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Local gas prices take on renewed political, economic importance

After coming tantalizingly close to the $2-a-gallon level long thought to be extinct, and in some select locations breaking through, gasoline prices are now back in the upper half of the $2-to-$3 slice, and you don’t have to look far to find dispensaries at which prices have breached the $3 barrier.

Now onward to — what? $3.50 a gallon? Four bucks?

And just what happened to that Golden Era of Cheap Gasoline we’ve been chattering on about in recent months, the one that, thanks to a near-permanent glut of oil spurting out of Texas and North Dakota and other states, would near-permanently reduce energy expenditures for consumers and businesses?

Gasoline prices, like local housing prices, are among the rare economic indicators that the general public can happily (or grumpily) jump into a discussion of, because they’re so visible, important and, lately, volatile.

They’re even more important these days, politically and economically.

Their political significance can be seen just down the road in Olympia, where the state Senate has approved and sent to the House a $15 billion transportation package funded by an 11.7-cent increase in the gasoline tax.

As is customary, the proposal includes a little something for everyone and everywhere, and a whole lot of something for the places where the votes are. Pierce County will get what port and local business officials have long dreamed of, an extension of State Route 167 as a limited-access divided highway from the Port of Tacoma. That’s paired with a much-desired project by similar groups in King County, an extension of SR 509 from the south end of Sea-Tac to I-5 (maybe they’ll be done in time for the next West Coast port labor dispute).

There’s also some money in there for “JBLM corridor improvements,” according to a list issued by the Senate Transportation Committee. And it’s not just highways that share in the fun; there’s also money for ferries (including a 144-car vessel), rail projects, buses (Pierce Transit, for example, would get money for express service from Tacoma to Parkland and Spanaway), even bikes.

The biggest projects included in the proposal aren’t exactly new — you could find a news story from two or three years ago and find the same projects on the same lists of “must-haves” for the state to grow and prosper.

So why this year and not two or three years ago? Multiple factors contributed, but two stand out — the absence of one particularly divisive megaproject, the Portland-Vancouver Columbia River Crossing, and gasoline prices. No one is making much of a fuss over the list of projects themselves; settling up over the Seattle tunnel, however that turns out, is going to be a lovely fight, but that can be left for another day, especially since no one knows how it will turn out, or how expensively.

Gasoline prices, meanwhile, provide some cover for tax increases.

It’s been said before by your columnist in other venues, but it bears repeating: To the extent that any tax increase is palatable to the public, gasoline taxes are often the easiest sell to make. In few other cases do taxpayers see a cause-and-effect correlation between what they give to government and what that buys them; you pay at the pump here, you see concrete poured over there.

But that doesn’t make a gas tax immune to taxpayer rebellion, especially in a state such as Washington where the natives have been known to be restless on such matters. Three conditions govern the public’s reception of a gas tax. First, how comfortable is the public with how the money is being spent? Hmm — that one could be a little awkward, especially if Bertha starts generating headlines again for all the wrong reasons.

Second, how much is the public being hit up by other taxing entities for increases? Hmm — that one could be problematic if the Legislature endorses the governor’s full menu of proposed increases, which it seems disinclined to do.

Third, what’s going on with the underlying price of gasoline? Here’s where Washington politicians (and those who want those projects) are catching a break.

The transportation proposal calls for a three-stage increase in the gas tax, 5 cents per gallon in the fiscal year beginning July 1, 4.7 cents the following year and 2.5 cents in the third.

Now let’s look at AAA’s fuel-gauge report, which at mid-week had the average price in Tacoma for a gallon of regular at $2.95. That’s up considerably from a week ago and a month ago.

That’s not good (and AAA notes the West Coast states are seeing the largest run-up in gasoline prices), but look at the degree fluctuation just in the space of a few weeks — all far more than what legislators are proposing over three years. Now look at two other data points: A year ago the Tacoma average was $3.48. The recorded high was $4.36 back in June 2008. That leaves a lot of room for a gasoline tax increase to operate without drawing much attention

So if the energy revolution and its promise of huge increases in domestic oil production prove to be long-term phenomena, and if the industry resolves whatever short-term problems are causing the current spike and if that spike proves to be temporary and if prices settle in about where they are now (a little lower would be especially nice), then a gas-tax increase is likely to prompt a shrug of the shoulders — if it’s noticed at all.

But that’s a lot of ifs to rely on, especially for an industry which never runs short on reasons why prices are suddenly skyrocketing — a refinery blew up, the Middle East blew up, the economy’s too hot, regulations are too cold, it’s always something. Still, it’s what the Legislature has to work with, and conditions could be a lot worse — like trying to sell the merits of a gas-tax increase to motorists already shelling more than $4 a gallon for the stuff they’ll be burning while idling in a construction-inspired back-up.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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