Traffic rolls along a wintry stretch of I-80 near Elk Mountain. (Flickr Creative Commons/Tom Kelly)

There are no quick or easy ways to protect Wyoming customers from price spikes at the fuel pump, according to a new state report. 

Trends in regional oil-refining capacity and fuel storage are moving in the wrong direction. A state fuel tax holiday would be too costly — an estimated $120 million annual drain on state revenue — while exerting a “minimal impact” at the pumps. “Even producing substantially more crude oil would not immediately impact the supply of gas or diesel,” according to the report commissioned by Gov. Mark Gordon.

Gordon formed the Gas and Diesel Price Working Group in June in response to a nationwide spike in fuel prices, which approached an average of $5 per gallon in Wyoming this summer. The 10-member group held two public meetings, analyzed the causes of regional price spikes and explored ways to reduce the impact of a volatile fuel commodity market on Wyoming residents.

“Even though Wyoming ranks in the top 10 of oil and gas producing states, the eventual price all Wyoming consumers pay is generally determined by factors well beyond our control,” the working group concluded in its 15-page report released Oct. 18.

But the state could help offset inflationary responses to fuel price spikes with some type of fuel rebate. That could come in the form of a lower sales tax for non-fuel purchases that’s triggered when the state earns more revenue from spiking oil prices. The state could “implement a dynamic sales tax, whereby the 4% statewide sales tax would fluctuate as the prices of Wyoming’s principal commodities rise or fall,” according to the report.

Other potential relief measures include instituting a tax credit for Wyoming’s elderly and disabled. Longer-term efforts include encouraging more oil lease sales and production, as well as increasing refining and fuel storage capacity in the region.

Wyoming’s vulnerability

Wyoming produces about 240,000 barrels of crude oil daily — 2% of the U.S. production, according to federal data. Although some of Wyoming’s crude oil is refined within Wyoming and the Rocky Mountain region, “suppliers, refiners, wholesalers and marketers determine fuel prices daily, not consumers or a central governing authority.”

Local refiners are also operating at about 90% capacity and are not fully utilizing fuel storage capacity. Transportation issues — particularly a shortage of truck drivers — also contribute to fuel price volatility, according to the report.

This map depicts oil refineries and infrastructure in the Rocky Mountain Region. Wyoming’s oil refining capacity has slipped by about 27% in recent years while regional capacity has mostly remained stagnant. (U.S. Energy Information Administration)

There are economic and regulatory headwinds against increasing refining capacity in the region as well. Many refiners are forced to respond to increasingly stringent fuel standards in other regions of the country. HollyFrontier Sinclair recently retrofitted its Cheyenne petroleum products oil refinery to instead produce renewable diesel using agricultural materials. Most of the renewable diesel is sold outside Wyoming. Other local refineries have not made up for the petroleum-refining capacity loss.

“I think the best solution for long-term price stability would be more energy production in our region that supplied our refineries,” Colorado-Wyoming Petroleum Marketers Association Executive Director Grier Bailey said.

Bailey, who did not serve on the working group, said local politics and policies matter when it comes to long-term solutions and incentives that might result in adding more regional oil production and refining capacity.

“People are fleeing high-cost-of-living states for more reasonable and more balanced legislatures that exist in Montana, Idaho, Wyoming and the Dakotas,” Bailey said. “I think that in our region specifically, the industry is more incentivized to make these types of investments.”

Short-term measures

The working group recommended against instituting a fuel tax holiday, warning it would sap the state’s road maintenance budget by as much as $120 million annually without providing much relief for customers.

However, some form of tax relief in other areas — such as sales tax for non-fuel products — could be an effective measure to ease the burden of fuel price volatility for residents, according to the working group.

The state receives an extra $100 million in severance tax and ad valorem tax revenue annually for every $10 increase in the price of oil, according to the report. Some type of sales tax relief tied to the average annual price per barrel of oil “would be a relatively efficient way to help Wyoming residents.”

The working group acknowledged that establishing such a system comes with complexities and administrative burdens. It recommended further study on the idea.

Gasoline prices in Wyoming surpassed the national average this year in part due to stagnant refining capacity and growing demand in the Rocky Mountain Region. (Dustin Bleizeffer/WyoFile)

Meantime, it said, state leaders should not lose sight of longer-term strategies to incentivize more oil production and regional oil refining capacity. Those strategies could include reducing state royalties for oil production on state lands, instituting a tax on renewable diesel production and using the state’s $3 billion industrial revenue bonding authority to back investments to expand oil refining and storage.

