Republicans urge Newsom to suspend California gas tax as prices skyrocket

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GasBuddy head of petroleum analysis Patrick De Haan argues the new coronavirus variant is not impacting gasoline demand. 

EXCLUSIVE: California gas costs shattered another record last week, with consumers in the state paying the most expensive prices in the country. A group of House Republicans from the state think they have the solution. 

In a Tuesday letter addressed to California Gov. Gavin Newsom, a group of GOP lawmakers – led by Rep. David Valadao – urged the governor to temporarily suspend the state's 51-cent-per-gallon gas tax in order to help blunt the financial pain of surging prices at the pump. 

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The tax is used to fund roads and other infrastructure projects; the state's Legislative Analyst's Office projected the tax will generate about $8.8 billion in revenue during the 2021-22 fiscal year.

"Even as prices skyrocket, California continues to tax gasoline at 51.1 cents per gallon," the lawmakers wrote. "While market forces are responsible for today’s extreme prices, California’s high taxes represent an added burden, and working Californians simply cannot afford gas prices approaching $6 per gallon."

Prices for a regular gallon of gas hit $4.31 on Tuesday, according to AAA, up from $2.86 one year ago. But California – as is usually the case – has seen the steepest prices in the country, with a gallon of gas reaching $5.75. In some parts of the state, prices are even higher: Mono County has recorded an average price of $6.50 per gallon.

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"With the cost of goods rising across the board and the price of a gallon of gas at record highs, now is the time to pursue all avenues of relief," the Republicans, including House Minority Leader Kevin McCarthy, said. "We call on you to immediately suspend California’s excise tax on gasoline for six months."

They noted that Newsom, a Democrat, has previously expressed support for helping California motorists by waiting to implement a 5.6% tax hike scheduled to take effect on July 1. But an analysis from LAO found it would only save drivers about 3 cents per gallon. Newsom's office has also floated the possibility of a rebate that could go toward residents with cars registered in California.

"In January, we proposed a pause to the gas taxes," Newsom said during his State of the State speech. "Now it’s clear we have to go further. And that’s why, working with legislative leadership, I’ll be submitting a proposal to put money back in the pockets of Californians to address rising gas prices."

Gas prices in Westchester are above $6 as prices at the pump continue to rise across the Southland on Sunday, March 13, 2022, in Los Angeles.  (Jason Armond/Los Angeles Times via Getty Images / Getty Images)

California state Republicans introduced a bill in January that would immediately suspend the gas tax in response to the surging prices and backfill the projects from the state's $45 billion surplus, but the proposal failed to secure enough votes on Monday.

The lawmakers said they are open to supporting Newsom's rebate in the future, but only in addition to a gas tax holiday.

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"Yesterday, the Democratic super majority in California had an opportunity to provide real relief to hardworking California families who are struggling with record breaking gas prices," Valadaon said in a statement to FOX Business. "It is unfortunate they chose not to put more money back into the pockets of Californians by suspending the gas tax." 

One Wall Street analyst estimated that higher fuel prices could cost the average American household an extra $2,000 per year.

The sky-high gas prices have roots in the faster-than-expected economic recovery from the pandemic, which has triggered the hottest inflation in decades amid strong consumer demand, an influx of government stimulus and disruptions in the global supply chain. 

But in recent weeks, the war between Ukraine and Russia has sent global prices even higher as it impedes the world's access to energy supplies. Although oil prices dipped below $100 per barrel on Monday amid talks between the two nations, gas prices remained high.

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