Hanna Bechtel: High gas prices threaten Pennsylvania’s economy
Summer road trips and tourism are integral to Pennsylvania. From riding buggies in Amish Country to visiting Gettysburg’s battlegrounds, people nationwide journey to the Keystone State for summer vacation. The Pennsylvania Tourism Office’s latest numbers calculate the industry’s impact on Pennsylvania’s economy at $76.7 billion.
However, Pennsylvania’s high gasoline prices threaten this bellwether industry — which, in 2022, supported 486,000 jobs and brought in $4.7 billion in state and local tax revenues — by complicating travel within the commonwealth.
And it’s not just tourism. High gasoline prices have a much broader, deeper consequence: whether Pennsylvanians can afford everyday necessities. Energy costs correlate with overall inflation, straining budgets with expensive utility bills.
Pennsylvania pump prices stand out nationally, with a June average higher than all neighboring states except New York. While Pennsylvania’s gasoline price has decreased from its 2022 record high, the long-term picture shows an average price — up 84 cents a gallon since 2019 — consistently above the national average.
Why is gasoline so much more expensive in Pennsylvania? The state’s gasoline tax — that’s why. At 57.6 cents per gallon (cpg), Pennsylvania’s gasoline tax also exceeds the national average. Based on 2023 numbers, the Keystone State ranked third nationally — just behind California and Illinois.
Pennsylvania experienced its highest recorded average gasoline price in June 2022 at $5.07 per gallon. The year prior, the average gasoline price was $3.13 per gallon. Between 2021 and 2022, Pennsylvania visitor spending decreased by more than half a million dollars. When Pennsylvania’s gasoline prices and consumer costs run high, people spend less while visiting the commonwealth.
Inversely, states with lower pump prices attract more summer travelers.
What affects gasoline prices? Assuredly, OPEC is the most significant factor.
Though OPEC largely drives pump prices, American lawmakers also play a role. Federal and state taxes comprise fourteen percent of gasoline prices, and these tax revenues fund numerous transportation-related areas, the most relevant being road maintenance.
However, not all gasoline tax revenues subsidize roads.
Pennsylvania’s gasoline tax also funds public transportation agencies, like the Southeastern Pennsylvania Transportation Authority (SEPTA) and Philadelphia and Pittsburgh Regional Transit (PRT). Despite decreasing ridership, Pennsylvania mass transit receives millions of dollars from driver fees and gasoline taxes every year. The state’s 2024–25 budget included more than $80 million for public transportation.
These subsidies devour the revenue generated for roads. Moreover, using gasoline tax funds for mass transit unfairly forces Pennsylvania highway users and rural residents—who neither use nor have access to buses and trains—to subsidize public transportation.
Stricter state regulations and fuel standards also increase gasoline prices. Environmentally focused policies restrict gasoline blends, adding to production, storage, and distribution costs. States mandating unique gasoline blends add complexity to the refining process and limit the ability to deliver reasonably priced fuel.
Though rising fuel costs may be a problem in Pennsylvania, things could be much worse. California, for example, provides an example of what not to do.
The Golden State has some of the highest pump prices, with the highest gasoline tax in the nation at 68 cpg. California’s energy regulations require a specific mix of gasoline that costs more to produce, especially during the summer. Additionally, California lawmakers continue imposing more and more taxes and fees on energy companies.
Pennsylvania should avoid following in California’s footsteps.
Instead, Harrisburg should unshackle the regulatory regime, streamline permitting for the state’s crude oil producers, and codify clear, objective timelines with transparent success benchmarks.
Also, state lawmakers should end subsidies to mass transit systems. They can also encourage transit agencies to increase passenger fees while creating vouchers for low-income riders.
Pennsylvania’s 2024–25 budget mandates a user fee for EV and hybrid cars weighing more than 14,000 pounds. The fee will be $200 in 2025 and $250 in 2026. This new fee is the first step in leveling the playing field so all drivers are accountable for road use. Lawmakers should use these extra funds to proportionally roll back the gasoline tax.
With genuine regulatory reform and fiscal responsibility, Pennsylvanians and out-of-state visitors would find relief while filling their tanks, which helps pocketbooks and benefits the Keystone State’s overall economy.
Hanna Bechtel is a Government Affairs Intern at the Commonwealth Foundation, Pennsylvania’s free-market think tank.
VERY WELL SAID, HANNA. PENNSYLVANIANS ARE BEING HURT, ALONG WITH OTHER STATES BECAUSE
OF SOMEONE ELSE’S THOUGHTS. GLAD YOU TOOK THE TIME TO BRING THE INFORMATION TO OUR ATTENTION.
THANKS