ST. PETERSBURG, Fla. — For the first time in a month, the national average gas price rose this week, according to GasBuddy data.
The average price for a gallon of gas in Florida is also up again, now hovering around $4.13, which is still about $1.30 higher than a year ago.
Americans are driving more after two years of the COVID-19 pandemic. But supply isn't keeping up, pushing prices higher.
Russia's war on Ukraine hasn't helped market pressures.
One solution coming soon promising to lower prices for drivers in Florida is a gas tax holiday. For one month – this October – the state is suspending the 26.5-cent tax you pay on each gallon.
So what will that actually look like at the pump?
Does a gas tax holiday guarantee lower prices when you fill up?
A gas tax holiday guarantees you won’t be paying the state tax on each gallon of gasoline, but because of the uncertainty of outside factors on price, it does not guarantee you will see the full tax break reflected at the pump.
But in states where gas tax holidays have recently been implemented prices have dropped below the national average, reflecting much of the gas tax savings.
WHAT WE FOUND
It seems simple enough.
The price of a gallon of gas in Florida should be 26.5 cents lower than it would be with the state tax and should stay that way for the month during the gas tax holiday.
But according to Jared Walczak, “it’s not that simple.”
“If gas prices are elevated because of a supply crisis then the price might be somewhere between the taxed price of gasoline and the untaxed price,” Walczak said. “Not all the savings may flow through to the consumers.”
That’s because the price of a gallon of gas is determined by several costs. Gas tax accounts for just a fraction of the price. The single biggest factor that drives what you pay is the price of crude, according to the U.S. Energy Information Administration (EIA).
A tax cut, Mark Finley explains, would perfectly reduce prices at the pump only if all other things were equal.
“But if there were other factors going on in the global marketplace for crude oil in terms of global demand or the Russia situation … all of these things will matter for the price of crude oil,” he said.
“There’s no guarantee that prices at the pump will change perfectly in line with the change in taxes because everything else is moving at the same time as well.”
Artificially lowering prices also might not save drivers much money anyway if it inadvertently drives up demand, GasBuddy’s Patrick DeHaan warns.
But the shift in demand wasn't dramatic enough to negatively impact prices, DeHaan said.
Overall, prices have been down in states with gas tax holidays. In Georgia, where the state's rate is 29.1 cents per gallon, the state average has been about 38 cents lower than the national average, according to AAA.
Florida lawmakers contend that holding off until October to implement the gas tax holiday will guarantee the most savings for Floridians because it’s during a time when fewer tourists are on the road. However, critics have pointed out it also falls one month before an election.
While other states are relying on surpluses to offset lost revenue from a gas tax suspension, Florida is using $200 million in unspent federal COVID relief funding.