Gas Is a Taxing Matter in This State

Are Californians finally fed up with unreasonably high gasoline prices? Maybe. At least in last week’s elections, Orange County voters knocked out a state senator after a bruising recall campaign that focused on his support of last year’s 12 cent- a-gallon gasoline tax increase. The broader question: Will others who voted for the hike discover it is a political albatross in this fall’s election? If so, it would be a turnaround. For years, Californians have obligingly tolerated some of the highest gas prices in the country while political leaders barely bothered to veil their cynicism. Taxes are raised on gasoline and diesel to pay for repairs to roads – sometimes rated among the worst in the country – and then the political types fail to fix our streets and come back for more taxes. State lawmakers demonstrated contempt for consumers earlier this year. They could have passed a bill called “Transparency in Fuel Taxes.” It called for a simple Quick Read Code that would be stuck on gas pumps that would allow consumers to get an updated view of what taxes and fees are included in each gallon of fuel they’re buying. Instead, the bill was killed in committee. Question: Aren’t these the same political folks who demand transparency and accountability from everyone else? What would that QR code have shown? According to the bill, it would have listed the federal gasoline tax of 18.4 cents a gallon and the state’s high fuel tax of 41.7 cents. Plus, it would have tallied the other ways the state nickels and dimes the motoring public. There’s the state’s underground storage fee of 2 cents; the cap and trade expense estimated at 10 cents; a low carbon fuel standard that costs an estimated 7.3 cents, a renewable fuels fee of about 1 cent and then a sales tax that adds about 7 cents. And, of course, you’ve got special summer blends that add costs, an estimated 8 cents a gallon this summer. Add it all up, and California motorists pay among the highest gasoline taxes in the country, which means consumers here pay 67 cents more a gallon than the national average. In the big picture, it means billions of dollars a year extra are flowing out of the private sector to Sacramento. When you travel, you see the effect of these taxes. According to the Gas Buddy website, the average price of gas in Los Angeles last week was $3.76 a gallon. It was 67 cents-a-gallon cheaper in Phoenix, 91 cents cheaper in Dallas and 45 cents cheaper in Las Vegas. (Vegas gas stations may be gouging L.A. visitors who think they’re getting a great deal.) As a reader of the Business Journal, you know how the high costs hurt the local economy. Virtually every product and most services have a fuel component to them, which means we must pay extra for everything. And of course, the direct impact is on motorists. The high prices particularly burden the working poor, who may have to drive farther in older, less fuel-efficient cars and trucks to get to their jobs. So, will voters continue to meekly accept the high cost of gasoline? Or are they finally fed up and ready to retaliate? Well, consider this: There is a possibility that the fall elections could include a measure to repeal the 12 cents-a-gallon gas tax approved last year (which also included a 20 cents-a-gallon increase on diesel fuel and a 4 percentage point increase in the sales tax rate on diesel). If it is on the ballot, it could energize voters, and we will get the answer to that question. • • • For several months now, a few economists and market watchers have been saying that we’ve returned to the so-called Goldilocks economy of the 1990s and early 2000s. That is, not too hot and not too cold. Lately, I’ve started to believe they might be right. Just last week, the Atlanta Federal Reserve’s forecast model said the U.S. economy is expanding in this second quarter at a 4.5 percent clip, which was a downward revision but still higher than anything we’ve seen in years. Another report last week said the number of job openings exceeded the number of job seekers for the first time since that record was started in 2000. At the same time, there’s been only a little upward pressure on interest rates and inflation. In other words, the growth in the overall economy, to use Goldilocks’ words, appears to be just right. Charles Crumpley is editor and publisher of the Business Journal. He can be reached at [email protected].