Politicians love a good theater production, especially when the script involves "relief at the pump."
Two Democratic candidates for governor are currently making rounds with a proposal that is as intellectually hollow as it is politically convenient: suspending the state gas tax and slashing refinery regulations. They frame it as a populist crusade against "Big Oil" and "inflationary pressures."
It is a fairy tale.
If you believe that pausing a tax or trimming a few safety protocols will actually lower the price you pay at the Chevron on the corner, you are the mark in a very expensive con. I have spent two decades dissecting energy markets and watching these cycles repeat. The math doesn't care about campaign slogans. The supply chain doesn't care about your "pain at the pump."
Here is why the "gas tax holiday" is a subsidy for oil companies, not for you, and why deregulating refineries is a distraction from the real structural rot in the energy market.
The Gas Tax Holiday is a Gift to Shareholders
When a state suspends a gas tax—say, 30 or 50 cents per gallon—the assumption is that the price on the marquee will drop by exactly that amount.
It won't.
Gasoline is a "price-inelastic" good in the short term. You need to get to work. You need to pick up the kids. You will buy the gas whether it is $3.50 or $4.00. Because demand does not significantly drop when prices rise, retailers and wholesalers have zero incentive to pass tax savings on to you.
Instead, a phenomenon called "price stickiness" takes over. The tax disappears, but the retail price stays high because the market has already proven it can support that price point. The difference? That 30 cents per gallon that used to go toward fixing your pothole-ridden commute now flows directly into the margin of the retailer or the distributor.
Look at the data from previous "holidays" in states like Maryland or Georgia. Prices drop for a week, then miraculously creep back up to the national average. You lose the infrastructure funding, and the oil companies get a taxpayer-funded bonus. It is a transfer of wealth from public goods to private balance sheets, disguised as "help."
The Refinery Regulation Red Herring
The second pillar of this misguided platform is "reducing refinery regulations" to increase supply.
This argument assumes that refineries are sitting idle because they are buried under a mountain of paperwork. It is a fundamental misunderstanding of the industry's current objective: Capital Discipline.
After the oil crash of 2020, the major players stopped building. They stopped expanding. They realized that keeping capacity tight keeps prices high and dividends fat. If you removed every environmental regulation tomorrow, Exxon and Chevron would not suddenly break ground on a new multi-billion dollar refinery. Why would they? They are making record profits by doing exactly what they are doing right now: running existing plants at 90-95% capacity and returning cash to shareholders.
Refining capacity in the United States has been shrinking for years, not because of "red tape," but because the industry is in a controlled harvest phase. They know the long-term outlook for internal combustion engines is terminal. They are not going to invest in 40-year assets in a 15-year market.
The Real Cost of "Cutting Red Tape"
When politicians talk about "reducing regulations" on refineries, they are usually talking about:
- Air quality standards (Sulfur and NOx emissions).
- Maintenance cycles (Allowing plants to run longer without safety inspections).
- Product specifications (Creating "boutique" fuels for specific regions).
If you relax these, you don't get cheaper gas. You get more "unplanned flaring" and mechanical failures.
When a refinery has a fire or a mechanical breakdown because they skipped a maintenance cycle, the supply shock sends prices skyrocketing across the entire region. "Deregulating" for the sake of speed actually makes the system more fragile. One "oopsie" in a major refinery does more to hike your gas price than any carbon tax ever could.
The Myth of the "Local" Gas Price
People ask: "Why is gas so much more expensive in my state than the one next door?"
The "lazy consensus" answer is always "taxes and regulations." While those play a role, the brutal reality is Geography and Logistics.
If you live in a state without its own refining hub or a major pipeline connection (like the Colonial Pipeline), you are paying a "logistics tax" that no governor can legislatively remove. You are at the mercy of Jones Act-compliant tankers or rail cars.
Politicians won't tell you this because they can't "fix" geography in a four-year term. It is much easier to blame a tax or a "bureaucrat" than to admit that your state's energy infrastructure is an antiquated mess that requires billions in long-term, un-sexy investment.
Why We Should Actually Raise the Gas Tax
If I wanted to be popular, I'd stop here. But if you want the truth, here it is: We should be increasing the gas tax, not suspending it.
I know, it sounds like heresy. But consider the logic.
Our roads are crumbling. Our bridges are "structurally deficient" (a polite way of saying "dangerous"). The funding for these comes almost entirely from the gas tax, which is not adjusted for inflation in most states.
By suspending the tax, you are starving the very funds needed to reduce traffic congestion. What costs you more in the long run? A 40-cent tax, or the $600 repair bill for a blown suspension from a pothole? What about the two hours of your life wasted in gridlock because the state can't afford to modernize the highway interchange?
The Efficiency Trap
As cars get more fuel-efficient, the "yield" per mile for the gas tax drops. We are driving more miles on less tax revenue. Suspending the tax accelerates this death spiral.
If we want to actually lower the "cost of living," we shouldn't be subsidizing a volatile, globally-priced commodity like gasoline. We should be using that tax revenue to build alternatives so that you aren't forced to buy 20 gallons of explosive liquid every week just to participate in the economy.
Stop Asking the Wrong Question
The question isn't "How do we make gas $2.00 again?"
The answer is: We don't. The era of cheap, easy-to-extract, easy-to-refine oil is over.
The question you should be asking is: "Why is my entire existence dependent on the price of a commodity controlled by a cartel and refined by a handful of companies that have no interest in my well-being?"
When a politician promises to "cut the gas tax," they are offering you a band-aid for a compound fracture. They are hoping you won't notice that the "relief" stays in the pockets of the oil companies, while the public infrastructure you rely on continues to rot.
The Industry Secret
Here is what the lobbyists tell each other behind closed doors: The best thing that can happen to us is a gas tax holiday. It keeps the consumer's total out-of-pocket cost high while shifting the revenue from the government to the corporate ledger. It silences the "price gouging" complaints for a few months without requiring the companies to actually lower their base prices.
It is the perfect crime. And you are cheering for it.
The "nuance" these gubernatorial candidates are missing—or more likely, ignoring—is that energy prices are a function of global crude benchmarks and local refining margins. State-level tax tweaks are a rounding error in the global market.
If you want lower energy costs, you need more localized power generation, a diversified transport grid, and a massive investment in rail and public transit to break the monopoly of the pump.
But that takes work. It takes vision. And it doesn't fit on a bumper sticker.
So, keep falling for the "tax holiday" rhetoric if you like. Just don't be surprised when the price of gas stays the same, the roads get worse, and the oil companies report another quarter of record-breaking "unforeseen" profits.
Stop looking for relief at the pump. Start looking for an exit.
