Oh man, not complaining but just complaining. I Put three-quarters of a tank of gas in my truck over the weekend and it was $87. $5.09 a gallon. I guess according to AAA, I paid the average price (I was in Leavenworth when I filled up). Here’s where I would prefer to be below average!
This got me thinking, so please indulge me as we explore. We’re going to start with a bit of rant about gas prices here in Washington before we get to why this data point may mean much more in the geopolitical realm, and in turn in the markets.
Here is a map of Washington prices and the National Average.
It’s not surprising that gas prices are higher on the west side of the state versus the east side. What is a little surprising (to someone who doesn’t pay that much attention), is the difference between the state average and the national average. About $1.32 per gallon.
State gas taxes are as follows. So, as you’re filling up a 20-gallon tank from empty, you’re paying just shy of $15 in taxes, with about $11 of this going to the state.
Below is a list of all the tax rates for all 50 states (from 2022). It’s a bit dated, but if the other two states above us didn’t change, then we are right there with them for highest taxes.
Through the Climate Commitment Act (CCA), most sources attribute another 40-60 cents per gallon to the price of gas, and this is a number that doesn’t show up in the direct tax amounts noted above.
No wonder it’s become so expensive to live around here! But that’s an aside. Let’s get back to why we’re talking about fuel prices here.
Here’s the effect of the Iran war on oil prices since it started on Feb 28th.
You can see that prices were around $70 per barrel and now sit at about $100, and that’s after today’s 10% decline in oil. That drop came mainly on the heels of President Trump saying the following.
According to Polymarket (and very much related, me thinks), the likelihood of Democrats taking over control of the House of Representatives is now up to 85%.
The odds of Trump knowing this are well above 85% (read: 100%) and he knows very well that high prices at the pump will not help him in the midterms if they remain elevated. My assumption is he will look for a way out of this Iran fight in order to get gas prices down and get the economy going. Is it already too late? I don’t know the answer to that, but my guess is by June many voters will have made up their mind. June’s not that far off.
So, we will see how things go through the summer, but of course we are hoping that we can get to a more ‘normalized’ world for reasons far more important than the price we pay at the pump. We might have to file that under wishful thinking. The markets certainly are tuned in, as evidenced by price swings like we saw today.
I hope you have a good week. If you have any questions or comments about this or any other topic. We will certainly be happy to have a conversation.