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TRANSPORTATION FUEL TAXES: IMPACTS OF A REPEAL OR MORATORIUM, March 28, 2000 1 (March 28, 2000)

handle is hein.tera/crstax0246 and id is 1 raw text is: Order Code RS20521 Updated March 28, 2000 CRS Repo for Congress Transportation Fuel Taxes: Impacts of a Repeal or Moratorium John W. Fischer Specialist in Transportation Policy Resources, Science, and Industry Division Bernard A. Gelb Specialist in Industry Economics Resources, Science, and Industry Division Summary Steep increases in the prices of gasoline, diesel, and other transportation fuels have prompted some Members of Congress to seek to ease the effects on households and businesses. Interest has focused on possible repeal or suspension of the levying of all or part of the federal excise taxes on those fuels. Current market conditions and the small amount of tax relief incorporated in most proposals, however, raise uncertainty as to whether prices to individuals and businesses would fall and whether any price decline would be meaningful to consumers. A reduction in transportation fuel taxes would result in a decrease in spending for transportation trust-fund-supported federal programs, unless Congress designated alternate sources of funding for these programs. As a result of the structure of the federal programs the effects of a fuel tax repeal on federal transportation programs would not necessarily be immediate, but depending on the length/scope of the repeal or suspension, they could be substantial. Increase in Crude Oil and Refined Product Prices Due to growing tightness in the supply of crude oil, spot prices of crude oil tripled between mid-February 1999 and mid-March 2000, from about $10 per barrel to about $30 per barrel. Perhaps more publicized, the futures price of one grade of crude oil exceeded $34 in early March. The average acquisition cost of crude oil to U.S. petroleum refiners (which includes some transportation costs) increased 145% over almost the same period, from $10.50 per barrel in February 1999 to an estimated $25.78 in February 2000. Because the cost of crude oil to refiners accounts for a substantial portion of the price of refined petroleum products to users, retail prices of gasoline, diesel fuel, and heating oil have risen. Low product inventories and unanticipated refiner shutdowns have Congressional Research Service The Library of Congress Prepared for Members and Committees of Congress

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