Governors from both parties are giving the same response to rising gasoline prices: Don’t look at me.
As the war in the Middle East is destroying critical energy infrastructure and impacting the global oil market, very few states are seriously considering a gasoline tax holiday—their only real short-term lever to lower prices at the pump.
The governor appears to be less willing to deplete state coffers than in 2022, when Russia’s invasion of Ukraine led to gas tax holidays in five states and calls for them in a dozen more.
This hesitation comes even as the energy market has emerged as one of the biggest pressure points in the battle. President Donald Trump on Monday walked back his threat to bomb Iranian power plants, citing confidential talks with the Iranian leadership. Speaker of Parliament of Iran responded by accusing Trump of trying to “manipulate the financial and oil markets.”
As of Wednesday, talks between Washington and Tehran appeared far from a solution, while the energy industry struggles to keep pace with the rapidly expanding and constantly changing conflict.
Meanwhile, some oil tankers are making their way through the Strait of Hormuz bombing from both sides Oil and Natural Gas Center, National Gasoline Prices Are increased by approximately 33 percent In the last month and it may increase even more.
But the state budget has become less than that of 2022. And state leaders seem more than a little worried.
“When we’ve done this in the past … I don’t think the consumer really felt relieved,” Republican Governor Ron DeSantis. said last week About the idea of repeating Florida’s 2022 gas tax holiday.
When gas goes above $4 a gallon, he said, drivers won’t mind a few cents off — if the state action even gets them. “Sometimes prices are inflated so that the consumer doesn’t notice any difference,” DeSantis said.
Democratic Governor Kathy Hochul offered a similar approach when faced with the idea of suspending New York’s gas tax.
“I don’t think people realize it,” she said this month. “Do you know what happened? Prices went up even higher.”
Economists and state budget experts say it’s understandable that the governor has become indifferent to gas tax holidays. Last time they did not have much impact in curbing fuel prices, nor did elected officials get much credit for the effort.
Nowadays, state finances are also under greater pressure — including major new costs shifted onto them by President Donald Trump’s megabill — than in the Biden era, when state budgets were flush with new federal dollars for pandemic aid.
But Alexander Aron, director of policy analysis at Penn Wharton Budget Models, said he was surprised by how many governors have rejected it.
“Probably that’s because they’ve learned some lessons in 2022,” he said. “If you are a state government, there is not much you can do in today’s environment.”
‘I don’t want to make too many promises’
Experts say that this time the impact of the gas tax holiday may be less than the huge impacts of 2022.
The blow threatens to be even bigger than Russia’s invasion of Ukraine, which imposed Western sanctions and reshuffled trade routes. But those price increases were mostly driven by fear of what might happen, Arnone said, while there has already been real damage to supply this year that can’t be easily reversed.
In June 2022, average US gas prices reach above $5 per gallon. On Sunday, average U.S. prices were around $4 — but that reflected supplies that were already available or in transit when the war began, Aron said.
“It’s fair to say that we’ve never really seen anything like what’s happening now,” he said. The war makes market forecasts highly uncertain, he said, but “it doesn’t look like the supply shock is being fully reflected in prices yet.”
Aron said the gas tax holiday could take effect during temporary price increases when producers can expect supply to stabilize relatively quickly.
But no one can predict how the war will go. And meanwhile, states will be watching from the sidelines.
Jared Walczak, a senior fellow at the Tax Foundation, said, “Taking away with gas taxes won’t reopen the Strait of Hormuz, and it won’t deliver anything close to dollar-for-dollar savings to motorists.” Wrote last week.
That’s because today’s costs reflect a “true supply disruption,” Walczak said in an interview, with gasoline producers and retailers bracing for even higher prices if the Iran war continues. Higher prices reflect a type of rationing, he said, so any gas tax relief would improve demand — which would push prices up again.
“Policymakers won’t get much juice to squeeze,” he said. “They’ll lose all the revenue for the transportation trust fund and the budget. But only a fraction of the savings trickles down to consumers.”
