War in Ukraine. More remote workers returning to the office. Gas prices well over $4 a gallon, $1.50 more than it cost a year ago.
When it costs $75 to fill up a Dodge Caravan, forget about steak for dinner, we’re having Hamburger Helper tonight.
Why are gas prices so high? Shaw Local News Network reporter Tom Collins recently explained what causes these soaring gas price increases. The retail price of gasoline includes four main components: the cost of crude oil (determined by the global market, and right now it’s 56% of the retail price), refining (petroleum refiners reduced output as the economy slowed and haven’t ramped back up), distribution (the supply chain is crazy) and taxes, Collins reported.
Although there are supply-and-demand problems driving up fuel costs, the U.S. does produce more domestic oil than it consumes. For example, in 2020 the U.S. produced 18.4 million barrels of oil a day and consumed 18.1 million.
While it’s easy to blame President Joe Biden for high gas prices, there’s much more nuance to the matter. When gas prices are setting records in Germany, Brazil and Japan, this clearly isn’t a domestic problem, it’s worldwide. And even if Biden hadn’t stopped the Keystone XL pipeline project, it wouldn’t haven been finished until at least 2023. Biden did announce Thursday that he is releasing more oil from our nation’s Strategic Petroleum Reserve, possibly saving us a nickel or two at the pump.
So let’s talk about taxes. Illinois is No. 8 among the nation’s most expensive gas markets. We know state taxes have a lot to do with that. The state tax on a gallon of regular gas is 39 cents. Add sales and county and local taxes, if applicable, and we are paying $4.20 or more for a gallon of gas.
Gov. JB Pritzker recently proposed a one-year pause in Illinois’ automatic increase in the state’s motor fuel tax that was part of the Rebuild Illinois plan approved in 2019. That move, however, would save motorists only about 2 cents a gallon and has been met with its share of critics.
State Sens. Dave Syverson (Cherry Valley) and Craig Wilcox (McHenry) are calling on the General Assembly and the Pritzker administration to roll back and cap the state’s sales tax on motor fuel at 18 cents a gallon, which is what consumers were paying last fall before prices started to climb dramatically.
In addition to the motor fuel tax, Illinois also charges a sales tax at both the state and local level. Motor fuel tax is a flat tax not changed by fuel prices. Those dollars, by law, go to fixing state and local roads. Thank goodness. The senators said they are not recommending changing that tax or affecting needed roadwork. However, they said, the sales tax increases as the price of fuel goes up, and those dollars go into the governments’ coffers.
With Senate Bill 4195, Syverson and Wilcox want to change the sales tax. Their example of savings for consumers is eye-popping but has real potential: $1 billion over the next fiscal year if gas prices reach $5.50 a gallon.
“We must pass emergency relief legislation before the session adjourns this spring,” they said. “With the highest inflation rates in four decades, the government has no business capitalizing on a crisis at the expense of struggling families. Money is always better left in the pockets of taxpayers.”
Gas prices are just one of the many goods we need to maintain our daily life that are skyrocketing. So consumers need some kind of break right now.
The governor and General Assembly should move to reduce the sales tax on gas, even as a temporary measure.