Sightline has some interesting information about the impact of Gregoire’s proposed “Barrel Fee”, which would be the major revenue source for her proposed transportation package.
If you’re out to raise money for transportation projects, one of the more clever methods is the so-called “barrel fee” that is the centerpiece of Governor Gregoire’s new transportation package. It’s structured in such a way that it minimizes impacts on Washington by effectively off-loading the costs to oil companies and out-of-state drivers. In fact, my back-of-the-envelope estimate is that for every dollar residents pay, the state will net roughly $2.20 in revenue.
Here’s where it gets interesting: Washington refines about twice as much oil as it actually consumes, and the governor’s barrel fee pointedly applies to petroleum products that are sold for consumption outside the state. That means Washington’s coffers can benefit from fees on twice as much oil as Washington consumers will actually pay for. (It’s similar, in some ways, to the way that some natural resource-producing jurisdictions benefit from extraction fees on products that are ultimately used elsewhere.)
So who picks up the other half of the tab?
For products that are refined in Washington but consumed elsewhere, the burden of the fee will fall on some combination of out-of-state consumers and oil refiners (and perhaps some oil distributors or marketers to a small extent). Certainly, the oil companies will try to pass the cost of the fee along to their customers, but in markets that are competitively supplied by other sources of fuel, it may be difficult for them to do so. That means the oil firms will have to carve the cost out of their profits.
Go here for the full post.