Yes…it is. You’ve also probably heard a reason, maybe two, as to why prices will tick up. I’ll share a couple factors that will add to the cost and also tell something you’ve heard is going up, but actually isn’t and will have no impact on the price at the pump.
Let’s start with the false rumor “The Gas Tax is Going Up in 2023”. It’s not. Price increases at the pump are not always caused by tax increases. The Washington State Gas Tax is not going up in 2023, but the price will, and I’ll offer a reason as to why lawmakers may have avoided raising the gas tax itself.
The 18th Amendment to the State Constitution says that all revenue from the gas tax must go to transportation. It is a dedicated fund with a singular purpose, not something the tax and spend crowd finds appealing or useful. The revenue coming in from the latest impacts to pump prices will not be restricted by the 18th Amendment, so they can go into the general fund and be used however lawmaker’s little hearts desire. It’s an end around to say “We didn’t increase the gas tax because if we did we couldn’t spend the money the way we want”.
Here are the things that will raise the price at the pump:
Low Carbon Fuel Standard – this kicks in play in 2023. It is estimated by the State Department of Ecology that prices will go up one cent next year, two cents in 2024, four cents in 2025, and by 2031 19.3 cents per gallon. That doesn’t sound like a lot, and it isn’t. It will add up over time. It is supposed to add to reducing CO2 emission, but it really doesn’t so it’s just another tax that will get passed on to consumers by the companies impacted.
Climate Commitment Act – Heard about this one? It’s a nice way of saying “New Emissions tax”. This will blow the pump prices out of the water. It’s a tax on Carbon Dioxide Emissions that will…you guessed it…get passed on to you because it’s cap and trade.
The shorthand reads like this: companies that emit CO2 will need to buy emissions allowances through an auction conducted by…wait for it…the State Department of Ecology. Estimates for 2023 say the additional cost at the pump for regular gas will be 53 cents per gallon or 46 cents for 10% Ethanol blends, 59 cents a gallon for diesel and 56 cents for fuels that comprise 5% biodiesel. That’s just 2023.
If you want to keep pace with the LCFS increase you’re at 89 additional cents per gallon for gas in 2030 and $1.02 for diesel…again per gallon!
OPEC – They’ve decided to cut oil production by 2 million barrels a day. That will impact the commodity price causing that to increase.
The Strategic Reserve – Currently sitting at 40 year lows after the current administration decided to remove 1 million barrels a day, up to 165 million barrels total, to combat high gas prices. Thing is they have sold tens of millions of those barrels to other countries, including China, and not used it here. Replenishing the reserve at an increased cost per barrel will get passed along to you as well…but that is a little further down the road.
Time to do the math for 2023’s projected base amount before the gas stations look to make a profit:
18.4 cents (Federal gas tax) + 49.4 cents (State gas tax) + 46 cents (Emissions tax impact) + 1 cent (Low Carbon tax impact) = $1.14.8 that you will pay in taxes, and impact caused by taxes, before the gas station adds their amount in 2023.