Higher federal gasoline tax likely dead on arrival

The White House is said to support it, the U.S. Chamber of Commerce definitely supports it, but making gas even more expensive doesn't make much sense, an analyst said.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Feb. 16, 2018 at 9:49 AM
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Feb. 16 (UPI) -- Putting another 25 cents on the consumer price for gasoline, as proposed by the Trump administration, could be political suicide, a market analyst said.

President Donald Trump floated the idea of raising the federal gasoline tax during talks earlier this week with a bipartisan meeting with Congress. The proposal comes on the heels of an expansive infrastructure plan, an ambitious budget bill and tax reforms that many analysts said would add to a mounting federal deficit.

The fuel tax has the support from the U.S. Chamber of Commerce, which added its proposal for a 25 cent per gallon increase ahead of Trump's announcement on infrastructure.

According to motor club AAA, the national average retail price for regular unleaded gasoline was $2.54 per gallon as of Friday morning, almost 25 cents more than this time last year.

Patrick DeHaan, a petroleum analyst for GasBuddy, told UPI another 25 cents to the tax would be more than double what it is today.

"I'm sure with gas prices already likely to face pressure to rise this spring and summer versus last year, any such move would be political suicide for both Trump and politicians that go along," he said. "In addition, it adds insult to injury since many states have already raised gas taxes on their own."

California, which usually has the highest state average price in the Lower 48, raised its gasoline tax by 12 cents last year. While skewed somewhat by higher oil prices, the state's average price for Friday of $3.33 per gallon is 15 percent, or 43 cents, higher than on this date in 2017.

Gasoline inventories in the United States increased last week, signaling demand may be on the decline. On Wednesday, the U.S. Bureau of Labor Statistics released its highly anticipated consumer-price index, a gauge on the inflation in what people pay for everything from clothes to food. Data show the CPI increased on all consumer items from 0.2 percent in December to 0.5 percent last month.

Consumer gasoline prices on average went from contraction in December of 0.8 percent to an increase of 5.7 percent in January. Year-over-year, all prices increased on average by 2.1 percent.

There might not be much support for a higher fuels tax outside of the White House. Marc Short, the legislative affairs director for the president, told Bloomberg News on Thursday "there is not support for a gas tax in Congress."

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