18.4 cents per gallon is a federal tax. States and local governments add on various sales and per gallon taxes that average close to $0.50 per gallon, though the sales tax portion will have driven some of that tax cost down. California adds 58.8 cents per gallon of taxes plus a 2.25% sales tax. Other states can be much lower but no matter where you are, there's a price floor due to taxes.
The real question I haven't seen much discussion of, is who covers state and local govts massive loss of tax revenue. They cant print money like the fed.
They can raise property gax, income tax, or gas tax, and yes the Fed govt can print money and grant it to states, as it does for highways and Medicaid.
That doesn't actually follow. If the station across the street is selling at a loss, you can either keep prices high and make zero revenue, or sell at a loss and make some revenue.
Of course you'll go out of business after a while below that floor so this situation wouldn't be sustainable, but it's consistent with economics that it could happen. (edit: I guess saudi arabia et al. are pretty much in this position now)
Why would making revenue be preferable in this case? If I have to buy gas for $1 a gallon from my supplier and can only sell it for $0.90, why not close up shop for awhile, then I don't have to deal with maintenance, don't have to pay the cashier, etc.
Sure if you have fixed costs like debt you have to pay you may make a loss on your business as a whole, but selling at negative gross margins only makes sense if you're somehow being strategic about it.
Generally, I've found that prices go up about $0.10/gal for each state you get away from the gulf coast (at least in the eastern US). Sometimes there's a few days delay to consider, too.
Of course the realities of the supply chain won't allow 50 cents a gallon fuel in the US, but it's interesting that April contracts (RBJ20) settled around this $0.55 mark - deliveries will shortly be happening at these ridiculous prices.
h0h0h0 tax increases are coming, you think this $4T bill will pay itself? i fully expect gas prices to rubberband back to the $3-$4 range before this decade has gotten fully underway.
until then, i've unexpectedly found myself in a great place to be with a recently modified turbocharger on a family sedan ]:-)
"Crazy" isn't the best choice of words. It has a loaded (negative) connotation.
California has high fuel taxes relative to other US states. It has low fuel taxes compared to most other countries. From random source [1], California is $0.35 per gallon. Fuel taxes in Canada vary from $0.64 to $1.55 per US gallon [2].
Right now in vancouver bc, lowest I seen is 0.934$ cad per liter.
That's about $2.51 USD/galon.
We had the highest gas in north America for awhile (we might still do) in part taxes... we were one of first unfortunate folks to have high taxes and carbon taxes for years.
-i have paid more than 5$ USD/gallon for 91 octane gas =/
Without getting too far off topic: I sincerely wish we had higher taxes on fuel in the rest of Canada (and commensurate increase in relief for lower income folks whom it would disproportionately affect). Everyone complains about the price of gas, but no one cares to change their behaviour and purchasing habits in response. I drive the smallest, most fuel efficient hatchback I could buy 8 years ago, and intend to buy an electric car whenever I move on from this one. I do it for environmental reasons, but the economics don't hurt, either! I've saved 4000+ liters of gas compared to the SUVs/MUVs that most people buy these days.
Yeah, we have pretty high fuel taxes but it's a good deterrent for driving since we have high smog too. Adding taxes and having high emissions standards really helped reduce a ton of smog in the air since the 80s
In the summer we use a special blend of gas that costs more due the heat causing an inversion(?) I think
High smog in all of California? Or just in those awful cities? Seems crazy to dictate taxes across the entire of a large state just because the urban areas have smog.
Urban areas tend to have higher smog concentrations, but most gases aren't known for their tendency to avoid travel and diffusion. Emissions have non-local effects. Some might even say global.
Additionally, gas taxes are about the most straightforward road use fee right now.
Still, non-metro areas tend to get a break. Never understood exactly why but my theory is either additional county/muni taxes, or real estate tends to be cheaper and with it station overhead. This goes out the window if it's an isolated refill chance, though, in which case it's whatever the market will bear.
No, gas tax in California is just 2 cents higher per gallon than in Pennsylvania, while the price at the pump is 80 cents higher (as per https://www.usatoday.com/story/money/2020/02/06/states-with-... ). The oil companies claim it has to do with the special formulation decreasing the competition in the local market. Then again, maybe they're successfully acting as a cartel.
this is likely due to lower demand still buying through gas from weeks prior. Prices are usually updated at the pump when a new truck brings a new delivery.