Few things rouse the senses quite like gas prices, and anxieties spike with talk of taxing it. When Minnesota lawmakers this spring boosted the state gas tax, a local TV reporter excitedly used charts to show rising pump prices as the levy — a nickel — kicks in next year.
But in reality, Minnesota's small tax bump won't affect pump prices (just as last year's silly proposal for a gas tax holiday to counter price-volatility would've had scant effect).
Gas pricing, says the Oil Price Information Service, is always driven by international supply and demand, and influenced by strength of the U.S. dollar, the currency basis for world pricing. Demand goes up and so does price, just as a weakened dollar requires more dollars for U.S. refiners to buy oil.
A nickel added to Minnesota's gas at $3.46 a gallon is 1.4% of pump price, hardly enough to move the needle.
There are local influences, like when a key refinery goes down and where a station is located. That's why price varies from one station to the next.
Also, notice that gas prices by state don't correlate with tax amounts. North Dakota and South Dakota gas costs $3.40 even though South Dakota's tax is 7 cents higher. Wisconsin and Iowa gas costs a few cents less than Minnesota's, while both tax at 5 cents higher. Florida gas is 12 cents less with a tax 14 cents higher.
Some think the U.S. could dampen pump prices by increasing oil supply. But that's outside government control; private companies produce American oil, and as a business matter their production is linked to world bid prices. Only those governments that own production — OPEC-plus members — can directly control local price.
Minnesota's gas tax has now been indexed to inflationary costs of road building, a common-sense move that will see revenue keep pace with costs. Regardless, it's unlikely to ever be enough to affect pump prices.
But there's some misplaced wrath here, in that big trucks cause nearly all road damage but don't pay their share of massive repair costs, leaving the difference to taxpayers.
While a range of factors are involved, an independent report says just one large, loaded truck damages freeways as much as 2,500 cars (9,600, some calculate). Trucks cause 90% or more of road damage (higher on secondary roads built to lesser standards) but pay only a third to half of repair costs.
Increasing truck traffic already makes up a third of interstate vehicles in Indiana, Nebraska and Texas. More road damage, together with huge increases in infrastructure funding, means more construction delays.
Seems the anti-gas-tax crowd might focus on the real inequity by taking on the giant truck lobby. Good luck.
Ron Way lives in Minneapolis. He's at firstname.lastname@example.org.