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Government response to rising gas prices limited
Amid rising gas prices, economists say relief is not coming anytime soon. The government has limited options when it comes to addressing the issue, but they are proposing options.
MILWAUKEE - When it comes to putting the brakes on rising gas prices, economists say relief is not coming anytime soon.
AAA reports as of Tuesday, June 7 that the Wisconsin average for regular gas is $4.89 per gallon. The average was $4.43 a week ago, $4.08 a month ago and $2.89 at this time in 2021.
"It’s happening pretty fast, it’s just crazy," gas station employee Courtrice Young said. "Please, Lord, tell me I don’t have to change these prices again."
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So what drives up the price? As it turns out, a lot of things.
"Everyone is traveling, everyone is going back to work, manufacturing is going back up again, so the demand has risen a lot more than supply could react to it," said Dr. James McGibany, chairman of Marquette University's economics department.
Marquette University
What can government do?
The answer is "not much," but there are a few options.
Wisconsin Gov. Tony Evers urged Congress in March to suspend the national gas tax, which is around 18 cents per gallon. The state's gas tax is around 30 cents per gallon.
"Even in Wisconsin, that would be about 30 cents a gallon, that wouldn’t even get us back to last week’s price. If you get rid of the gas tax, it’s one of the biggest sources of funds for the state, for road construction and so on," McGibany said.
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Wisconsin has an estimated $3.8 billion surplus. Could the state give drivers a subsidy? For now, the Wisconsin Legislature doesn't plan to meet again until 2023.
"The demand for oil and gasoline is rising relative to the supply," said McGibany. "If you give people a rebate, you’re just going to add more to the demand, without really doing anything to the supply. Could that actually maybe cause prices to go even higher, and undo what you’re trying to do?"
Southeastern Wisconsin and other areas with high smog must use reformulated gas. It is blended to burn more cleanly, but it costs more. The Federal Reserve finds reformulated gas nationwide costs an average of $5.25 per gallon, while conventional gasoline averages 55 cents less.
Tuesday, Wisconsin Republican lawmakers urged the U.S. Environmental Protection Agency administrator to lift the requirement. Democrats worry it would lead to more pollution.
Republican or Democrat, polling from Marquette University this year and The New York Times in 2005 show that when a consumer's party is in the White House, they tend to think the president cannot do much to lower gas prices. However, when it is the other way around, and their favored party is out of office, consumers' expectations of the president tend to be higher.
Wisconsin State Capitol, Madison
"When you declare war on fossil fuels, that’s going to drive up the cost of gasoline," U.S. Sen. Ron Johnson (R-Wisconsin) told FOX Business.
In late March, President Joe Biden said: "Putin’s price hike is hitting Americans at the pump."
High gas prices are not just an American problem, but a worldwide problem. While politicians trade blame, people on the road have no detour from the high prices.