Falling fuel prices could take some savor out of FL Legislature’s coming gas tax holiday

Falling gas prices, which have contributed to a slowing rise in inflation, suggest the Florida Legislature missed the mark in timing a gas tax holiday for October.

gov. Ron DeSantis first proposed halting enforcement of the 25.3-cents levy in November, during a press conference in which he blamed rising inflation on President Joe Biden. Actually, a major factor in rising prices was the Russian war on Ukraine and subsequent economic sanctions and restrictions on the flow of Russian oil and gas.

DeSantis’ original idea was to pause collections between July 1 and Nov. 30 to save consumers something like $1 billion. By the time the Legislature was done with its state government budget, the holiday had been shrunken to cover one month only — October, right before the November midterm elections — and the savings to $200 million.

“It is our understanding that October was selected because it follows peak summer tourism season, so the tax holiday would inure to the greatest benefit of Florida residents rather than out-of-state visitors,” Bryan Griffin, the governor’s new press secretary, told the Phoenix by email.

Gasoline prices have been declining since June, when they topped out at an average $4.89 per gallon, according to the AAA. Last week, they declined by 14 cents per gallon, to $3.65.

That’s a little more than the 3.35 cents per gallon price when DeSantis first floated the tax holiday.

Florida gas prices dropped 14 cents per gallon last week. The state average has now declined for nine consecutive weeks, falling a total of $1.24 per gallon since mid-June.

The organization said it costs $55 to fill a 15-gallon gas tank, $20 less than in mid-June.

“The state average should continue moving lower, likely slipping into the $3.50s by the end of the week,” AAA spokesman Mark Jenkins said in a press release.

He did note that the price of oil in the United States increased by 3 percent last week, to $92.09 per barrel.

“Oil and gasoline futures regained some strength last week, as analysts believe that falling fuel prices will encourage consumers to drive more,” Jenkins said.

According to the AAA, prices were highest in the West Palm Beach and Boca Raton area at $3.85, Naples at $3.82, and Miami at $3.77. The lowest prices were in the Crestview and Fort Walton Beach area at $3.48, The Villages at $3.50, and Panama City at $3.54.

Drivers may not realize much benefit in the end, according to an analysis by the Orlando Sentinel. That’s because there’s no guarantee gas stations will pass the savings along to customers. Additionally, encouraging people to drive more would increase demand and push prices higher.

A Tax Foundation analysis had noted in March that the state planned to pay for the holiday by drawing on federal American Rescue Plan Act money, and that doing so appears to be illegal and may subject the state to a clawback to the feds of that money.

Meanwhile, the Consumer Price Index rate rose 8.5 percent in July compared to 9.1 percent in June, suggesting inflation is slowing down. “Core CPI, which excludes often-volatile energy and food prices, eased to 0.3 percent last month, down sharply from June’s 0.7 percent gain,” The Wall Street Journal reported.

Leave a Comment

Your email address will not be published.