Gas Tax Suspension by State Revealed; West Virginia, California Propose Measures to Ease Oil Price Hike

Americans are hurting by the rising pump prices due to uncertainty brought by the ongoing war between Russia and Ukraine, adding to the impact of the COVID-19 pandemic restrictions on economic activities.

Even before Russia invaded Ukraine, gas prices were rising as demand surged when pandemic-related restrictions were loosened.

However, the prices were affected further as nations shifted away from Russia, which is one of the world's top oil producers, due to the invasion of Ukraine.

According to AAA's tracking, petrol prices set a new high in mid-March, with the national average reaching $4.33 a gallon of regular unleaded and more than $5.13 for diesel.

Since then, as per the national average, the gas price has decreased significantly, but it remains expensive. Furthermore, average costs in several states continue to exceed $5 per gallon.

Governments Take Action on Oil Price Surge

Federal and state governments have implemented measures to mitigate the impact of surging gas prices on consumers.

The Biden administration announced the release of 30 million barrels of crude oil from the Strategic Petroleum Reserve earlier this month. The move is a part of a concerted effort with partners to lower global energy prices. It follows a 50 million barrel release in the fall of last year.

Some members of Congress have also proposed suspending the federal gas tax, which is slightly over 18 cents per gallon for gasoline and 24 cents per gallon for diesel.

Each state has its own set of gas taxes and surcharges. According to the American Petroleum Institute, state gas taxes and levies averaged 38.69 cents a gallon at the beginning of this year.

Some state governments have already moved to postpone gas taxes to assist customers.

The following are the states that suspended gas taxes :

Connecticut

CBS News reported that Connecticut Governor Ted Lamont had supported a bill that suspends the state's 25-cent-per-gallon motor vehicle tax for retail customers, which the state House and Senate enacted on March 23 with bipartisan support. The interim solution will be in effect from April 1 to June 30.

Lamont projected that the tax decrease would cost $90 million.

Georgia

Georgia Governor Brian Kemp signed a law on March 18 suspending the state's excise tax on motor fuel sales for the time being. The state's gasoline cost is 29.1 cents per gallon, while diesel is 32.6 cents per gallon. According to the New York Post, the suspension is in effect until May 31, 2022, and it covers gas, diesel, and several other types of motor fuel, such as liquid propane gas.

Maryland

On March 18, Maryland became the first state to suspend its gas tax. The emergency legislation, which suspends the tax for 30 days, applies to the gas tax of 36.1 cents per gallon and the diesel fuel tax of 36.85 cents per gallon. The state is estimated to lose $100 million as a result of the action.

When asked by CNBC journalists if the 30-day gas tax respite would save Maryland drivers only approximately $15 on average, Maryland Gov. Larry Hogan replied that he believes the suspension significantly impacts the typical consumer.

Other States Also Follow

Other states also took actions to help ease the impact of the rising fuel prices.

State Senate Republicans in Ohio have suggested a bill to temporarily slash the motor fuel excise tax rate for gas and diesel from the current state tax of 38.51 cents to 28 cents per gallon for five years.

In California, a group of Democratic senators has proposed using $9 billion from the state budget surplus to give every California taxpayer a $400 gas rebate. It came as the governor requested assistance for those struggling with rising expenditures.

Some Republican legislators in California had proposed suspending the state's gas tax, but they lacked support in the assembly to proceed.

Meanwhile, a coalition of Democratic lawmakers in West Virginia has requested Republican Governor Jim Justice to summon a special session to suspend the state's 35.7 cents per gallon gas tax for 30 days. As of present writing, there is no decision from the governor yet.