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With prices high and a busy travel season ahead, will South Dakota's leaders support gas tax relief?

Pres. Biden urges suspension of federal gas tax, state gas taxes; Thune, Johnson opposed

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(Metro Creative photo)
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MITCHELL — Many South Dakotas are expected to hit the road this summer, and every one of them will be watching the prices at the gas pump as they journey out for business, vacation and work commutes.

In fact, AAA estimates that 42 million people across the country will head out on the highway this summer on trips of 50 miles or more, including 118,000 South Dakotans. That’s set to be the busiest road travel season since 2019.

“The volume of travelers we expect to see over Independence Day is a definite sign that summer travel is kicking into high gear,” said Paula Twidale, senior vice president for AAA Travel, in a statement. “Earlier this year, we started seeing the demand for travel increase and it’s not tapering off. People are ready for a break and despite things costing more, they are finding ways to still take that much needed vacation.”

Road travel is picking up, in part, thanks to consumers shaking off the isolation of the COVID-19 pandemic along with air travel frequency dropping. Recent issues with air travel and ongoing concerns of cancellations and delays may be driving the share of people traveling by air to the lowest level since 2011, according to statistics from AAA. Air travel by South Dakotans is projected to be down about 3% this year compared to 2021.

By comparison, car travel is expected to set a new record despite high gas prices, with 42 million people taking to the road, an increase of 0.4% from 2021. In South Dakota the number of travelers driving to their destination will be down slightly by about 0.8%, with more than 99,000 state residents traveling by car.

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For many, car travel is more convenient than air travel, Twidale said.

“Traveling by car does provide a level of comfort and flexibility that people may be looking for given the recent challenges of flying,” Twidale said. “But not all destinations are within driving distance, which doesn’t mean you have to abandon your vacation plans. The best advice we can give travelers is to consider working with a travel agent who can help plan for the unexpected — like flight cancellation. They are your best advocate.”

Gas tax proposal

With so many travelers expected on the road between June 30 and July 4, consumers are looking for any relief they can find at the pump. President Joe Biden has suggested a three-month suspension of the federal gas tax as a way to reduce the impact on travelers.

That tax comes to 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel fuel. Officials estimate that such a suspension would cost approximately $10 billion in tax revenue, according to the White House.

It’s not a complete solution to the issue, but it could help consumers, Biden said.

"I fully understand that the gas tax holiday alone is not going to fix the problem," Biden said in remarks Wednesday, according to ABC News. "But it will provide families some immediate relief, just a little bit of breathing room, as we continue working to bring down prices for the long haul."

Biden also called on states to suspend their own gas taxes or provide commensurate relief to consumers.

In South Dakota, the state charges a tax of 28 cents per gallon for gasoline, natural gasoline and undyed diesel fuel. Other fuel types, such as liquid petroleum gas, ethyl alcohol and jet fuel, are also taxed at the state level, according to the South Dakota Department of Revenue.

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Those taxes produce a significant amount of income for the state. Over the years, those taxes have brought in $211,993,156 in fiscal year 2017, $209,762,406 in 2018, $212,209,837 in 2019, $209,669,376 in 2020 and $210,980,758 in 2021. That comes out to about $210,923,107 on average.

Most motor fuel tax income is deposited into the state highway fund and then designated for various entities. Where it goes is dictated by South Dakota codified law 10-47B-149. Those destinations also include non-highway purposes, as well as counties and townships.

State gas taxes around the country average about 31 cents per gallon of gasoline, according to the U.S. Energy Information Administration .

According to AAA, the national average price for a gallon of gasoline as of June 22 was $4.955. South Dakota is currently below that average at $4.768, and is listed as 19th lowest in the country. Georgia currently has the lowest average gasoline prices at $4.451 and California ranks the highest at $6.371.

Support for the federal gas tax suspension seems mixed among legislators in Washington, D.C.

Sen. Joe Manchin, D-West Virginia, told ABC News that he's not on a "yes" vote right now.

"Now, to do that and put another hole into the budget is something that is very concerning to me, and people need to understand that 18 cents is not going to be straight across the board -- it never has been that you'll see in 18 cents exactly penny-for-penny come off of that price," Manchin said.

Johnson, Thune opposed to proposal

The Mitchell Republic reached out to representatives for Sen. John Thune, Sen. Mike Rounds, Rep. Dusty Johnson and Gov. Kristi Noem about their position on the proposed federal gas tax suspension, as well as their position on any potential suspension of South Dakota state gas taxes.

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Johnson posted a series of messages Wednesday afternoon on his official Twitter account opposing the proposal.

“The President’s proposal to suspend the gas tax is a terrible idea. It steals from our roads and bridges, won’t help consumers, and doesn’t prioritize American energy,” Johnson wrote. “It doesn’t attack the real problem. Gas is up $2.50 since the President’s swearing in. Rolling back $0.18 worth of a gas tax doesn’t deliver anywhere near the relief we need. This is about supply, not taxes.”

Johnson said the issue at hand has to do with supply and demand.

“Indeed, the ‘laws of supply and demand’ are mightier than the ‘laws of DC.” Unless the White House works to increase supply, we’ll continue to see upward pressure on gas prices. Prices will continue to rise, and consumers will continue to suffer,” Johnson wrote. “The federal gas tax funds roads and bridges. I don’t understand why the administration would prefer to rob the highway trust fund instead of actually increasing domestic supply.”

Investing in American refineries would be a better approach to the issue, he said.

“These supply shortages have been a long time coming. We haven’t built a major new refinery since the 1970s. It’s almost impossible to permit pipelines & energy infrastructure. No year-round E-15. These policies are unwise & a gas tax holiday won’t put us back on the right track,” Johnson wrote.

Thune agreed that increased American production of energy is a better solution to the gas price problem.

"This is yet another example of this administration’s failure on an issue that is fundamental to the American people, and that’s the price they’re paying for a gallon of gasoline. $5 is the national average right now. What the administration of course is coming out with is yet another gimmick, another band-aid and something they know is dead on arrival up here in Congress. The president knows it, Democrats know it up here, and from what we’re told they’ve conveyed that to him,” Thune said Wednesday. “So the question is why do people at the White HOuse continue to talk about ideas like these that are going nowhere? Why are they talking about tax rebates, wny are they talking about trying to convince other countries around the world to up their energy production when we have ample energy supplies right here in the United States.”

The United States has the ability to counter supply issues with its own resources, Thune said.

“Instead we’re going hat in hand to these other countries around the world. Why is he continuing to talk about a gas tax holiday and tax rebates and all these things that don’t treat the fundamental problem. And that is that we have taken American energy producers out of the game. All this administration has to do is get these energy producers off the sidelines, back in the game, start increasing American energy production and American energy supplies,” Thune said. “It will start meeting demand and gas prices will start coming down. That’s the formula. The president and his policies have contributed to where we are today, it’s as simple as that. They can fix it but they have to start focusing on the real problem and not on gimmicks that they know are going nowhere.”

Noem and Rounds had not responded to the Republic prior to the deadline for this story.

Related Topics: GASOLINEECONOMYTRAVELTAXES
Erik Kaufman joined the Mitchell Republic in July of 2019 as an education and features reporter. He grew up in Freeman, S.D., graduating from Freeman High School. He graduated from the University of South Dakota in 1999 with a major in English and a minor in computer science. He can be reached at ekaufman@mitchellrepublic.com.
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