I drove to the bank last week to deposit my federal stimulus check.
Thank you, future American taxpayers!
My car still had half a tank of gas so I didn’t bother filling up.
When I got home, I checked my credit card records. The last time I put gas in my Honda was March 13, more than two months ago. If current trends were to hold, I probably won’t need to buy gasoline until the middle of July.
Most days, I’ve got nowhere to go. I work from my back bedroom, walk to the grocery store and talk to my friends, family and coworkers on Zoom.
A year ago, I was filling up every other week routinely. Now, the equivalent of four times a year.
I like math. Let’s do some.
Oklahoma’s gasoline tax is 19 cents per gallon, almost all of which goes to pay for state and county roads. My car holds roughly 10 gallons. Every time I fill up that’s $1.90.
If I fill up 26 times a year, $49.40 to the state Capitol and to the highways and bridges. But if current trends were to last 12 months, I’d actually end up paying closer to $5.70, a difference of $43.70 a year in fuel tax revenue.
Oklahoma has about 2.5 million licensed drivers and 3,482,540 vehicles on the roads, if you count every motorcycle, city bus and trash truck. But, for these purposes, let’s just think about the private and commercial motor vehicles. That’s 3,268,223 vehicles. We’re also going to assume for the sake of argument that my driving and my Civic are typical, which I’ll admit is a pretty broad back-of-the-envelope assumption.
Still, it works out to the state of Oklahoma getting $142.8 million less in a year.
(The federal government’s gasoline tax is 18.4 cents per gallon. My roughly estimated annualized impact on federal gasoline tax revenue nationally from COVID-19: $10.2 billion a year.)
If you think of state budgeting as an action and reaction process, that all would work out to roughly $142.8 million less for transportation funding.
It will actually mean less money available for schools, cops and everything else the state does over the long term. To make up for lost road money next year, the Legislature approved $200 million in bonds to keep the state’s eight-year construction program funded. That’s $180 million this year and $20 million for the future.
Oklahoma will be paying off those bonds from general revenue for 20 years. Every penny that pays off bonds is a penny that can’t be used for public schools.
A friend recently posted a picture of a gasoline pump at a national warehouse store that was selling discounted gasoline for 95.9 cents a gallon, a truly remarkable price. Of that 96 cents, 37.4 cents was taxes – nearly 40%. How much do you figure an Oklahoma oil producer got out of it? How much went to the guy who owned the warehouse store?
The national average of regular gasoline prices over the Memorial Day weekend was $1.942 a gallon, according to AAA; the Oklahoma average was $1.617.
A year ago, the average price in Oklahoma was $2.744.
The tax levels were the same, but we were driving a lot farther. Household vehicle travel across the contiguous U.S. declined by 68% to 72% during the last two weeks in March and first week of April, compared with the first week in March, according to U.S. Public Interest Research Group
Of course, fuel taxes only tell a fraction of the impact on COVID-19’s petro-impact on state government revenue.
Last month, gross production taxes — taxes on oil and natural gas — were down $19.1 million. That’s a 24% drop compared to April 2019. The benchmark future price on West Texas crude recently went below zero. In effect, people who owned oil were paying people to take it off their hands.
The number of drilling rigs in the state fell to 24, Baker Hughes reported recently. A year before, the number had stood at 102. Nationally, the active rig count went from 1,012 to 529 in one year.
Don’t look for any of those numbers to go up a lot anytime soon. At the moment, every tank farm, pipeline and the national strategic reserve are pretty much brim full. We don’t have any more space for the petroleum we’re pumping out of the ground.
The mix of state tax revenues changes every year. In fiscal year that ended June 30, 2019, state gross production taxes added up to $1.15 billion. Gasoline, diesel and fuel storage taxes were another $538.2 million. Together, they were about 15% of state tax revenue. (Both tax rates have gone up and demand has gone down, so current numbers are more difficult to parse.)
All of those numbers aren’t really government stories, although journalists sometime ask as if they are. They’re human stories.
Oklahoma people who work on oil rigs, at oil companies and at convenience stores are hurting badly. The people who sell those people groceries, hardware and newspapers are too.
Fuel tax numbers will bounce back faster than the gross production, but neither is coming back fast, and neither may come back fully.
The way things are going, that federal relief check I deposited Friday will keep my Honda going for about 24 years, eight months, 25 days.
This is going to be a bad recession for Oklahoma, and one of the big reasons may be parked in the garage.