Opinion: Where are the lower gas prices from Biden’s release of oil reserves?
It was a political stunt that hardly moved the meter. But states are debating another move that really could make gas cheaper
How are you planning to spend your gasoline surplus? You know, the money you saved because President Joe Biden released 50 million gallons of the nation’s strategic oil reserve in order to reduce the price we pay at the pump.
I’m joking, of course. As I predicted, a release of the reserves barely moved the meter. It was a political stunt, nothing more.
The gas station monitoring website gasbuddy.com said the cheapest place in Salt Lake County earlier this week was $3.43 per gallon for regular gas, which is not far from where it was the day before Biden’s announcement.
Nationally, prices have come down slightly from an average of $3.41 per gallon a month ago to $3.33 this week, according to AAA. But experts had been predicting a drop due to natural economic forces, such as a reduction in driving during winter months and fears over the omicron variant of COVID-19.
Do you want to see a real reduction at the pump? Get your state politicians to cancel the gas tax altogether.
That’s what Florida Gov. Ron DeSantis is proposing for his state. It would cost about $1 billion per year in lost revenue, but Florida is one of several states sitting atop mountains of surplus money right now, putting it in a position to do something a little rash.
That list of states with surpluses includes Utah. As Gov. Spencer Cox unveiled his proposed budget this week for next year, he put the expected surplus in tax collections for ongoing funds at $1.16 billion, and the surplus for one-time money at $1.87 billion.
In the context of a $25 billion overall budget, that’s real money.
As he left a meeting with the Deseret News/KSL editorial board on Monday, I asked Cox what he thought of DeSantis’ plan in Florida. Without commenting directly on it, he said Utah has to get serious about what it wants to do with its gas tax, which is becoming increasingly ineffective each year.
It was designed as a user tax to fund road construction and maintenance, but it’s losing its punch.
Utah adds about 31.4 cents in taxes to every gallon of gas sold, but cars are becoming increasingly fuel efficient, and even though only 3.4% of all new cars purchased nationwide this year were hybrids, a recent survey by CarMax found 55.9% of Americans saying their next car purchase is likely to be an all-electric or hybrid model.
The future could be coming at us faster than a driverless Tesla.
Owners of those new cars won’t pay as much in gas taxes as their gas guzzling peers, but they still will cause wear and tear on the roads.
Utah has a pilot program allowing those folks to pay a tax based on miles driven, instead of paying heftier fees to register their cars. A simple device that plugs into a car’s data port keeps track.
Maybe everyone will have one of those some day. Or maybe we’ll see more aggressive tolling on roadways, with drivers charged more during high-traffic times. The state’s HOV lanes already use that model.
The gas tax problem wasn’t a part of the governor’s budget presentation, but Cox said he and legislative leaders have been talking a lot about it.
Frankly, this isn’t the time to eliminate the gas tax. To be meaningful, tax cuts should increase economic output. Making gas cheaper wouldn’t do that. Meanwhile, the tax still raises enough meaningful revenue, especially from out-of-state drivers, to serve a purpose.
But the state will have to face the future of road taxes sometime soon, perhaps sooner than politicians think.
With surpluses expected, the 2022 legislative session could feature huge debates about tax cuts of all sorts. Cox wants to enact a credit for grocery sales taxes paid. Others want to eliminate the state’s sales tax on food altogether, while still others want to cut the state income tax.
Debates like these will happen all over the land next year. Minnesota has a whopping $7.7 billion surplus. Arkansas may cut income taxes while providing tax breaks to a steel mill so it doesn’t move to Mississippi.
Utah just lost the production of “Yellowstone,” a major television show, to Montana, and some lawmakers are talking about increasing the tax breaks to production studios.
We weren’t expecting to be in this situation when the pandemic began. The only questions are why it’s here and how long it will last.
As Carl Davis of the Institute on Taxation and Economic Policy told Forbes recently, “... this rosy budget picture isn’t going to last forever.” However, he said, a lot of the tax cuts states are talking about “were written to last forever.”
So, enjoy your Biden oil reserve benefit while you can. Buy a small drink with your next fill-up.
Or maybe put the extra change away for the day when fortunes turn and taxes rise again.