Gas & Diesel Price Working Group Come Up with Possible Solutions to Higher Fuel Prices

By Shen Wu Tan

Special to the Wyoming Truth

Members of the new gas and diesel price working group, along with an energy industry stakeholder, shared ideas for long-term solutions to Wyoming’s higher fuel prices Friday, with many stating there wasn’t much the group could do in the short term.  

The speakers at the group’s second public meeting proposed looking at Wyoming’s import capacity for supply, a dynamic state sale and use tax, a tolling agreement and a tax rebate program.  

Glen Murrell, executive director of the Wyoming Energy Authority, told the group that it would be worth exploring Wyoming’s import capacity for supply, such as pipelines and rails, because the agency can implement capital projects. Murrell noted Wyoming exports 90% of its energy products, so the state agency has been focused on its export rather than its import capacity.  

“We are enabled to build, construct, finance, own, rent, lease capital projects – we have that capability,” Murrell said. “And furthermore, we’re able to do that because we have bonding authority to the order of $3 billion, which is an incredibly powerful tool to leverage in these large capital projects using sophisticated financial models to actually get these things built. The same approach has been used to build out our natural gas supply …and the same approach can be used on the flipside, to build out our import capacity moving forward.”  

However, Murrell noted that refining capacity is down and that when building a pipeline, one has to think about the source and the exit supply required to bring into the state. He said it seems that the root cause of the supply restraint boils down to refining capacity, and he questioned whether Wyoming can invest in ramping up refining capacity or keep its current refineries operating.  

One of the group’s members, Rep. Clark Stith, R-Rock Springs, proposed a sales and use tax rate that could change depending on how much extra money Wyoming would earn from higher gas prices. Stith said the state budget projected an estimate of $62 a barrel of oil for this year and $56 per barrel for 2023.  

Yet, Stith said oil prices are substantially higher than this estimate and that for every $10 increase above the estimated cost, the state generates about an extra $100 million. A penny of sales tax on all the goods in a year generates about $190 million a year, he estimated.  

“Currently, we have a situation where people on the street have the burden of paying high fuel prices at the pump, and while they are paying high fuel prices, the state itself is getting rich and getting more tax revenue,” Stith said. “So the idea of this would be to make the price of oil and sales tax rate linked, so that it would provide a kind of financial shock absorber.”  

If oil stayed above a certain benchmark price, Stith said the state share of the sales tax could go down.  

“This would not directly deal with the price at the pump itself, but might give Wyoming residents some relief to mitigate the effects of high fuel prices,” Stith added.  

Gas prices in Wyoming have recently dropped. As of Tuesday morning, the state reported an average gas price of $4.49 per gallon, a decrease of 20 cents from last week’s average of $4.69 and down 32.7 cents from last month’s average of $4.82, according to GasBuddy. Prices are up $1.04 from last year’s average of $3.45. 

Another group member, Rep. Mike Greear, R-Worland, proposed instituting a tolling agreement concept, which is a contract to purchase fuel where the utility pays the seller a payment for capacity for the length of the agreement, to get the Cheyenne Logistics Hub online.  

Greear suggested having the state of Wyoming help back the hub to be stood up and de-risk the fuel that would be in storage or in lines and also provide a hedge on contracting until the market is filled and fully able to stand on its own. The state would financially back some of the potential risk to get the facility up and running until it could capitalize on its products.  

Brenda Henson, chairperson of the working group and director of the Department of Revenue, recommended a solution that targets specific demographic groups that may be impacted by higher gas prices. She proposed a tax rebate program that would issue refund checks to those who are elderly or disabled.  

Henson noted gas prices might not affect this proportion of the population much, but pointed out that they could be impacted by pump prices in other ways, such as through grocery deliveries.  

To qualify for the program, individuals would need to be a Wyoming resident for a year or more, age 65 and older or at least 18 years old if they have a disability. There also would be an asset and income limit to be eligible for the program, which could offset higher gas prices for some folks, Henson added.  

At the end of the meeting, Randall Luthi, Gov. Mark Gordon’s chief energy advisor, announced that he will meet with Henson during the first week of August to sort through the proposals to provide relief to residents from higher gas prices and bring them back for the group to review.