New Jerseyans and Americans across the nation are feeling the economic effects of the Ukrainian at the gas pump. The country has seen gas prices rise an average of $1.00 per gallon this month as markets respond to international uncertainty and President Biden’s executive order banning all Russian oil imports. While gas prices have been steadily rising over the past three years, the sudden spike is impossible to miss when viewing it on a chart.
Even those who don’t drive are affected, as consumers inevitably share the costs incurred by businesses. For businesses, it can be brutal, as they are torn between taking the hit of higher prices themselves or passing them off to consumers and watching their sales drop.
Some argue the markets are simply responding to the conditions of the world. Others, particularly those proposing bills in the House, suggest that oil companies are taking advantage of the situation to gouge consumers. Whatever the cause, there is already discussion at both state and federal levels about what legislators could do to lessen the pain at the pump for citizens.
Today I’ll cover everything that’s being discussed in our state and on Capitol Hill about dealing with high gas prices.
State Sen. Shirley Turner will propose a bill to drop the state gas tax by 27.9 cents for 60 days, and State Sen. Ed Durr has already proposed a bill that gives a $250 rebate to NJ citizens to offset the increased gasoline costs. Neither bill has been voted on yet.
Critics of Sen. Turner’s bill point out that the revenue generated by the gas tax is used to fund infrastructure and pay back debts owed by the state. They further argue that even if debts continue to be paid, the state’s credit rating could be hurt by the loss in revenue, a rating that has only recently improved.
Turner has responded by saying, “Our infrastructure will not suffer and we will not be late or delinquent on our bond payments, because New Jersey is flush with cash.” Turned also noted that the state should be receiving $6.8 billion in federal highway aid, implying that the state could use that money to offset the loss in revenue from her proposed gas-tax holiday.
Sen. Durr’s proposal would not take from any ongoing revenue stream but would take from the $4 billion surplus the state is currently sitting on. This bill is independent of but adjacent to NJ Senate Republicans’ Give It Back program, which proposed to refund taxpayers between $500 and $1,000 for what they argue was an over-collection of taxes.
Amidst multiple proposals for reducing the burden on NJ residents, Governor Murphy has stated that there’s nothing the state can do about it. He framed it as something residents would have to deal with in the collective effort to choke off revenue to the Russian government as they proceed with the war. However, the Governor stated that he supports a release from the federal petroleum reserve and a federal tax holiday.
It remains to be seen what he will do if either of the two bills in the State Senate pass.
There are three proposed bills in the House that would tackle high gas prices. Each bill is structured differently, with the first suggesting a monthly check of $100, the second suggesting an annual rebate of $240/$360, and the third suggesting a rebate based on oil company profits.
The first proposes a $100 monthly payment to each adult and dependent each month the national average price per gallon of gas is over $4.00. This payment would be made in full to each adult and their dependents for those making under $75,000 per year. Between $75,000 and $80,000, it would decrease until phased out for those making $80k and over.
The second proposes a tax rebate applied quarterly, with an annual maximum of $240 for single filers and $360 for joint filers. This money would be generated by taxing the largest oil companies, while the smaller domestic producers that account for 70% of production would be exempt.
As chairman of the House Committee on Energy & Commerce, NJ’s own Rep. Frank Pallone has already called six of the biggest energy companies to testify before Congress on April 6th. Pallone is challenging them on the costs Americans are seeing, accusing oil companies of taking advantage of the Ukrainian crisis as cover to lower production and artificially increase prices.
Information about Rep. Pallone’s press release, letters, and the upcoming hearing can be found here.
There you have it. There is a problem, and legislators at both state and federal levels are doing something to combat it. Business owners and consumers alike will surely breathe a sigh of relief to see that elected officials are taking note and taking action.