States Look To Cut Fuel Prices — And Win The Messaging Game

Governors and state lawmakers in both parties are taking steps to address high fuel prices as voter frustration grows and the White House struggles to blunt the Iran war’s impact on energy prices.

In Ohio, lawmakers could take up a bill as soon as Wednesday to suspend the state’s gasoline tax, joining Georgia, California, Texas and other states that have cut their levies or proposed other solutions — even if those efforts could sap state transportation funding.

“We are listening to the people of Ohio,” said state Sen. Jane Timken (R), one of the bill’s sponsors, in a social media post. “Ohio can do this and still take care of our roads.”

The moves come just weeks before voters head to the polls with control of Congress at stake, as well as several statehouses and governor’s mansions. Many of the suggested fixes were wrapped in either partisan sniping or campaign chest-thumping.

But analysts say most of the proposed fixes would have only a muted effect, since the primary driver of pump prices is the cost of oil, which has surged because of U.S. hostilities with Iran.

The price of U.S. benchmark crude is about $30 a barrel higher than before the war, and the average price of gasoline is more than $1.50 per gallon higher than before the war. Meanwhile, Ukraine’s counterattacks against Russia’s invasion have knocked some of the world’s diesel-refining capacity offline, driving the price above $6.50 a gallon in the U.S.

“Until both those become solved, you're just putting Band-Aids on a gaping wound,” Patrick De Haan, head of petroleum analysis at GasBuddy.com, said in an interview.

To help lower prices, the Trump administration has considered varying options such as allowing the broader use of off-road diesel fuel. The so-called red-dyed diesel is cheaper because it’s sold without most federal fuels taxes.

Meanwhile, President Donald Trump is reportedly considering a ban on diesel exports.

“That can oftentimes lead to a little bit of an increase on gasoline for cars, so we’re looking at it very seriously — we may do it,” Trump told a Fox News reporter Sunday.

His Cabinet opposes the idea, along with the oil industry and congressional Republicans — they’re pushing other ideas instead, such as asking European nations to release reserves of diesel.

Fuel for campaign season

State officials have fewer options — and even then the impact is limited.

State gasoline taxes range from a few pennies to 60 cents per gallon. If and when states cut their taxes, it usually takes time to see a difference at the pump, since the stock of fuel at most stations has already been taxed at the normal rate.

Plus, retailers typically don’t pass on the full benefits of tax cuts to consumers, according to the Penn Wharton Budget Model.

Still, that hasn’t stopped states, both red and blue, from rolling out their own proposals.

Ohio Republican gubernatorial candidate Vivek Ramaswamy is working directly with the Republican-controlled Legislature — and his running mate, Ohio Senate President Rob McColley — to introduce legislation to pause that state’s tax.

Lawmakers will consider it in a special session on Wednesday.

“This is a preview of how a Ramaswamy administration will operate — bold, decisive leadership with strong action to make Ohioans’ lives more affordable,” McColley said in a statement.

Ramaswamy’s opponent, Democratic candidate Amy Acton, called for a suspension of the tax first, labeling her opponent “an out of touch billionaire.” But Acton, who may need Republican voters to win her race, stopped short of dragging the president and war into her press statements, instead focusing on affordability in Ohio.

That wasn’t the case in California, where Gov. Gavin Newsom (D) announced Monday that he was suspending summer-blend gasoline requirements a few weeks early. The move will cut the price of gas 10 to 30 cents, according to AAA, and Newsom — a potential White House contender in 2028 — used the opportunity to blame Trump for the higher costs.

“In just seven months, Trump’s Iran war has cost Americans more than $120 billion in extra fuel costs, $428 per California household — weakening the United States’ economic and energy security,” Newsom said in a statement.

Georgia Gov. Brian Kemp (R), who suspended his state’s 25-cent-per-gallon gas tax for 30 days on Monday, didn’t mention the war in his announcement — only “petroleum supply disruptions.”

But the Democrat looking to replace him — former Atlanta Mayor Keisha Lance Bottoms — has been messaging steadily about the war’s impact on voters.

“Prices are at a record high because of Donald Trump’s war in the Middle East and the people of Georgia are paying the costs,” Lance Bottoms said earlier this month.

Her Republican opponent, Rick Jackson, previously has supported automatically pausing the tax during major price shocks. During a campaign event last week, Jackson declined to criticize Trump for the war’s impact on prices, saying, “I am not going to be blaming the federal government for everything.”

Texas Gov. Greg Abbott (R) has resisted calls from his Democratic opponent Gina Hinojosa to suspend the state's gas tax. He opted this week to allow wider use of off-road diesel fuel for farmers and truckers instead.

Not without cost

Political considerations aren’t the only factor guiding state officials.

There’s a fiscal impact, too.

It’s one reason Ohio Republican Gov. Mike DeWine previously has resisted a gasoline tax holiday, as that kind of policy typically diverts money from state transportation funding.

And it’s why a similar proposal hit a roadblock in Washington. Earlier this month, Republicans in Congress blocked proposals to suspend the federal gas tax over concerns it would deplete transportation funding.

That hasn’t been a barrier in neighboring Indiana — at least so far.

There, Gov. Mike Braun (R) suspended his state’s sales and excise taxes on gasoline in April and May, respectively, saving consumers about 60 cents a gallon. Since then, the governor has renewed the 30-day orders every month.

The gas tax holiday extensions have led to questions about the fiscal impact for the state and local governments. The Indiana Department of Transportation estimates the suspensions, if continued, would lead to $1.1 billion in lost revenue by Dec. 4.

To date, Indiana’s State Board of Finance has reimbursed local governments for lost revenue — something the governor said is made possible by record economic growth and government efficiency.

But the chair of the Indiana Democratic Party, Karen Tallian, a former state senator, had another suggestion for how to give consumers a break at the pump when asked about the gas tax during an interview last month on Fox 32 in Chicago.

Tallian’s answer: “End the war.”

Utah offers another example of the pros and cons of gasoline tax holidays.

State lawmakers this year passed a bill reducing the gas tax by 15% between July 1 and the end of the year, part of a long-running effort to reduce pump prices.

But that cut amounted to roughly 6 cents per gallon — and the state’s average gas price has already risen ten times that in just a month, according to AAA data. And a fiscal impact study says the state could miss out on roughly $40 million of revenue because of the gas tax reduction.

“With families still facing high prices at the pump, our work is not finished,” said Utah state Rep. Cal Roberts (R), who sponsored the gas tax bill.

Jeffrey Tomich and Jason Plautz contributed to this report.