[Old Yeller]

$1.30 per gallon sounds good to me.

Except the federal, state and local governments will increase their taxes on it. They aren't going to lose any revenues.

[IYAS9YAS]

Except the federal, state and local governments will increase their taxes on it. They aren't going to lose any revenues.

Most states tax on a per-gallon basis. So a change in price has no impact on the tax collected (except when prices are down, consumption usually goes up, and an increase in revenues is seen). There are several states that do base tax on price, and it varies within those states between fixed per-gallon tax plus a sales tax based on price, among other things.