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Suspending the state gas tax could save CT drivers about $30

Gas Prices
Joe Amon
/
Connecticut Public
Gas prices at a station off of I-84 in eastern Connecticut March 10, 2022.

Connecticut lawmakers could decide Wednesday to give drivers a temporary tax cut on gas. But mileage may vary for Connecticut drivers as to when financial relief comes and how much a gas tax holiday will help.

On Tuesday, the average price for a gallon of regular gas in Connecticut was $4.33, according to AAA. Most of that cost, and the cause of rising prices, is crude oil, according to Chris Herb, president of the Connecticut Energy Marketers Association. “Overwhelmingly, crude is what dictates the cost of a gallon,” Herb said. The price of crude has risen throughout the pandemic, and recently see-sawed after Russia invaded Ukraine.

The tax at the pump doesn’t change much as the price of crude rises. There are three taxes on gasoline in Connecticut: 18.4 cents for a federal excise tax, 25 cents for the state excise tax, and petroleum products gross earnings tax is a percentage of the cost of wholesale gasoline. Herb said that tax is about 27 cents right now.

State lawmakers want to suspend only the state excise tax —25 cents per gallon— until the end of June. Connecticut drivers pay about 70 cents per gallon in taxes. About 15% of the cost of a gallon of gas comes from state and federal taxes. As the price of crude rises, that percentage shrinks.

The average Connecticut driver puts about 12,000 miles on their odometer a year, according to MetroMile. Cars on average in America get 24 miles per gallon – with light trucks and vans averaging 17.5 mpg – according to the U.S. Department of Energy.

Crude prices may rise or fall. A three-month state gas tax holiday could save Connecticut drivers a little more than $30 based on these numbers. The more gas a driver uses, the more they would save.

But even if the bill passes this week, Herb says “it could take some gas stations days, if not over a week, to pass those savings onto the public.” Gas stations have already paid taxes on the fuel they have in their inventory. Consumers essentially reimburse gas stations for that tax, according to Herb, and he says consumers will have to wait until that gas is sold before they see any relief at the pump.

Popular gas stations will cycle through their supply sooner, while less trafficked stations sell gas slower and will have a harder time selling that more expensive gas, he says. Herb had hoped lawmakers would include language in their bill to reimburse gas stations for that tax so consumers could feel relief immediately.

Ali Oshinskie is a corps member with Report for America, a national service program that places journalists into local newsrooms. She loves hearing what you thought of her stories or story ideas you have so please email her at aoshinskie@ctpublic.org.