Californians, grappling with the nation’s highest gas prices, will pay an additional 3 cents a gallon starting Friday due to the state’s annual gas tax hike.
Yes, you read that right: Gasoline prices will increase due to the annually adjusted state excise tax on gasoline.
Golden State drivers were already paying an average of $6,289 for a gallon of regular gasoline Thursday, well above the national average of $4,857 and most of any state, according to the American Automobile Assn.
But the number came as a kind of relief as it slipped from a record high of $6.438 a few weeks ago and fell for the 16th straight day on Thursday.
Now the consumption tax will push prices up again. The tax rises from 51.1 cents to 53.9 cents per gallon, the second highest of its kind in the country, with only Pennsylvania’s excise tax being higher.
The increase comes just hours after Gov. Gavin Newsom and the state’s Democrats signed a budget deal for gas tax breaks, which will be delivered in the form of refunds to state residents.
But several state leaders, including many in the GOP, had been pushing for the state to temporarily suspend gas taxes altogether.
“The governor and the legislature could have suspended the state’s gas tax and stopped this,” Rep. Vince Fong (R-Bakersfield), vice chair of the assembly’s budget committee, said in one statement of the increase. “But the ruling party in Sacramento chose not to do that. The result will be further increasing costs for practically everything.”
Newsom and other Democratic leaders eventually rejected the idea of suspending the gas tax hike, with some arguing that it would cut funding for much-needed infrastructure projects and cost jobs.
Others said there was no guarantee oil companies would pass the savings on to consumers, and Democratic Assembly Speaker Anthony Rendon announced a legal probe to see if oil companies were “rip-off” drivers.
However, President Biden in June asked Congress to suspend the state gas tax until September, a move he said could save 18 cents a gallon.
in one Letter to Newsom On Monday, nearly a dozen Republican congressmen asked the governor to follow Biden’s lead. They also called on Newsom to support a repeal of the state’s policy of linking gas taxes to inflation.
“Amid historical uncertainty in global energy markets and California’s unique vulnerability to supply shocks, California families deserve tax breaks that reflect the severity of the economic reality they face,” read the statement by Jay Obernolte, Kevin McCarthy, David Valadao and others GOP signed letter guide.
Severin Borenstein, an energy economist at UC Berkeley, said he didn’t think it made sense to suspend the gas tax without a clear path to recovery, but he also countered the argument that doing so would reduce spending.
“The Legislature could shift revenue from other parts of the budget to offset this, as they are doing right now to pay for these rebates,” he said. “I think the reality is that neither side sees the three cents as a big deal.”
In fact, he said, many consumers might not even notice the extra three cents “compared to all the ups and downs in crude oil prices,” which have been very volatile lately. Crude oil prices have fallen from about $120 a barrel to $110 a barrel in recent weeks, he said, representing a saving of about 25 cents a gallon.
Borenstein warned that suspending the tax without later raising it to a “reasonably high level” would encourage people to return to driving gas-guzzling cars when the price falls again.
“The problem would be how do we get people to keep voting [electric vehicles] when gasoline is so cheap,” he said.
He said a bigger priority for the Legislature should be what he called the state’s “mysterious gas surcharge,” which for years has caused Californians to inexplicably pay more at the pump.
“Of course, 3 cents less would be better than higher, but compared to the other factors driving gas prices, that’s not the main factor,” he said of the excise tax.
Friday’s surge also comes ahead of the Fourth of July weekend, which the AAA says will be the third-biggest Independence Day on record for Southern California when it comes to vacation travel. About 2.7 million Southern Californians are expected to travel by car.
“People are ready for a break, and even though things cost more, they’re finding ways to take a much-needed vacation,” said Doug Shupe, spokesman for AAA Southern California.
Las Vegas, San Diego, the Grand Canyon, Mexico and Yosemite National Park are the top travel destinations for Southern Californians according to the AAA.
Nationwide, more than 42 million people are expected to arrive by car this weekend, the organization said.
https://www.latimes.com/california/story/2022-07-01/california-gas-prices-finally-declining-will-be-hit-with-new-tax-this-week Prepare to pay more for gas in California starting today