Tax Holiday – Too Little, Too Late

The States are starting to panicc about fuel prices.

Fuel-tax holidays are appearing. States are declaring emergencies. Rules are being relaxed. Dyed diesel is being made available for uses that normally wouldn’t qualify. The federal government is even reaching into the Strategic Petroleum Reserve.

But for those actually buying diesel by the hundreds of gallons, there’s a legitimate question: Is this relief, or is it damage control?

Diesel has climbed well beyond $6 a gallon nationally, compared with roughly $3.75 a year ago. Taking 20 or 30 cents of tax off the pump price certainly helps, but it doesn’t address the much bigger forces pushing fuel prices higher.

Global oil prices are elevated, refinery disruptions and geopolitical events have tightened supplies, and U.S. distillate inventories remain below normal levels. Some states are also raising concerns about strong diesel exports occurring while domestic supplies remain tight.

For the repossession industry, that’s important because fuel doesn’t just affect the fuel bill. It affects virtually every other cost associated with putting a recovery truck on the road.

And those costs don’t automatically disappear when fuel eventually comes down.

An agency that has spent months operating on $6-plus diesel has already absorbed that expense. If diesel drops 50 cents tomorrow, it doesn’t put yesterday’s money back in the bank.

That’s why the current State and Federal actions look less like a solution and more like an attempt to slow the damage. They may provide some temporary relief. But they don’t create more diesel, fix supply problems or change the underlying economics of the collateral recovery.

The states may finally be waking up to the fuel problem.