States Set The Pace Of Hikes at Gas Pumps
Planning a family car trip? You might want to cross California off your list. If you have to visit Chicago, avoid filling up in the city. And for those scenic drives through Connecticut, buy your gas in New York.Skip to next paragraph
Subscribe Today to the Monitor
Sure, the price of gas has shot up enough that official Washington is suddenly interested in trying to ease the situation. But don't look for much relief at the pump from these efforts.
The reason: The oil industry - and the states - will have more influence on this summer's gas prices than either President Clinton's plan to sell US oil reserves or GOP congressional efforts to roll back federal gas taxes.
On the industry side, gasoline prices, up almost 20 cents a gallon from a year ago, are expected to ease, analysts say. With the end of the cold winter, which kept refineries focused on producing heating oil, gasoline should flow more freely from the oil companies. President Clinton's announcement April 29 that he would sell 12 million barrels of oil from the Strategic Petroleum Reserve should help a little too.
But taxes represent roughly a third of the price of gas. And while Sen. Bob Dole and congressional Republicans push for a rollback of a special 4.3-cent federal gas tax, several states are pushing through tax increases of their own.
Connecticut is the biggest culprit with a 36-cent per-gallon tax on gasoline. The tax is scheduled to increase another 3 cents by Jan. 1, 1997.
On April 1, the same day Connecticut introduced the first of its four one-penny hikes, Idaho raised its gas tax 4 cents a gallon and Missouri hit motorists with a 2-cent-a gallon surcharge.
Other states are considering similar moves. Ohio Gov. George Voinovich said last month he might have to raise the state's 22-cent gas tax. Pennsylvania, which already has a high 22.35-cent gas tax, is considering raising it another 6.5 cents a gallon. That would make it the third-highest gas-tax state behind Connecticut and Rhode Island.
Such moves are in sharp contrast to the last legislative year, when no state enacted a gas-tax increase and New Mexico actually cut its tax from 20 cents to 17 cents a gallon. State gasoline taxes are the single biggest factor in the varying price of fuel around the country.
Not everyone is jumping on the raise-the-tax bandwagon. Minnesota, which had a tentative House-Senate agreement to raise the gas-tax as part of a move to raise the state speed limit to 65 miles per hour, bucked the trend and decided to keep the tax at 20 cents a gallon.
"What's so striking is the variance," says Mike Morrissey, spokesman for American Automobile Association, based in Heathrow, Fla. While Connecticut charges 36 cents, Georgia charges only 7.5 cents. Alaska, New York, and Wyoming are also in the single-digit category.
Reasons for raising gas taxes vary. In Pennsylvania, Republican Gov. Tom Ridge is pushing for the 6.5-cent gas tax hike to pay for damages to highways and bridges that were damaged during severe flooding this winter. After cutting business income taxes by some $225 million last year, the state is scrambling to find the needed money. State Democrats are criticizing the move as unfair to lower-income citizens.
In 1993, the Clinton administration tried to raised the federal gas tax by 9 cents a gallon in order to help cut the budget deficit. But a compromise with Congress kept the price rise to 4.3 cents. It is this 4.3-cent increase that Mr. Dole, the Senate majority leader and Republican presidential candidate, is trying to roll back. The federal government adds 18.3 cents to the price of gas, a penny less than the state average.
The effect on consumers would probably be modest. A study of the tax increase by Resources of the Future, a Washington, D.C., think tank, estimated the 4.3-cent rise in 1993 cost the average American household an extra $39 a year and caused the average vehicle to be driven 239 miles a year fewer. Cutting the tax would presumably do just the opposite.
Raising gas taxes to cut the deficit is not a new idea. Ross Perot, the 1992 independent presidential candidate, pushed the idea of a 50-cent per gallon increase to help get the federal books in balance. The Concord Coalition, a deficit-watchdog group formed by former Sens. Warren Rudman (R) and Paul Tsongas (D), also back a hefty federal gas-tax increase to held reduce the deficit.
But tax watchdog groups are leery of the idea. "You can earmark all you want for deficit reduction, but there's no guarantee that it will go to that," says Pete Sepp of the National Taxpayers Union based in Alexandria, Va. "The more politicians have to spend, the more ways they figure out how to spend it."
State Gas Taxes
Tax per gallon*
The Ten Highest...
1. Connecticut $.36
2. Rhode Island .29
3. Montana .27
4. Idaho .26
4. Nebraska .26
6. West Virginia .25
7. Nevada .24
7. Oregon .24
9. Wisconsin .23
10. Maryland .24
...And the Five Lowest
1. Georgia .08
2. Alaska .08
2. New York .08
4. Wyoming .09
5. New Jersey .11
*Rounded to nearest cent, as of April 1
Source: Federation of Tax Administrators