Further blunting the political appeal of a gas tax: Most states impose the tax upstream from gas stations, so it would be hard for drivers to detect any effects.
“It’s not like the state can simply take a rebate of 30 cents a gallon at the pump — it doesn’t work that way,” said Carl Davis, research director at the Institute on Taxation and Economic Policy.
He said, the public realizes it is not the state policy, but the war, due to which gas is more expensive. Meanwhile, state heads are grappling with new health care, food aid and other spending that Republicans’ 2025 megabill has put on their books.
“It’s really leaving state lawmakers in no mood to step up and clean up yet another mess that’s going to happen at the state level because of federal policy,” Davis said.
Or as Pennsylvania governor and potential Democratic presidential candidate Josh Shapiro said: “This is a problem created by Donald Trump.”
“He’s going to have to figure out a way to deal with this quickly,” Shapiro said. “There’s a pattern here where he creates chaos, he raises prices, and he creates a lot of problems for people in Pennsylvania. And now we’re dealing with the next problem he’s created, and that’s rising gas prices.”
Michigan Gov. Gretchen Whitmer, another potential Democratic presidential contender, pointed to the mismatch between Trump’s war-mongering global market forces and the small impact of gas taxes.
“One state cannot solve all the pressures that we are feeling in Iran because of this war,” he said last week. “I don’t want to overpromise people about something we can’t deliver.”
‘Call Donald Trump’
That hasn’t stopped some states from trying.
Connecticut Governor Ned Lamont, a Democrat who is running for a third term this year, is pressuring lawmakers to stop the gas tax. And Republican Governor Brian Kemp was reluctant about a gas tax holiday — until last week, when the Georgia Legislature voted overwhelmingly Include one in the annual tax bill.
However, those states remain outliers.
As the Trump administration argues that oil prices will fall precipitously once the war ends, some Republicans have come forward to argue otherwise.
Indiana Governor Mike Braun said, “Once you secure the supply coming through the Strait of Hormuz, you will see it go down, ideally, as much as it went up.” Said this month.
Rather than have the states cover the cost, some governors have said that the federal government should be the first to withhold the gas tax. The federal gas tax is about 18 cents.
‘The same president who promised that prices would go down on day one is presiding over this and letting it happen,’ Hochul said at a gas station near Buffalo last week. We need them to relieve us and help us here.
But the Trump administration has rejected the demand for a federal gas tax holiday for now.
Even Republicans on Capitol Hill don’t seem keen on it. Oklahoma Senator James Lankford said lawmakers were not discussing anything. And Senate Majority Leader John Thune of South Dakota was skeptical it would make much difference.
“I don’t know that the federal gas tax is going to lower (gas prices) much,” Thune said. “But I think ultimately it will open up the bottleneck. I think it will drive down gas prices.”
Just as the state budget is under pressure, the federal highway trust fund is already at a deficit.
Sen. Shelley Moore Capito of West Virginia, who chairs the Senate Environment and Public Works Committee and serves as the fourth-highest-ranking Republican in the chamber, said, “As someone who works very closely with this, I don’t think the impact of (the suspension) will be strong enough to merit it.” “Also implementation, I think, will be an issue.”
Meanwhile, Democrats have shown little interest in covering the Trump administration.
Although some Democratic state lawmakers in Pennsylvania, Florida and elsewhere have planned gas tax holidays, party leaders see the issue as cutting against Republicans. And political strategists in both parties say higher gas prices could become a major GOP problem in the midterms.
Maryland Governor Wes Moore forcefully rejected calls by state Republicans to halt the gas tax, as his Republican predecessor Larry Hogan did in 2022.
“If Maryland Republicans are serious about reducing costs, they should pick up the phone and call Donald Trump and ask him to end this missionless war instead of asking Maryland taxpayers to help pay for it,” Moore spokesman Ammar Moussa said in a statement. “The best way to bring prices down is to address the source of the pain, not pass the cost of Donald Trump’s war onto Maryland families.”
Mary J. French, Pawan Acharya, Kylie Williams and Carlos Anchondo contributed to this report.
