Connecticut Gas Prices Rising Despite Tax Pause

Both Democrats and Republicans in Hartford worked for and celebrated the Connecticut gasoline tax suspension that Governor Ned Lamont (D) signed in late March, but new data indicate its effect could be lessening.  

The center-right Yankee Institute (YI) published an analysis on Saturday showing that the difference between gasoline costs in Connecticut and those in Massachusetts, which did not enact a similar gas tax holiday, are narrowing. 

“The gimmicky gas tax cut adopted unanimously by the General Assembly in March, and extended to December 1 as part of the state budget, may be delivering less savings than promised,” Ken Girardin, YI director of policy and research, wrote in Saturday’s policy brief. 

During 2021, gasoline in the Constitution State generally cost 10 to 15 cents more per gallon than fuel sold in the Bay State, according to the pricing website Gasbuddy. Connecticut’s fuel tax holiday began on April 1. At that point, fuel costs in both states had begun to drop, with Connecticut’s price coming to just about five cents above Massachusetts’s price. Girardin wrote that Connecticut prices may have fallen especially far in anticipation of the tax pause. 

Days after the policy went into effect, Connecticut’s gasoline was priced at $3.84 per gallon, 20 fewer cents than the cost of gas in Massachusetts. Nonetheless, prices in both states went back up again beginning in mid-April and Connecticut’s price per gallon is now only eight cents below the price in its northern neighbor.  

The problem as YI sees it? “Prices are opaque.” In other words, neither the supply of petroleum nor drivers’ demand for fuel changed as a result of a new policy implemented by Hartford. Gas retailers could simply charge higher prices even if state government wasn’t levying the gas tax. 

The projected $240 million in revenue loss as a result of the gas tax suspension, Girardin wrote, will turn out especially problematically for Connecticut’s Special Transportation Fund, which currently has $7 billion in outstanding bonds. He further noted that the state expects to borrow $930 million for transportation projects.

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Bradley Vasoli is managing editor of The Connecticut Star. Follow Brad on Twitter at @BVasoli. Email tips to [email protected].
Photo “Ned Lamont” by The Office of Governor Ned Lamont. Background Photo “Gas Station” by Niagara. CC BY 3.0.


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