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Gas prices keep breaking records. Just how much relief can state leaders provide?

States including Florida, Georgia and Maryland have enacted state gas tax holidays, and while Minnesota has not yet taken action to reduce prices, some leaders and candidates have floated similar ideas.

A gas station price display in St. Paul, Minnesota.
A gas station price display in St. Paul, Minnesota, on Thursday, June 16, 2022, shows prices at record levels. Minnesota's average gas price Thursday was around $4.76 per gallon.
Alex Derosier / Forum News Service
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ST. PAUL — U.S. fuel prices this summer have soared to an all-time high, but don't look to St. Paul for relief at the pumps in Minnesota any time soon.

The price of fuel is highly variable and sensitive to global market forces that are beyond the control of a state government, but leaders in some states have taken measures to relieve the pressure on consumers. Connecticut, Florida, Georgia, Maryland and New York have enacted state gas tax holidays.

While Minnesota has not yet taken action to reduce prices, some leaders and candidates have floated similar ideas.

Rep. Dan Wolgamott, DFL-St. Cloud, and a group of other DFL lawmakers introduced a bill in February that would suspend the 28.5 cent state gas tax from Memorial Day to Labor Day. The bill never received a hearing and Republicans in the Legislature, such as House Minority Leader Kurt Daudt, R-Crown, derided the proposal as a "gimmick." They pointed out that Democrats in the past have supported significant gas tax hikes, including Gov. Tim Walz's unsuccessful 2019 proposal to raise the gas tax by 20 cents a gallon.

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A customer views the price display as he fills his pickup truck at a gas station in St. Paul, Minnesota, on Thursday, June 16, 2022. Gas prices continue to push into record-high territory, with the national average hitting $5 on Thursday, according to the AAA.
Alex Derosier / Forum News Service

Walz and Republican gubernatorial challenger Scott Jensen both say they support suspending the state's 28.5 cent per gallon gasoline tax, but they'll need state lawmakers to pass a bill in order to do that.

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The Legislature is currently out of session, and Walz would have to call a special session in order to get any proposals on his desk. The Republican-controlled Senate and Democratic-Farmer-Labor-controlled House on Thursday said they haven't been able to negotiate what they'd do during a special session, so the odds of one happening any time soon are low. And even if it does, lawmakers have many other issues on their plate besides fuel prices, such as figuring out how they'll use the state's historic budget surplus to address a surge in crime, fund education, and provide tax relief, as well as a borrowing bill for public infrastructure projects.

The average price per gallon of gasoline in Minnesota has shot up by around 66% from one year ago, according to the AAA. In mid-June of last year, the average cost per gallon was around $2.86. Today, it's nearly $4.76 — an unprecedented high for Minnesota, but still below the record national average of $5.

Jensen, the GOP-endorsed candidate for governor, has made fuel costs one of the central issues of his campaign. He supports suspending Minnesota’s fuel tax and repealing a law that bars businesses from selling gas cheaper than the state average — something his campaign claims would reduce the price of gas by up to 25 cents per gallon. Suspending the tax would cost the state $70 million per month, the Jensen campaign said, but the cost could be backfilled by using the state’s record $9.3 billion budget surplus or auto parts taxes.

Jensen also supports changing policies that affect fuel prices, including expediting permits for pipelines and refineries and directing the state commerce department to report any action the governor could take to reduce prices.

DFL lawmakers and Walz have also supported the idea of gas tax holidays. In March, Walz joined several other governors in March in asking Congress to suspend the federal gas tax. The governor's office said Walz is also open to a state gas tax holiday, though his primary focus has been on pushing the Legislature to approve direct payments to families.

Just how much relief does suspending gas taxes provide? On the national level, around 53.6% of the cost of fuel is tied to the price of crude oil, according to the U.S. Energy Information Administration. Refining costs, profits, distribution and marketing account for 31%. The remaining 16.4% is federal on state taxes on gasoline.

Minnesotans pay $0.47 in taxes per gallon of gasoline, with 18.4 cents going to the federal government and 28.6 cents going to the state. At the current average price in Minnesota, a customer can expect to pay $76.16 to fill a 16-gallon tank. If the state and the federal government both suspended their gas tax, it would cost $68.64 to do the same. If just Minnesota suspended its tax, a customer would save about 5 bucks each tank.

Alex Derosier covers Minnesota breaking news and state government for Forum News Service.
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