Effect of Utah’s gas tax cut may be swallowed up by international conflict 

As Utah prepares to reduce its gas tax by 15% from July until the end of the year, aiming to decrease the amount Utahns pay at the pump, an international conflict will put added strain on motorists’ wallets for at least a few more weeks. That, experts say, may dilute the effect of a lower tax.

The proposal that legislative leaders had been planning for over a year will certainly have a benefit for consumers, said Phil Dean, chief economist at the Kem C. Gardner Policy Institute. However, the effect may be swallowed up by the ballooning prices seen across the country.

“There’s the temporary gas tax reduction that passed the Legislature, and at the same time, there’s a lot of fluctuation taking place in gas prices overall, both related to the war in Iran and other issues, just more generally, with inflation taking place,” Dean said. “So I think to me, it’s still unclear the extent people will notice that tax cut.”

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The Rocky Mountain region has seen an almost $1 increase per gallon throughout March, according to the U.S. Energy Information Administration, going from $2.75 per gallon at the beginning of the month to $3.63 on Monday for unleaded fuel. That’s a 33% increase in two weeks.

The predominant factor determining gas prices is crude oil costs, which make up 51% of the price structure of regular gas, according to the Energy Information Administration. After that, 20% pays for its refining, 11% for distribution and marketing, and 18% is for taxes. And Brent crude oil has reached its highest price since September 2023, according to the agency’s short-term outlook. 

The Brent crude price settled at $94 per barrel on March 9 and briefly reached $119 per barrel on Thursday. Currently, it is expected the prices will remain above $95 per barrel for the next two months before falling below $80 per barrel in the third quarter of 2026.

U.S. Energy Secretary Chris Wright told NBC News on Sunday that there’s “a very good chance” gas prices will go under $3 a gallon in the summer. But, he acknowledged Americans will see gas prices rise for at least a few more weeks while the conflict in Iran continues. 

On Thursday Treasury Secretary Scott Bessent also told Fox Business the U.S. could remove sanctions on 140 million barrels of Iranian oil in floating storage amid the high energy prices.

While all of these factors play out, Utah drivers may not notice what the Legislature intended with its temporary tax relief, Dean said.

“My personal sense is that people don’t pay a ton of attention to what’s making the gas price go up and down, whether it’s a tax, whether it’s something in the Middle East, whether it’s something here within the U.S. that’s causing that change,” he said. “I think for most people, they just look at the bottom line like, ‘here’s how much I’m paying at the pump.’” 

‘It’s needed now more than ever’

Since last year Legislative leaders have been planning a gas tax restructure to lower the prices Utahns pay at the pump. While it took substantial changes and a deal with local refineries, they made good on their promise to reduce the tax early this month.

The initial proposal evolved to a bill that would cut the gas tax at the pump to $0.319 per gallon, a 15% reduction, from July 1 until the end of 2026. That’s while long-term solutions come into fruition. The legislation is still waiting for Gov. Spencer Cox’s signature, but it already has his blessing. 

When asked about the Utah policy potentially coming into effect while a foreign conflict is driving prices up, Draper Republican Rep. Cal Roberts, who sponsored the legislation said, “well, it’s needed now more than ever.”

“Now that gas prices are spiking, that’s going to hit working families, middle-class Utah families first, and that’s why it’s so important that we get immediate relief to Utah families at the pump,” Roberts said. “And that 15% gas tax cut provides that relief at the pump.”

He highlighted that in the long term, his bill, alongside an agreement state leaders signed with oil companies, will increase gas supply by 12% in the next five years through pipeline expansions and refineries’ commitment to increase production. 

And, Roberts seems indifferent on whether or not the optics help the Legislature score political points.

“At the end of the day, if we as the Legislature get credit for lowering people’s gas taxes, great,” he said. “But we did it because we know Utahns are feeling the high cost of living right now, and as prices go up because of what’s happening in the Middle East, all the more reason and the need for us to lower the gas tax right now.”

Regardless of the crude oil price fluctuations, he says the average Utah family should expect to save about $100 in the six months that the temporary tax cut is in effect.

“It’s a real tax cut. It’s more money into the pockets of Utahns. And they’ll feel the difference,” Roberts said. “Now, obviously there’s macroeconomic impacts that are outside of our control, like what happens in the Middle East, but when I think long term, when more supply comes into our market through the work we did around expanding production and supply here, you’re going to see Utah be more competitive on prices at the pump relative to states around us.”

Dean, from the Gardner Institute, agrees that oil production in Utah is on an upward trajectory, following trends set during recent years.

“We’ve definitely been at high levels of production, and at least cutting into the year, that was the forecast, for that high level of production to continue,” Dean said.