Soaring Gas Prices Unlikely to Affect Gas Taxes

Record-high gas prices may send you scrounging for loose change under the car seat, but so far only Florida is considering lowering its fuel tax to try to ease the pain.

Unlike four years ago when at least two states temporarily eased gas taxes, other states have no immediate plans to follow suit. Back then, the governors of Illinois and Indiana suspended collections after gas prices in their states approached the $2-per-gallon mark. High gas prices also prompted a federal investigation into price gouging in 2000.

Gas prices this year reached a record-high national average of $1.76 per gallon on April 2, according to the American Automobile Association daily fuel gauge report. Prices ranged from an average of $2.13 in Hawaii to $1.61 in Oklahoma, sparking public frustration that could grow into a national political issue. Florida's average gas price on April 2 was $1.79 per gallon.

The Florida House voted unanimously April 1 to cut the gas tax by 10 cents per gallon for a month in either July or August, and the budget amendment now awaits Senate action. On Friday, senators demanded hearings on the soaring gas prices, according to the Palm Beach Post. Florida motorists pay 14.3 cents per gallon in state fuel taxes, and a 10-cent reduction could siphon $90 million from state coffers.

If the measure passes, the state could make up the difference from projects vetoed by the governor, said Rep. Bob Henriquez, D-Tampa, who proposed the tax relief.

"I simply want to try to stimulate our Florida economy by lowering gas prices during the months that are so important to us, when most people drive in Florida... There's some belief that prior to the election, that prices will come down some way, somehow. I've done the best that I can to try not to make this a partisan issue or focus on why gas prices are so high," Henriquez told Stateline.org.

Gas prices have become an issue in the presidential race, with President Bush and Democrat John Kerry trading charges about them. Bush has accused Kerry of supporting a 50-cent federal gas tax. Kerry countered that consumers are paying more than 10 percent more for gas since Bush took office, and that this amounts to a "Bush gas tax."

The federal gas tax of 18.4 cents per gallon is used for highway improvement. It is collected in all states in addition to any state or local gas taxes. State gas taxes range from 7.5 cents per gallon in Georgia to nearly 33 cents per gallon in New York, the American Petroleum Institute said.

Some states, such as Louisiana, charge a flat tax rate per gallon. Others levy a tax on the dollar amount of gas sold. Some states also let localities charge a gas tax.

U.S. motorists have been paying more at the pump partly because crude oil prices last month hit their highest level since the 1990 Gulf War. On March 31, the Organization of Petroleum Exporting Countries, which pumps about a third of the world's oil, said it would cut production by 4 percent.

John Person, a Chicago financial analyst, said lower-than-expected gasoline inventories have been driving higher prices but he expects a change in coming weeks.

"As inventories build in crude oil, then you're going to see price relief at the gas pump. We are building inventories," Person said.

But Person said prices won't go below $1.50 anytime soon. Also, beefed-up security at U.S. ports will translate into delivery delays that could keep prices elevated, he said.

Adjusted for inflation, previous gas crunches were worse than the current one. The 1981 gas price in this year's dollars was more than $2.80 a gallon.