The states making extra off of high gas prices

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**Sabri Benishur** (0:31)
On the show today, how long until you're not the new guy anymore?

**Kevin Warsh** (0:36)
So I think officially it's eight weeks and four days, but I'm not counting.

**Sabri Benishur** (0:41)
From American Public Media, this is Marketplace.
In New York, I'm Sabri Benishur. In for Kyra's Doll. It is Wednesday, July 29th. Glad you are here. That was Federal Reserve Chairman Kevin Warsh at his second ever press conference since getting that job. The occasion being that the Fed just wrapped up its big two-day meeting today. The main point of that meeting was to figure out what to do with interest rates, where should interest rates be to fight inflation but also protect jobs. And today, the Fed went with leaving rates right where they are. Although not unanimously, three out of the 12 voting members on the committee actually voted to raise interest rates.

**Kevin Warsh** (1:34)
I asked for a good family fight and I got one.
That's the purpose. That's the design feature.

**Sabri Benishur** (1:40)
It was the first time since 2016 that there's been a descent like that, all in one direction. Now, why would they vote like that? Well, it means those members think the Fed should fight inflation more aggressively. But Warsh pointed out, markets are kind of already doing that for the Fed. Like market interest rates have risen on their own in the past month.

**Kevin Warsh** (2:02)
We're trying not to interfere with that market signal. That's part of the reason why we've been somewhat spare in our words. We pulled back from forward guidance.
So, they're reacting to events, I would say, much more directly over the 42 days since we last met. This is a good thing.

**Sabri Benishur** (2:19)
Now, in explaining why the Fed ended up deciding to leave rates alone, it basically said, look, inflation isn't great, higher than we want, but the job market is actually okay, and there's just a lot of uncertainty. So, you know, let's just not do anything hasty. But Warsh said, as he has said many times these past eight weeks, one way or another, the Fed will get inflation down.

**Kevin Warsh** (2:41)
The path to central bank heaven requires delivering on our remit. These days, that means delivering on price stability.
I wouldn't measure that path in 42 days or any one particular meeting, and I came out of that meeting even more confident that this is the right team to win the battle against high inflation.

**Sabri Benishur** (3:00)
Hopefully, because inflation has been above the Fed's target for more than five years now. Wall Street today, not pretty. We'll have the details when we do the numbers.
War in the Middle East and oil prices are, of course, looming over this whole inflation question, which is a thorn in the side of the Federal Reserve and obviously us consumers generally. But you know, it's capitalism, so there's always a winner somewhere apparently. And that winner today would be oil-producing states like Alaska and New Mexico, specifically their budgets. From the Every Cloud Has a Silver Lining, I Guess desk, Marketplace's Elizabeth Troval has more.

**Elizabeth Troval** (4:01)
Two things are completely certain, death and taxes. But exactly how much taxes can be hard for governments to predict. Lucy Dadan is with the Tax Policy Center.

**Lucy Dadan** (4:13)
Unfortunately, very hard for revenue forecasters to forecast revenues with any precision.

**Elizabeth Troval** (4:21)
That's especially true for states that rely on taxes from oil production, like Alaska, North Dakota.

**Lucy Dadan** (4:28)
New Mexico, Texas, Oklahoma, Louisiana, West Virginia, and to some extent, Montana.

**John Diamond** (4:36)
It is a volatile source of state funds.

**Elizabeth Troval** (4:39)
That's Rice University's John Diamond. He says when the price of oil is high, like now, states collect more of what are called severance taxes.

**John Diamond** (4:48)
As we've hit this war where oil prices have spiked, that's going to drive severance tax revenues way up.

**Elizabeth Troval** (4:56)
That's temporarily good news for oil producing states that are seeing increased revenue projections right now. But Jared Walzak with the Tax Foundation says the gravy train only lasts so long.