The recent spike in gasoline prices is on pace to cost American drivers an additional $9.4 billion per month, according to a new analysis released today by the Institute on Taxation and Economic Policy (ITEP). Driven by the ongoing Iran war, which has sent prices soaring by about a dollar per gallon in a single month, the financial strain is being felt most acutely in the South.
“Pretty much everyone is paying more for gas right now, but the impact is particularly severe in the South because folks there tend to buy more gas than in other parts of the country,” said ITEP Research Director and report author Carl Davis. “Some lawmakers are talking about gas tax holidays to help bring down these very high prices, but the truth is that tax breaks just aren’t going to solve this problem. Most of the tax cuts aren’t going to reach the people who are struggling most right now.”
Key Findings:
- Gas prices are up dramatically across the country, but the South has been hit hardest and is on pace to pay $4.2 billion more per month. The average driving-age person in the South will pay $39 more per month in higher gas prices, compared to $34 nationally or $24 in the Northeast. If gas prices remain elevated, the average additional cost for households will be several hundred dollars per year.
- Alabama is the most affected state in the nation, with residents spending an extra $52 per person, per month. Other heavily impacted states include Mississippi ($51), Wyoming ($49), Kentucky ($47), and New Mexico ($44).
- Some lawmakers are proposing gas tax holidays to help working-class consumers, but these are largely symbolic and steer significant benefits to the oil industry. For example, a federal gas tax holiday would cost $2.4 billion a month in revenue yet save families earning under $53,000 only about $5 a month. And state gas tax holidays, such as those enacted in Georgia or proposed in Connecticut, see a significant portion of their value—between 38% and 40%—flow to nonresidents and the oil industry rather than local working families.
