President Joe Biden banned the import of Russian oil, natural gas and coal Tuesday, an action that is likely to further raise the sky-high price of gasoline in the short-term but one that environment-minded advocates hope will lead to a long-term separation from fossil fuels.
Biden said the ban is intended to "inflict further pain on [Russian President Vladimir] Putin, but there will be costs as well here in the United States." The further costs that Biden's ban will have in the United States are most likely to be felt at the gas pumps, where the average price of a gallon of gasoline hit a new record high of just above $4.24 in Massachusetts on Tuesday, according to AAA.
As inflationary forces have driven up the price for groceries and many other household goods in recent months, global events have done the same for energy prices. The average price of gas in Massachusetts is up 61 cents over the last week, 78 cents over the last month and $1.55 in the last year, AAA said, and the price of gas has become a topic of national conversation.
Biden said Tuesday that the U.S. average gas price has climbed 75 cents since Putin began his build-up of Russian military forces ahead of his invasion of Ukraine.
"I'm going to do everything I can to minimize Putin's price hike here at home," Biden said in an attempt to place blame for the rising prices at the feet of the Russian president. U.S. Rep. Lori Trahan used the same language in her statement supporting the Biden administration's suspension of Russian energy imports Tuesday.
"[F]urther insulating Americans from Putin's price hike is absolutely necessary," the Westford Democrat said.
In 2021, the United States imported almost 700,000 barrels of crude oil and refined petroleum products per day from Russia and the president's executive order banning those imports "will deprive Russia of billions of dollars in revenues," the White House said. Biden outlined a number of near-term steps he said he will take to ease the pain of gas prices, but he and others Tuesday also said the United States should use this as an opportunity to boost domestic energy generation, especially renewable energy.
"This crisis is a stark reminder: to protect our economy over the long-term, we need to become energy independent," the president said. "It should motivate us to accelerate a transition to clean energy."
U.S. Sen. Ed Markey used the president's action Tuesday to call on Congress to take up and pass $555 billion worth of climate and clean energy provisions that were formerly part of the president's Build Back Better plan.
"This moment is a clarion call for the urgent need to transition to domestic clean energy so that we are never again complicit in fossil-fueled conflict," Markey said.
Beacon Hill Policy Considerations
A $1.6 billion spending bill passed the Massachusetts House unanimously on Wednesday after representatives shot down a Republican bid to add in language that would have suspended the state's gas tax until prices fall below $3.70 a gallon, a proposal the House's top Democrat called a "stunt."
Passed a day before the second anniversary of Gov. Charlie Baker's March 2020 declaration of a state of emergency around COVID-19 and with public health metrics trending in a positive direction, the bill (H 4532) reflects the continued influence of the virus.
It allocates $700 million for pandemic-related expenses, including COVID testing, treatment, vaccination access and personal protective equipment, spending that House Ways and Means Chairman Aaron Michlewitz said would help Massachusetts prepare for the future.
The midyear spending bill also extends COVID-related eviction protections through March 2023 and continues both special pandemic permissions for outdoor dining and the authorization for restaurants to sell beer, wine and cocktails with takeout orders through April 1, 2023.
With a smaller bottom line than the $2.4 billion version Gov. Charlie Baker filed, the House's bill also features $100 million to repair local roads from winter damage, $100 million in rental assistance, $55 million for rate increases for human service providers, $140 million to support staffing and program needs at private special education schools, and $10 million to support resettlement of refugees, particularly those from Ukraine.
Before passing the bill, representatives agreed to an amendment that added $6.75 million in spending — $1.75 million for the Department of Fire Services and $5 million in additional support for the Low-Income Home Energy Assistance Program.
The community action agencies that administer the fuel assistance program had asked for $50 million, writing to Michlewitz Tuesday that they have seen an increase in applications and that many of the people they've been able to help have exhausted their benefits as heating oil prices rise.
"The conditions we have seen this winter are unprecedented in terms of the price of energy brought on in part by the impact the invasion of Ukraine has had on worldwide oil supply," MASSCAP Executive Director Joe Diamond wrote.
Spencer Republican Rep. Peter Durant also cited Russia's invasion of Ukraine and spiking energy prices in his push to suspend the gas tax, a proposal that Revenue Committee Chair Rep. Mark Cusack dismissed before the vote as a "gimmick."
Durant's amendment sought to suspend the gas tax until the average per-gallon price of unleaded gasoline in Massachusetts is less than $3.70. AAA reported an average price of $4.24 per gallon in the state on Tuesday.
Durant told his colleagues that adopting his amendment will show residents "we have skin in the game, too."
"This is one small step that we as a commonwealth can say to the people of this state that we feel your pain," Durant said. "We're willing to step up to the plate, we're willing to do what's right, and we'll take some of this burden on ourselves."
The House rejected Durant's amendment on a voice vote, where individual lawmakers' positions are not recorded.
With Massachusetts posting record per-gallon prices this week, Republican gubernatorial candidates Chris Doughty and Geoff Diehl have called for gas tax relief.
