Gas and diesel prices continue to rise in the weeks after the war in Iran began, choking off a fifth of the world’s oil supply. Georgia has become the first state to initiate a gas tax holiday, suspending the tax for 60 days. Lawmakers in several other states have made proposals to suspend the tax, but even as Washington has one of the highest gas taxes of any state, the Evergreen State is not likely to be one of them.
Pressure at the Pump
For nearly 60 years, Don Smalls & Sons Oil Distribution Company has been involved in nearly every step a drop of gasoline takes once it comes into Washington. The company brings gas from suppliers to fleets, one of their 10 commercial gas stations, or sells it to the dozens of other gas stations they serve through Washington, Idaho, and Oregon.
Jeff Small, the third-generation general manager of the family-owned business, says the speed at which prices rose since the beginning of March is unmatched since prices jumped in the summer of 2008.
“It’s been a while since it’s gone up this quickly,” Small said. “We’re checking [prices] two to three times a day... We set our prices load to load, day to day, because it’s changing that fast.”
Washington is typically in the top five nationally for both the highest price of gas and the highest gas tax, the latter taxing $0.554 for every gallon of gasoline and $0.584 for every gallon of diesel.
To the south, Oregon’s gas tax sits at $0.40 a gallon and Idaho’s at $0.33, yet AAA tracks Washington’s prices at more than $1 a gallon higher.
“Everybody in Washington is getting that same fuel from Spokane’s [distribution pipeline], everybody in Idaho in the Panhandles is getting the same fuel, so the solid difference is taxes,” Small said.
The federal government’s gas tax takes another $0.18 per gallon, but the real difference, Small says, lies in Washington’s Climate Commitment Act that created a “cap and invest” market for emissions in an effort to cut down on pollution from greenhouse gases that are driving climate change. The Washington Department of Ecology hasn’t released estimates for how much the “cap and invest” market adds to a gallon of gas, and Small says the law forbids him from designating a line item to tell his customers how much it’s contributing.
However, Small receives a daily report from the oil market industry firm OPIS, which provides market breakdowns for clients across a variety of industry sectors. For much of the last week, OPIS has tracked the CCA as adding $0.55 to a gallon of gasoline at $0.70 per gallon of diesel. KIRO 7 requested a price check for the CCA from the Washington Department of Ecology, but did not receive a reply.
Fueling Financial Relief
KIRO 7 first asked Governor Bob Ferguson, the Democrat leading Washington, about the gas tax on March 19.
“There are a lot of things that are being considered,” Ferguson answered at the time.
“The actions of the Trump Administration are clearly having a negative impact,” Ferguson continued.
KIRO 7 called and emailed the Governor’s office several times over the past week with the same question, along with any other ideas for relief at the pump for Washingtonians, but have still not received a reply.
A Drop in the Can
In 2022, Florida, Georgia, Connecticut, Maryland, and New York all took temporary gas tax holidays after prices surged from Russia’s invasion of Ukraine. This time around, only Georgia’s governor has taken the step of temporarily pausing the gas tax. Lucy Dadayan, a principal researcher at the Urban-Brookings Tax Policy Center, says fewer states will be able to provide that relief.
“2022 was a year when most states were seeing a revenue boom,” Dadayan said. “Fast forward, and states are facing a different fiscal environment. A lot of states are chasing budgetary deficits. So, it will be hard for the states to enact gas tax holidays.”
Dadayan says, based on research from the 2022 holidays by the University of Pennsylvania, the benefit to consumers is limited. That research found gas stations don’t pass on the full discount of a gas tax holiday on to consumers.
“Gas tax holiday is also providing relief for everyone, not just the ones who are in dire need of it. So a better option to provide would be targeted relief to the lowest-income taxpayers," Dadayan said.
Small says he would pass on any savings to consumers, saying that he makes money on the volume sold, not a percentage off the cost, so there’s a motivation to give people some relief so they can fill up their tanks.
“If something doesn’t happen over in the Middle East, if some things don’t calm down, then we could be in for a rough summer for sure,” Small said.
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