Reducing the state gasoline tax
A separate course of action proposed by some involves reducing the state gasoline tax. Notably however, Colorado already has the 39th lowest state gasoline tax in the country, at just 22 cents/gallon. This is 17 cents lower than the national average. Using the mid-July average gasoline price in Colorado of $4.82, state gasoline tax accounts for approximately 5 percent of the cost of each gallon of gasoline. Notably, state lawmakers have already taken some steps to help temporarily reduce costs by delaying a new fee on gasoline until 2023.
While an initially appealing idea to some, reducing the state gasoline tax poses several potential challenges. First, the gasoline tax is a major source of transportation funding in the state. As a result, reducing this tax will decrease available funding for transportation services and upkeep. Additionally, many economists have pointed out that reductions in the gasoline tax are unlikely to have the intended, direct to consumer impact. This stems from research which shows reductions in gasoline taxes often lead to minimal, at best, reductions in cost, and are more likely to benefit producers than consumers.
A Way Forward
Global markets and forces are driving high gasoline prices in Colorado and beyond. Realistically, there’s little that can be done to change these outcomes, especially by state lawmakers, in the short run. The good news however, is that we are seeing signs that, at least production, is righting itself as COVID-induced pressures ease.
An exploration of the factors which drive gasoline prices make clear that a reliance upon oil does not equate to true energy independence. Even when produced in the US, oil is still bought and sold on a global market, and as a result, is at the whim of international volatilities. True energy independence instead will exist when we’re able to rely upon the renewable sources nearest to us, like solar and wind. By making long-term investments in these technologies, we’ll be fostering the energy independence we aspire to.