Understanding gas price disparities between stations
Fluctuations in gas prices are not random. Understand how taxes, blends, margins, and brands lead to different pump costs.
Brad Myers, Ben Mace
- President Donald Trump and some lawmakers are considering suspending the federal gas tax in response to soaring prices.
- The federal government has collected a gasoline tax since 1932, and it currently stands at 18.4 cents per gallon.
- Georgia has already suspended its state gasoline tax, and several other states are considering similar measures.
President Donald Trump has said he wants to temporarily suspend the 18 cents per gallon federal gas tax to help drivers struggling with high gas prices, and Republicans in Congress have introduced a bill that would do just that.
“I think it’s a great idea,” President Trump said in a phone interview with a CBS News reporter about his plan to temporarily raise the gas tax. “Well, we’re going to eliminate the gas tax for a certain period of time and then phase it back in as gas prices go down.”
The comments come after Republican Sen. Josh Hawley of Missouri said he would introduce a bill on May 11 to suspend the federal gas tax. Furthermore, on March 13, two Democratic senators in the Senate introduced a bill calling for the suspension of the federal gasoline tax until October 1, in light of soaring domestic gasoline prices.
“This bill temporarily suspends the federal gasoline tax, lowers high gasoline prices and squeezes consumers, and provides much-needed economic relief to American families,” said Democratic Sen. Richard Blumenthal of Connecticut, a co-author of the bill.
The Automotive Innovation Alliance, the largest lobbying group for automakers in Washington, also recently spoke in favor of a plan to eliminate the federal gas tax and introduce a new vehicle fee based on a car’s weight.
The president and lawmakers’ comments came as the average price of gasoline reached $4.52 on May 11, according to the AAA Auto Club. This is an increase from the national average gasoline price of $2.98 on February 28, when the United States launched its first military strike against Iran at the direction of President Trump.
How much is the federal gas tax?
The federal government has collected taxes on all gasoline purchases made at U.S. gas stations since the 1930s. The current tax rate of 18.4 cents per gallon was established by a law passed by Congress in 1993. Transportation funding advocates lament the fact that Congress has not acted to raise gas taxes in more than 30 years.
Gasoline taxes are typically authorized by Congress each time it adopts a federal highway funding bill, because revenue from the gas tax is used to fund the Department of Transportation’s Highway Trust Fund. The Highway Trust Fund is distributed to states to help pay for road and transportation construction projects.
The federal gasoline tax was first enacted in 1932 at a rate of 1 cent per gallon. Congress has approved multiple tax increases since then, and some lawmakers have called for tying the increases to inflation, making it politically difficult for lawmakers to vote in favor of tax increases before elections.
Suspending the federal gasoline tax would require an act of Congress, since the collection of the federal gasoline tax was authorized by lawmakers in a previous highway funding bill.
What is the gasoline tax used for?
The DOT’s Highway Trust Fund, which is distributed to states to help pay for road and transportation construction projects, is primarily funded by the federal gasoline tax of 18.4 cents per gallon on every U.S. gasoline purchase.
As cars become more fuel efficient, more drivers are choosing EVs and hybrids., Even though road use is increasing, the government is collecting less money. Lawmakers have been looking for ways to close the growing gap in federal gas tax revenue.
The federal gasoline tax hasn’t been raised since 1993, and at current levels it brings in about $40 billion a year, according to the Tax Policy Center. The federal government typically spends about $60 billion on transportation projects, but infrastructure advocates say that’s barely enough to maintain the nation’s roads and transit systems. Most states also impose their own gas taxes to fund local road projects.
Can President Trump unilaterally suspend the gas tax?
The federal gas tax is authorized by Congress, so President Trump cannot unilaterally suspend it. Suspending or eliminating the federal gasoline tax would require separate legislation from Congress.
Mr. Trump and others recently floated the idea because of voter dissatisfaction with rising gas prices and because current federal highway funding was part of former President Joe Biden’s bipartisan infrastructure bill, which expires on September 30.
The last time Congress voted on anything other than reauthorizing the gasoline tax at its current level of 18.4 cents per gallon was in 1993.
Since the fuel tax was first introduced in 1932 at a rate of 1 cent per gallon, Congress has voted to raise the fuel tax nine times, including in 1993, according to the Congressional Research Service.
During the same period, lawmakers voted to lower the federal gasoline tax only twice: once in 1934, when it was lowered from 1.5 cents per gallon to 1 cent, and once in 1987, when it was raised from 9.1 cents per gallon to 9 cents per gallon.
Congress has been debating the idea of temporarily suspending the gas tax when fuel prices rise, or eliminating it entirely in favor of a plan to tax drivers based on the number of miles they drive or the weight of their vehicles. But lawmakers have never voted to cancel the tax since they first authorized it in 1932.
