Orlando fuel prices fall as gas tax holiday takes effect

A one-month gas tax holiday that kicked in Saturday helped to push Orlando-area gas prices to their lowest average since January.

A gallon of regular unleaded averaged $3.19 per gallon on Monday, down 15 cents from a week ago, according to the travel club AAA. The state is suspending 25 cents a gallon in gas taxes through the end of the month.

Florida drivers could see gas even dip below $3 a gallon at some stations, and everyone will likely see a “sizable discount” this week, said Mark Jenkins, a spokesman for AAA.

“This gas tax builds on the previous downward pressure on pump prices, stemming from global recession concerns and underwhelming fuel demand,” he said in a statement.

The “tax holiday” doesn’t require stations sell fuel at a specific price — only that stations that buy fuel at a tax-reduced amount pass along those savings to consumers, according to Florida Attorney General Ashley Moody.

Moody said the price of gas will not necessarily immediately drop 25 cents with the holiday because taxes are only one factor of many in fuel costs.

Jordan Davidson, who was fueling up in downtown Orlando Monday, said he wasn’t aware of the gas tax holiday, but he welcomes the relief. He said the price of everything has gone up, forcing him to increase his rates for the landscaping business he runs

“It’s affecting me a lot,” said Davidson, who lives in Winter Springs. “The tax (break) helps, but it’s still a lot.”

Gas prices peaked at $4.89 per gallon in mid-June.

The tax break appears to be reaching consumers with prices rising elsewhere in the country but dropping in Florida, said Patrick De Haan, an analyst with GasBuddy.

Hurricane Ian isn’t expected to cause a spike in prices because critical fuel infrastructure survived the storm, he said.

“The supply of gasoline didn’t stop,” De Haan said. “There was just a shutdown of the port. The (price) decrease should continue, and the outages should continue to improve.”

Some stations haven’t dropped their prices yet because their fuel was purchased before the tax break took effect, said Ned Bowman, executive director of Florida Petroleum Marketers.

“When they get their new inventory, you’ll see the prices going down,” he said.

The relief could be short-lived, though. An influential alliance of the world’s top oil producers is considering cutting output, which analysts say could push the price of oil back into the triple digits.

Gov. Ron DeSantis said he initially wanted to waive the gas tax for about six months, but the proposal was scaled back to one.

Still, the tax break will make a difference, said Jeremy Redfern, a DeSantis spokesman.

“This relief will help hardworking families across the state save money at the pump,” he said.

Democrats criticized the governor for waiting until October, the month before the election, to suspend the gas tax. Florida is using $200 million in federal pandemic relief money to offset revenue losses during its gas tax holiday.

Some economists have been critical of gas tax holidays, saying the full tax savings typically aren’t passed along to consumers and don’t amount to much.

A driver with a 15-gallon tank will save about $3.80 for each fill-up, assuming all of the tax break is passed along. That’s a month’s savings of about $15 for drivers who refuel four times in October.

Drivers saw between 58% to 87% of the savings during gas tax holidays in Maryland, Georgia and Connecticut earlier this year, according to an analysis by the nonpartisan Penn Wharton Budget Model.

Those price reductions, though, were “often not sustained during the entire holiday,” the study concluded.

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