This post originally appeared on Orphan Road.
Now, let’s imagine a hypothetical barrel of oil under the proposed barrel fee. Perhaps 70 percent of it would be refined into transportation fuel, half of which would be sold to Washington’s consumers and half of which would be sold out-of-state. Another 20 percent or so would be refined into things like aviation fuel and lubricants, where prices can’t easily pass on to consumers. (The remaining 10 percent of refined products would not be touched by the fee.) At the end of the day, Washington consumers would be touched by fees on about 35 percent of a typical barrel of oil, yet the state would reap revenue on 90 percent of the barrel.
That’s a pretty sweet deal for Washington’s residents. It’s not such a sweet deal for oil companies because they will end up eating a sizeable portion of the cost of the fee. And it’s not such a sweet deal for drivers in places like Oregon—where much of Washington’s refined fuel is sold—because they will, in effect, be paying more for fuel in order to fund road projects in Washington.
I really don’t like these fees that pass the buck to other states. The King County lodging tax is another one. Rental car taxes, too. It’s a cowardly way raise revenue, and it ends up being zero sum as other states ratchet up their taxes on out-of-staters to match. I can’t help but think of this classic scene from The Wire:
The next guy’s pocket, indeed.