(The Center Square) – Washington drivers are currently paying taxes of 49.4 cents per gallon at the pump in state gas taxes. That number is set to climb on January 1 of 2023 by a projected 46 cents per gallon.
Taken together with federal gas taxes, Washingtonians will be paying just shy of $1.14 per gallon, the highest tax at the pump in the country of any state. The tax on diesel would be higher.
That's according to a new analysis by analysis by the Washington Policy Center think tank, which says that the Climate Commitment Act’s cap-and-trade program to cut carbon pollution is projected to nearly double the state’s portion of the gas tax.
The WPC, which looked at an analysis conducted for the state Department of Ecology forecasting average allowance auction prices, found drivers could see a hike of 46 cents per gallon of gas, as well as a 56 cents per gallon increase in the cost of diesel.
Passed in 2021 and going into effect on Jan. 1, 2023, the Climate Commitment Act requires emitters to obtains “emissions allowances” for their greenhouse gas emissions that can be obtained through quarterly auctions hosted by Ecology.
According to the Ecology study, the projected cost of a metric ton of carbon dioxide next year is $58.21, which is significantly higher than the $20.60 per metric ton figure used for the cap-and-trade legislation’s fiscal note provided to members of the state Legislature last year.
The cost of carbon offsets at the new rate, according to Todd Myers, WPC’s Director of the Center for the Environment, translates into the increased indirect taxes on gas and diesel.
That’s on top of the 67.8 cents per gallon of gas in state and federal taxes currently paid by Washington drivers. The state’s portion of the gas tax is 49.4 cents tax per gallon – third highest in the nation – and the federal government’s share is 18.4 cents per gallon.
The state's portion of the gas tax also applies to diesel, but the federal government's share is higher, at 24.4 cents per gallon. That means total state and federal taxes on diesel are 73.8 cents per gallon.
Jonathan Bydlak, director of the Government Program at the Washington, D.C.-based R Street Institute, thinks state government should be doing more to lessen the impact on Washingtonians dealing with high gas prices and record-breaking inflation.
“During the height of the pandemic, many states adjusted regulations and laws to deal with the strain on healthcare and the economy,” he told The Center Square via email. “For instance, the growth of telehealth and the loosening of certificate of need (CON) laws made it easier for Americans to get healthcare at a time when it was needed. To-go drinks and sidewalk dining helped restaurants stay in business.”
That same model should apply to easing the pain at the pump and elsewhere for Washingtonians, Bydlak argued.
“Governments today should be employing the same type of innovative thinking when considering how to help consumers harmed by rising prices,” he said. “Inflation robs Americans of their hard-earned dollars, and the last thing Washington should do is proceed with a policy that would only add to that burden.”
While gas prices are falling in Washington and around the country, inflation continues to skyrocket.
According to AAA, the current average national gas price for a gallon of gas is almost $4.61, which is down from nearly $5.62 a month ago. A year ago, a gallon of gas cost on average $3.15.
On Wednesday, the U.S. Labor Department reported that the consumer price index, a broad measure of the price for everyday goods – including gas, groceries, and rent – rose 9.1% in June from a year ago. Prices jumped 1.3% in the one-month period from May.
That was followed on Thursday by the Labor Department reporting that its producer price index, which measures inflation at the wholesale level before it reaches consumers, climbed 11.3% in June from the previous year. On a monthly basis, prices jumped by 1.1%.
“Just as Germany is rethinking nuclear energy in the wake of Russia's invasion of Ukraine, states like Washington would be well-served to rethink a policy that may have looked enticing previously but would clearly be harmful to citizens in the current economic environment,” Bydlak concluded.
Gov. Jay Inslee disputes the projected increase to gas prices.
“This is going to have a minimal impact, if any. Pennies. We are talking pennies,” he told Fox 13 on Tuesday. “Potentially, not all of this would be passed off to the consumer and what they would (pass on), would be pennies.”
The governor, whose signature issue is fighting climate change, directed his ire at a familiar foe when it comes to high gas prices.
“Look, the people causing the extraordinary gas prices are the gas and oil companies, they control the price, not me,” Inslee said.