Where Will Fuel Savings Go?

We have had several Association members tell us that while the tumbling price of crude oil provides welcome savings at the pump, the ripple effect of a glutted oil market hurts business.

The situation won’t be helped by this past weekend’s removal of sanctions on Iran, whose national oil company gave the instruction to increase output by about 500,000 barrels a day.

Even the savings at the pump are coming under fire with many states using current conditions to raise gasoline taxes to help cover the costs of road repairs.

The New York Times reports that many states have already acted.

Last year, eight states, including Iowa, Michigan and Washington, raised their gasoline taxes. Kentucky and North Carolina changed the way they tax fuel to assure the revenue they collect is not subject to fluctuations in gas prices.

California’s Gov. Brown has proposed a $65 annual vehicle fee, which would increase highway funding by about $2 billion a year. States that have not taken action have floated various plans to turn a portion of the temporary savings at the pump into long-term higher fuel taxes.

We recently noted an ag-related blog encouraging farmers to top off their tax-discounted farm fuel tanks as the price of diesel dropped below $1 a gallon. You have to wonder if that will also be targeted in the months to come.

Finally, we are still searching for special “fuel discounts” from airlines and others who were quick to add “fuel surcharge” to invoices when prices rose. S