Misplaced blame for high gas prices

By Chuck Kajer

Republicans are betting that higher gas prices are going result in a voter mood swing that will come back to haunt DFL'ers in this fall's legislative elections. They have announced a $100,000 ad campaign blaming the state's new gas tax for higher gas prices.

The state's new transportation bill, which the DFL-controlled legislature put into law by overriding Gov. Pawlenty's veto of the transportation bill, has resulted in a series of gas tax increases that went into effect last month. On April 1 Minnesotans started paying two cents a gallon more when we filled up our tanks. That means when we fill an 18-gallon tank, we are paying an extra 36 cents. There will be another increase this fall and several more to come.

Of course, that extra 36 cents is not the number Republicans are pointing to when they call attention to the higher price of gas. When the tax went into effect gas was selling for a little more than $3 a gallon. Now, it's closer to $3.50, and some say it could reach $4 a gallon by summer.

Where is the real blame?

It's easy to point the finger at oil companies. This week Shell and BP reported record profits in the first quarter of the year. And don't for one minute assume that means owners of the local Shell and BP stations are swimming in dough. In reality, profit margins for gasoline retailers are ridiculously small.

But it's not just the oil companies, there are other factors as well. Global demand due to development in Asia means demand for oil is higher than ever, at the same time that supplies are tight due to a variety of factors, including reduced production capacity in refineries and terrorism in Nigeria.

Assuming an increase from $3.09 to $3.49 over the past month, it now costs an additional $7.20 to fill that same 18-gallon tank. Blaming the two-cent gas tax increase - and the politicians who voted for it - for skyrocketing gas prices is like blaming a dripping bathroom faucet for a flooded basement.