Repealing the Superfund Tax May Lower Oklahoma Gas Prices Even More

Senator James Lankford and a group of fellow Republicans are back at it in Washington, trying again to wipe out what supporters call the “Superfund Tax” on oil and gas.

The tax was brought back a few years ago and is charged on crude oil and imported petroleum products. Lankford and others argue it drives up costs at the pump, and they want it gone to save a little on gas prices for families and businesses.

This Push Isn't New

Lankford and Senator John Barrasso tried a similar repeal before. The latest push, wrapped into the “Pay Less at the Pump Act,” would undo the tax entirely, saying it unfairly penalizes U.S. energy production and contributes to higher fuel costs.

Right now, Oklahoma already has one of the lowest gasoline tax rates in the country. The latest data shows we’re taxing gas at roughly 19 to 20 cents a gallon, far below the national average of about 33.5 cents and way down from the 70-plus cents charged per gallon in states like California.

Diesel in Oklahoma is taxed even lower, around 13 cents per gallon.

That low state tax is part of why Oklahoma’s pump prices tend to run cheaper than most places. Folks here have gotten pretty used to seeing gas prices lower than much of the rest of the country, not necessarily because crude is always cheap, but because the tax hit at each fill-up isn’t as stiff as it is elsewhere. Combined with the federal gasoline tax, we still come out on the lighter side of the tax burden compared with many states.

So if the Superfund Tax were repealed on top of Oklahoma’s already light state tax, you could see pump prices dip even further. That's the theory that Lankford and his allies are leaning on anyway.

We don't mind paying more taxes.

-No One Ever-

What’s interesting is that this debate comes at a time when the oil and gas industry in Oklahoma isn’t exactly booming. Latest rig counts show a slight drop in active rigs here, even as the national total holds steady. Oklahoma dipped a little in the latest Baker Hughes report.

That kind of downturn matters to a state where energy jobs and investment are a big part of the economy. Cutting taxes might help producers stay in the game longer, but it’s still an open question whether it’s enough to reverse the current trend.