TRADE WARS! TANKER GATE! IRANIAN SANCTIONS! MIDDLE EAST UNSTABLE! MIDDLE EAST PEACE! VENEZUELA SANCTIONS! INVENTORIES UP! INVENTORIES DOWN! REFINERY OUTAGES! PRODUCTION DOWN! PRODUCTION UP! CRUDE CHASES $50!
CRUDE RUNS UP TO $60!
WHAT DOES IT ALL MEAN?
As we head into the month of August, the New York Mercantile Exchange front month futures shifts to September. When we think of September we think of the fall and the seasonal changes to gasoline specifications. While the price spread between the expiring August contract (summer grade) and the October contract (reflecting higher reid vapor pressure) is over $0.20 per gallon. Will the market prices go down as the spread suggests?
Every year on July 1st, new state fuel excise taxes are ushered in and yesterday was no different. The chart below lists the increases sorted by highest to lowest. Keep in mind this is on top of the existing state tax. Federal tax is $0.1840 per gallon. This year’s winner is Illinois with a whopping $0.19 per gallon increase. Illinois is one of seven states where drivers pay layers of both general sales tax and special excise tax on gasoline at the state and local levels. Those multiple layers mean drivers filling up in Chicago, for example, will pay $0.96 in taxes and fees on a $2.46 gallon of gasoline which equal a tax burden of 39%. The new Illinois taxes are ear marked for an aggressive infrastructure plan. To be fair, Illinois hasn’t raised the gas tax since 1990.