By DINA ARÉVALO
Port Isabel-South Padre Press
January 15, 2015
Drivers across the Rio Grande Valley have been enjoying an extended Christmas gift lately in the form of low gas prices, prices which have continued to plummet into the new year. The pinch at the pump has lessened, with prices in the Valley falling by an average of 5.7 cents per gallon in the week ending on January 12, according to information released by GasBuddy.com.
The website and mobile app company uses crowdsourced information to collect and publish gas prices as they fluctuate in real time. According to data collected from consumer-reported prices at 410 Valley filling stations, as of Jan. 12 gas was “112.4 cents per gallon lower than the same day one year ago.” Nationally, prices have dipped 118.7 cents per gallon within the same time frame.
The average price statewide for regular was $1.938 per gallon as of Jan. 9. Those numbers look far different from the ones seen at the height of the economic recession in the summer of 2008, when the statewide average peaked at $4.016 per gallon. And though paying half as much per fill-up may seem like a good thing, economic analysts have begun sounding an alarm.
Today’s lower gasoline prices are the direct result of tumbling crude oil prices, which currently stand below $50 per barrel. The last time crude oil prices fell so far, in the 1980s, the state of Texas itself fell─straight into a recession. At the time, oil and gas tax revenue accounted for almost one-fifth of the state’s total budget, according to the Texas Tribune. Lower gas prices brought in lower revenues, which in turn meant huge budget shortfalls and recession.
In the aftermath of the ensuing budget scramble, lawmakers established the Economic Stabilization Fund, which has come to be known as the Rainy Day Fund. The Fund, which is expected to have a balance of $8 billion this year, is fed entirely by the state’s fuel tax revenues.
This past election cycle Texas voters overwhelmingly approved Proposition 1, which aims to use monies from the Fund to help maintain highway infrastructure. The amendment would redirect $1.7 billion from the Fund to the State Highway Fund, according to the Tribune.
But within the last month, fears that the Fund’s levels could fall too low while money is being withdrawn from it prompted lawmakers to establish a $7 billion “floor.” If the balance falls below that number then transfers from the Fund will be halted or reduced until it is once again above the line.
The Fund’s floor, however, is currently set at the discretion of a joint committee made up of State House and Senate members, and can be reset in the future by said members. Hoping to change that, State Sen. Charles Perry (R-Lubbock) this week filed a bill which would require the Fund’s minimum balance to be “equal to 5% of general revenue… at all times,” according to a statement released by the senator’s office. The bill, SJR 19, would also make it more difficult to distribute the Fund’s monies by requiring any appropriations to be approved by a four-fifths vote versus the current requirement of a two-thirds vote.
In the interim, the price of crude oil continues to fall and it’s unclear when the tumble will slow or how it will impact the state’s economy. The state budget no longer relies on oil and gas taxes as heavily as it did 30 years ago, but they are still expected to account for some 4.5 percent of total revenue over the course of 2014-15, according to the Tribune.
The question now facing lawmakers is whether or not the savings drivers reap while filling up their gas tanks will spark increased consumer spending in other areas. And if those increased revenues will be enough to offset reduced oil and gas tax revenues, keeping a recession at bay.
Want the whole story? Pick up a copy of the Port Isabel-South Padre Press, or subscribe to our E-Edition by clicking here.