“As a longer-term solution, seeking ways to expand our refining capacity will help keep the cost of gas lower at the pump for Wyoming,” working group member Sen. Ed Cooper (R-Ten Sleep) said in a prepared statement.

— This story was updated to correct Wyoming’s percentage of national crude oil production. -Ed

Dustin Bleizeffer is a Report for America Corps member covering energy and climate at WyoFile. He has worked as a coal miner, an oilfield mechanic, and for 25 years as a statewide reporter and editor primarily...

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  1. Wyoming needs to build its own supply chain. The Feds are not interested in what we need. They want a one world government where we will all be unarmed serfs fighting for food.
    Did you like that movie? Do you want to live that way? Not me.
    We need to stop pretending we live in our parent’s world. Things are going south fast and it is entirely intentional. Look at the big picture.

  2. Governor Mark Gordon wasted Wyoming tax payers money hiring a committee to investigate the cost of fuel. As Governor of Wyoming and the incumbent candidate, it is appalling he is illiterate on this issue. I am fully aware the cost of fuel in our country is out of his hands as it is our President Joseph R. Biden’s! Mark Gordon will NOT get my vote on November 8, 2022! Wyoming deserves a Governor who is intelligent and honest!

  3. Pain at the pump has two sources. 1. Biden cut supply from Canada when canceling XL pipeline. 2. No new refinery’s have been built due to Green movement over the years. Biden has been anti oil for years. He actually voted against the Alaska pipeline. Time now to pay the piper.

  4. “People are fleeing high-cost-of-living states for more reasonable and more balanced legislatures that exist in Montana, Idaho, Wyoming and the Dakotas,” Bailey said.

    “Balanced legislatures” in these states are overwhelmingly Republican. Bailey has a rather hysterically laughable sense of balance.

  5. Good article as alway, Dustin. The report you cited states, “Wyoming is currently the nation’s eighth-largest crude oil producer, generating approximately 240 thousand barrels daily—around 20% of the U.S. crude oil production. Compared to total US production (11 million barrels per day) and total global production (100 million barrels per day), even substantial increases in the production of Wyoming
    crude likely would not significantly impact the worldwide price of gas.” Unless I missed something, 240,000 bbl is about 2% – not 20% – of US production. Correcting this would reinforce the conclusion that Wyoming has little control over oil and gasoline prices.

  6. 2 parties here to blame. 1. Joe Biden. He terminated the XL pipeline on 1st day. That severed valuable supply source of oil from Canada. 2. The Green Environt groups have stopped any new refinery’s from being built for last 50 years. Enjoy the high fuel prices folks. Thank Joe. By way Biden voted against the Alaska pipeline! Now the drooling fool is President.

    1. 1) The Keystone XL project was not an oilfield. It was only a pipeline. It would have no effect on supply. It was less than 10% completed when the project was stopped and would not have been fully online until the mid 2020s. Again, zero effect on the current market. You can blame Biden all you want, but that is incorrect.

      2)Refineries are massive polluters, and environmental groups are correct to see that they are stewards of the natural resources they are obtaining. Oil companies use tons of energy on their product which releases literal poison into the water, soil, and air. Further, anything taken from new drilling in Alaska would not be to the market for several more years. Zero effect on the current market.

  7. This entire process was political theater. Another waste of time and money by a do nothing governor. The republicans only care about the corporate world. I don’t understand why the people of this state support a party that takes your tax money and supports corporations.

    1. Because MAGAs would happily eat a crap sandwich if it meant that progressives would have to smell their breath.
      Take a look at the red platforms nationally. There are very few actual policy suggestions. It is all about punitive action taken onto groups they despise.
      And for this particular problem, look to the oil company balance sheets.

  8. “Even though Wyoming ranks in the top 10 of oil and gas producing states, the eventual price all Wyoming consumers pay is generally determined by factors well beyond our control,” the working group concluded in its 15-page report released Oct. 18.
    Huh, and here I’m being told it’s ALL the fault of the Democrats, especially that Biden guy.

    1. Facts that come straight from the horses mouth. Is there any chance that repubs will believe it?

      My magic 8-ball says “outlook not so good”

    2. who do you suppose controls that working group? Brandon and his cronies, or course, as the esteemed Senator from Louisiana says, the water won’t clear up til we get the pigs out of the creek. Hope this Nov, we get back to common sense.

      1. Wow. You are way off base on this one. The working group was put together by Governor Gordon. Maybe you should read the article before posting. We all know this is an extremely red state so any working group is run by the Republicans.

    3. It is. Corruption, stupidity, and a fake President working only for China… Those are the factors. Read more real news. Oil went up the day Nazi Joe was appointed.