Here we go, Idaho — it looks like we have a trade war on our hands. Utah lawmakers want to shift their gasoline tax to out-of-state consumers, like us. That’s right, in an effort to cut their own gasoline tax in half, Utah lawmakers (including their Speaker of the House) are hatching a plan to replace lost taxes at the pumps by instead taxing gasoline being shipped out of state at 24 to 38 cents per gallon. That means it falls to you and me, fellow Idahoans. 

It’s a weird twist on protectionism and trade battles. Utah could be the first state to turn to an “export tax” on gasoline refined in Utah, but shipped out of state. And Idaho — with exactly zero refineries of its own — depends on Utah refined gasoline for all its south and eastern Idaho gas stations, and Washington and Montana refined gasoline for north Idaho gas stations. Idaho is indeed a 100% importer of refined gasoline. 

In fact, Idaho is the only Northwest state without an oil field or a refinery. So, we are uniquely captive to Utah refineries and the Utah Legislature, who want to shift their own gasoline tax burden onto Idaho consumers. If successful, it’s only a matter of time before other states selling to Idaho follow suit. Washington and Montana will be next in line to impose similar taxes.

So, what does Idaho do? Well, we can’t do much. 

Here are the limited options for Idaho:

1. Lay down and pay the tax. It’s “only” 24 to 38 cents per gallon. And with Idaho at approximately $2.85 per gallon (AAA data as of 1/28), what are a few more cents? Just a 14% increase is all (sarcasm intended). Idaho House Speaker Mike Moyle suggested the cost could amount to as much as $250 million for Idaho gasoline consumers.
2. Send a negotiating team. Perhaps our governor and legislative leaders can traverse the desert to go talk some sense into the Utah lawmakers. With no gasoline capabilities of our own, nothing for trade, and no army to speak of, it would be nothing like sending Trump to threaten Canada. It’s more like tiny Mauritius negotiating with China for a super-duper trade deal. Not much hope of getting the Utah general authorities to stand down.
3. Retaliate. You want to soak Idaho for our gas? Well, wait until you see what we do with our potato, barley, and sugar taxes! This may sound like a strategy, but just ask our Idaho potato, barley, and sugar farmers what they think of their products becoming the RPGs in an intermountain trade war. As with most trade wars, the usual weapons are merely tools of self-inflicted harm (hurting Idaho farmers) with the wish of hurting those “outsiders.”
4. Sue the carrot-snappers. The U.S. Constitution absolutely contemplated the dangers and follies of states battling one another in economic trade restrictions. That’s why the Interstate Commerce Clause (ICC) and Article I, Section 10 were included. These provisions specify keeping trade regular and impose prohibitions on states exacting tariffs and duties on one another (yes, taxes across state lines were considered tariffs among the independent, free, and United States of America). Suing Utah may or may not be a win, and it would probably take a while. Personally, I don’t trust the courts.
5. Cry foul. Of course we think it’s unfair for a neighboring state to impose a tax for the express purpose of collecting money from people who don’t live in that state. Oh wait, that’s what some of Idaho’s squishy legislators have been saying about why Idaho should maintain its grocery tax — to collect money from those “out-of-state tourists.” Not much high ground for Idaho in that argument. And not much impact should be expected by saying Utah is being mean to Idaho.  
6. Open our doors. Immediately, it would make a lot of sense for Idaho to remove any and all impediments for oil companies to relocate refineries into the Gem State. It doesn’t take much imagination to see how some companies might want to get the heck out of Utah once the tax is dumped in their lap. We wouldn’t see the results right away, but in the long term, Idaho could be a big winner here.

All this is to say, stay tuned. This could get interesting. For Utah to consider an export tax is new territory, and it will be fascinating to see what, if anything, Idaho can do to mitigate the effects or take advantage of an opportunity. Utah’s trade folly could become Idaho’s win if Idaho positions itself well to take on a new industry and welcome its first producers of gasoline. Keep calm, and refine.