(The Center Square) – A report from the Utah Office of Energy Development blames the state’s high gas prices on demand and pressure to end the use of fossil fuels.
Gov. Spencer Cox requested the report as fuel prices in Utah trend higher than the national average.
Utahns have paid $3.07 for a gallon of gas on average in the past five years, according to the report. The cost has skyrocketed to an average of $4.17 per gallon during the past year.
One problem is supply issues on the West Coast, the authors wrote.
“Utah’s refining capabilities are at or near their maximum capacity, and as out-of-state markets continue importing Utah’s cheaper refined products, the market price for Utah’s gasoline goes up,” the authors said in the report. “Subsequently, the state will either pay higher prices for gasoline or must source it elsewhere. The West Coast and the Intermountain Region (except Utah) are seeing an overall decrease in the supply of refined products without seeing a decrease in demand. This decrease in supply is caused by refinery closures or conversions to produce biofuels, both of which are heavily incentivized by state and federal regulations.”
Another issue is pressure to decrease the use of fossil fuels is removing gasoline from the market before an alternative is found, according to the report.
“This encouragement – through regulations, fees, and incentives to close operations – has created a paradigm where the amount of supply that is removed from the market is outpacing the removal of demand, creating an artificial shortage,” the report said. “And in many cases, gasoline demand is still increasing as supply is terminated. This removal of supply is happening through refineries limiting their capacities or utilization, refinery closures, and refinery conversions to produce biofuels – conversions to biofuels eliminate a refinery’s gasoline supply because they produce only distillates, not gasoline.”
Residents pay between 50 cents and 54 cents in fuel taxes, according to the report. The state’s fuel tax is 32 cents a gallon and funds employees of the Utah Department of Transportation. The federal gas tax is 18 cents a gallon. Environmental Protection Agency regulations have led to another three to four cents a gallon in Salt Lake and Davis Counties.
Utahns are not likely to see a break in gas prices soon. The state’s fuel tax is has an inflationary trigger that will add 4.5 cents to the cost of a gallon of gas beginning in January.
Cox thanked the department for its report in a Twitter post.
“We now understand why gas prices in Utah are high and can work toward increasing supply and reducing prices,” Cox said in the post.