Although gasoline prices have reached record highs in Texas and around the country, data shows that fuel demand is rising rapidly to meet pre-epidemic levels.
Economists do not see fuel prices decrease anytime soon, as demand is rising faster than supply. There is no quick fix, the idea of a president stopping collecting federal fuel taxes would have no lasting effect. And as Texans reverse the price hike, the problems can be dire for those who are already struggling financially.
“I’m stressed out,” said Jasmine Camarena, who was taking orders next to hot engines in a nearly 100-degree heat Thursday at the Kellers Drive-In on the Northwest Highway. She goes to work, hoping that she’ll give him enough advice to get back to Arlington. “I don’t know what to do because I’m just fine,” he said.
Fuel demand in Texas has fully recovered from the epidemic. Last year, the state raised $ 2.7 billion from a 20-cents-per-gallon fuel tax on gasoline, about $ 2.8 billion at the 2019 level. And diesel taxes show Texans are consuming more gallons, with the state collecting $ 983 million in 2021 and $ 952 million in 2019. And so far this year, from January to May, the state has collected more than that from fuel taxes. It did the same period last year.
And that’s despite a significant rise in fuel prices. In 2019, according to the US Energy Information Administration, regular gasoline in the US will cost about $ 2.50 per gallon. The average retail conventional gasoline price in May this year was $ 4.076 per gallon.
Economist Bernard Weinstein attributed high demand to population growth in the state, and said demand would continue to grow as more people move to Texas.
“I think it might surprise people, how quickly the demand has recovered,” Weinstein said. “But it’s a reflection of how quickly the economy has recovered from the epidemic.”
Weinstein said the demand for transportation fuel, even if the economy goes through a mild recession, is unlikely to decrease.
“If we had an 8 percent or 10 percent unemployment rate after COVID hit first, then yes – it would shrink demand,” he said. “But if we’re talking about a mild recession, I don’t think we’re going to see much decline in transportation fuel consumption, at least not in the state of Texas.”
If Congress approves a three-month federal fuel tax suspension as proposed by the Biden administration, consumers will see a slight reduction in gas pump prices. But that reduction is short-lived and can only make the problem worse, said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University.
“I think it’s been about a month of sugar levels,” Bullock said. “You feel good in the sense that you got about 20 cents less in the pump, but it doesn’t take long to melt its effects.”
He said: “This federal tax holiday they are talking about is a monumental mistake.”
Reducing prices (usually 18.4 cents per gallon and 24.4 cents per gallon of diesel) can increase demand, prompting prices to rise again in a short time. Plus, the fuel tax suspension is similar to the tax cut and it will put more money into the economy, which will contribute to more inflation, he said.
“This is fiscal policy and it will increase aggregate demand in the economy. It has gotten us into this inflationary cycle that we are in now, so it is likely to contribute to that,” he said.
They think the proposed tax suspension is largely politically driven.
“It’s only a matter of time to make it look like they’re doing something about it when in reality the solutions are long term,” Bullock said.
Douglas Davis was consolidating his actions Thursday morning, stopping at the post office and grocery store near Casa Linda. He said they are dealing with high gas prices.
“I’m not happy, but I understand why they are more,” Davis said. “People complain about it, but it’s a total effort to get one gallon of gas off the ground compared to a gallon of milk.”
Davis said price liability falls on a number of people, including Congress and oil companies.
“Everyone tries to blame the president, but it’s not just a one-man problem,” Davis said.
Audra Chavis was parked near the post office and said there were two cars in her house. She said the gas prices her family was facing to fill were disappointing.
She said if prices continue to rise, her family may have to make some concessions.
“What the government can do to help us is definitely beneficial because the price of everything is rising,” Chavis said. “It affects families and you have to decide what’s important to you.”
Tillie Bergin, executive director of the nonprofit Mission Arlington, which provides services and resources to financially struggling people, said the group has seen an increase in the number of people seeking help in energy and transportation. Some people who work for the firm are looking for a job or trying to start a new one. Transportation can make the difference between living with their cars or finding a more permanent living situation, Bergin said.
Mission Arlington can sometimes help with gift cards so people can fill their tanks and the nonprofit offers bicycles so people can go to work. In the last two months, the nonprofit has delivered two to three bicycles per day. Last year, they gave only one to two bicycles a week.
“Under the circumstances, we help someone get down and put gas in their car, but it’s short term because they get back into the same situation,” he said.