Utah leaders discuss possibility of suspending gas tax

Mar 16, 2022, 6:50 PM | Updated: Jun 19, 2022, 9:03 pm

Gas prices remained high Thursday, as state leaders discussed options—including the possibility of suspending the state gas tax—to relieve the burden of increasing prices on Utahns.

Utah’s gas tax is 31.9 cents a gallon, according the state’s website. That comes out to about $5 of state gas taxes to fill up your 15-gallon tank of gas.

By now we’ve all seen the numbers at gas stations. According to AAA, the average price of a gallon of regular gas is at $4.35, up 50 cents in the last week and a half and a dollar in the last month.

The governor and state legislative leaders are still early in their discussions about how to respond to the price hike at gas stations, according to Alexa Roberts, communications manager at the Utah House of Representatives.

Roberts told KSL Wednesday that state leaders are discussing the possibility of pausing the gas tax among other options to reduce the tax burden and keep the cost of living low for Utahns.

Other states are also considering the move and some have already made it happen, according to several media outlets.

“If you look at the gas tax in Utah as compared to say California, ours is much lower,” said Thomas Holst, senior energy analyst the Kem C. Gardner policy institute.

“But if legislators feel that Utahns need that temporary relief I would say that appears to be a good solution.”

Holst says there are many factors contributing to the current situation. During the pandemic, he says. Crude oil prices got down to the single digits as fewer people traveled and demand for gas dropped.

Over the last year or so demand for gas has shot back up as more people have returned to the office and traveling. AAA reports the average price of a regular gallon of gas was $2.98 one year ago.

And then Russia invaded Ukraine, uncertainty increased and the U.S. and western allies banned Russian oil imports, events that Holst says has “pushed oil prices up into triple digits.”

“That’s created a shortfall in the market. There is certainly enough crude oil supply globally to fill that gap. But right now, we just don’t know where that is. And commodities like crude oil and motor gasoline react accordingly and there is an uptick on prices.”

But what about oil companies? Do they share the blame for price increases?

“Oil companies have a relationship with their investors to be as profitable as they can be,” he said. “And so, they would like to maximize crude oil production.”

But Holst says this is not the first time we’ve seen gas prices this high. He points to the increase in 2008 and in August 1990 during the invasion of Kuwait.

But more than that he says the early 80s saw a huge spike in gas prices during the period of Iranian revolution. When you adjust for inflation he says the cost of crude oil spiked to about $140 per barrel. Over the last week we’ve seen that price hit $110 a barrel.

Holst also noted that the United States is the world’s largest producer of crude oil and that there is the ability to increase production even more, including at home.

“Is Utah ready to increase oil production? I would say the answer is yes.”

Looking ahead, Holst said, “Unfortunately nobody has a crystal ball to answer those questions. We can only say we’ve been there before.”

And he said today we have alternatives to “reduce our dependence on fossil fuels” with other types of vehicles, like electric, that do not rely as heavily on motor gasoline.

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Utah leaders discuss possibility of suspending gas tax