"We've seen how much money we saved taxpayers in recent years by rejecting those annual increases; can you even imagine what those increases would be with current inflation rates?" Diehl said in a statement. "Tax relief isn't the answer to all of our problems and it won't erase all fuel price increases, but particularly where our state has surplus tax revenue on-hand, it would go a long way toward making Massachusetts a more affordable place to live."
Arguing against Durant's amendment on the floor, Transportation Committee Chair Rep. Bill Straus said revenue from the gas tax is among the guarantees the state makes when it borrows money for transportation projects, and warned that pausing collection of the 24-cent-per-gallon tax for an indeterminate period of time could make future projects more costly.
Cusack said his committee is "looking at real relief for families, not political gimmicks." He said the panel is reviewing the estate tax changes and rental deduction increase that Baker offered up in January as part of a nearly $700 million package of proposals to help individual taxpayers and make the state more competitive.
Cusack said the rental deduction and other measures the committee is looking at offer "real relief and real money in the pockets of everyone across the commonwealth, not just drivers."
"The price of gas is outrageous," Cusack told reporters. "There's a lot of price gouging up there. The price of gas has risen a lot higher as a percentage than has a barrel and that needs to be looked at, but there's no relief in this amendment for home heating oil and gas, so that's also a concern. But we're looking at real relief."
Cusack, a Braintree Democrat, said the gas tax also affects the state's bond rating.
"Our bond rating and our bonds are based on our revenue streams and this is a pretty guaranteed revenue stream," he said. "We use the gas tax to bond a lot of our transportation projects, including Chapter 90, so to start messing around with that and to do it without doing all our homework — which is not atypical of proposals from our colleagues on the other side — they can't answer what it does to bonding, they can't answer the long-term costs, and it's a gimmick that doesn't even make sense when you read it."
Similarly knocking the gas tax suspension as a "stunt," House Speaker Ron Mariano said after Wednesday's session that lawmakers are "beginning to try and figure out a way that would have a bigger impact on families that have to deal with the uncertainty that we're facing in inflation and certainly in fuel supply."
Mariano said he and Cusack "had a revenue discussion" before Baker filed his plan in January and had been talking about the estate tax and something that would benefit renters.
For Secretary of State William Galvin, the sky-high price of gas signals a need to take a closer look at the prices being charged by middlemen and whether any distributors are taking advantage of consumers in Massachusetts.
"Scrutiny of the pricing, looking at the books and records, is a reasonable way to ensure Massachusetts citizens they're getting an honest and fair price," Galvin said Tuesday. "There's not an ounce of gas that's on sale, or heating oil, for that matter, that was actually taken out of the ground after the Russian invasion of Ukraine."
Like the price for gasoline, the price for home heating oil has soared in recent weeks. As of Monday, the average per-gallon retail price of home heating oil was $5.02 in Massachusetts with some prices reaching as high as $6 per gallon, according to the Department of Energy Resources. In the last week, as the heating season has begun to wind down, the average price has jumped more than 25 percent from $4 per gallon as of Feb. 28 and over the last year has spiked 75 percent — from an average price of $2.87 per gallon this week a year ago.
Echoes of the Summer of 2008
About 14 years ago, Massachusetts saw similarly high prices at the pump in the midst of the 2008 presidential election. Gasoline prices hit a then-record $4.08 per gallon on July 7, 2008 — which would be equal to $5.21 per gallon in 2022 dollars, according to the Bureau of Labor Statistics.
Much of the public discussion around the price of gas now echoes the debate that took place in 2008.
"We're going to change how often we drive and where we drive. We're going to have to think more seriously about telecommuting," then-Gov. Deval Patrick said in Salem on July 9, 2008. "We're going to have to carpool more often."
Hillary Clinton, then locked into a tough Democratic primary contest with Barack Obama, and eventual Republican nominee John McCain both proposed a suspension of the federal gas tax during the peak summer driving months between Memorial Day and Labor Day to ease the pain of the soaring gas prices.
Obama opposed the idea as a political stunt — he told voters in North Carolina that the three-month suspension "would save you on average half a tank of gas," Reuters reported — and many economists called it a bad idea that would complicate the problem by fueling greater demand for gas.
Though most of the elements at play were out of Beacon Hill's collective hands, the Senate Committee on Post Audit and Oversight convened a hearing in June 2008 (about a month before gas prices hit their high point for the year) to scrutinize the impacts of rising energy costs on consumers and the state's efforts to address the problem.
"It is also imperative that we explore what state level action we can take to try to tackle this crisis, because quite frankly, we're running on empty," Sen. Marc Pacheco, who chaired the committee, said at the hearing.
Afterward, the committee reported that the pain at the pump was likely just a preview of the financial distress that was in store when home heating season rolled around and that the state would need to roughly triple what it had been providing for low-income fuel assistance.
This time around, the state's financial picture is much brighter. The high gas prices of the summer of 2008 coincided with plummeting home values and gave way in the fall to the Great Recession. This year, the Department of Revenue is already sitting on about $1.7 billion in above-expectations tax revenue after having collected about $5 billion more than expected last budget year.