in Washington seems to have much of a decent "plan B" when it comes to how to deal with falling gas tax revenues that are the result of ever-increasing fuel efficiency and more hybrid and electric car use nationwide. And it's exceedingly frustrating that the only response to dwindling revenues in Washington is raising tax rates, as opposed to fixing the whole broken tax machine in the first place.

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The free market will always innovate, especially when it comes to an essential need like transportation. Fools in Washington who think they can piggyback for eternity on a current means of transportation like gas-powered cars, need to wake up to the reality that time is already passing them by. A better idea would be tomarry the free market driven and improved means of transportation with more free market solutions for road and bridge repair, maintenance, and construction.

And more free market access and control of mass transit wouldn't be a bad idea either. As much as I like the freedom of driving my own car on my own schedule, every transportation study proves that the only way to reduce traffic jams is to offer more mass transit options. But "mass transit" doesn't have to mean "public transit"... as in, publicly run. Is everyone so convinced that a privately run mass transit system wouldn't succeed? How about if we try removing the regulatory and other political barriers to entry that chased private industry out of mass transit 60+ years ago in this country? Is everyone really enamored of the performance and financials at Amtrak, the D.C. Metro and New Jersey Transit, etc? Good and reliable transportation is indeed vital to the economy and national security, and that's often been the excuse used by politicians to control so much of it.

It's time for new management.

Commentary by Jake Novak, supervising producer of "Power Lunch." Follow him on Twitter @jakejakeny.