Gasoline prices at the pump are a wait-and-see
Starting New Year’s Day, motorists in Pennsylvania should have seen a drop in gasoline prices at the pump – on paper, at least.
Some of the gasoline tax adjustments from the state transportation bill passed in November went into effect on Wednesday, and it should have benefitted customers.
State Rep. Garth Everett, R-Muncy, said the Oil Company Franchise Tax on the sale of fuel to gas station owners was uncapped, and starting Wednesday, increased by about 9.5 cents per gallon. However, the 12-cent flat tax on gasoline at the pump was eliminated, so, with a 2.5-cent less per gallon difference, motorists should be smiling as Everett posited there really should be little to no change at the pump.
“This year, it’s a wash,” was Everett’s opinion – but the franchise tax will continue to increase incrementally (next year and again in 2017) so that at the end of five years, it will amount to 28 cents. “But this first year, I don’t see how the price could go up and could be attributed to the bill.”
Will that increase be passed on to consumers? “That depends on whether the wholesalers pass that whole price on, and what they do with it,” Everett said. “We don’t know. We could see an increase, depending what they choose to do. They’re in competition with each other, so they may keep prices low.”
One local station manager, who asked not to be identified, said he was unsure where prices would go. “When I get a new gasoline load (in about a week), I will know,” he said.
Perhaps getting ahead of the numbers game, one business on Lycoming Creek Road raised its regular unleaded prices 10 cents per gallon on Tuesday.
State Rep. Rick Mirabito, D-Williamsport, explained the bill’s tax adjustment. Previously, the tax had a 90-cent floor and a $1.25 cap on the wholesale price of gasoline, plus the 12-cent flat tax. Now, that flat tax is gone, and the floor is at $2.99 – with no cap, he said.
“Some people recognized the need to change the cap because it’s not $1.25 anymore,” Mirabito said.
Mirabito argued it would’ve been more fair to the public to replicate the previous formula with a cap for taxpayer protection. If war breaks out in the Middle East, for example, “That would trigger an increase in the tax much higher than 9 cents. But if there was a cap on it, like under the old system, you’d only pay a tax on the cap,” he said.
“Therein lies the danger and why I voted against the bill: without a cap on it, there’s no way of controlling for the public what their tax will be,” Mirabito said. ” … Elected officials 15, 20 years from now should come to the public and make a case for (more taxes), not just slap a tax on it that goes on forever.”
The median income for Williamsport residents is $32,000 a year, Mirabito said, and many are seniors on fixed incomes. This uncapped tax may cause these residents to use up what small wiggle room they have, and rely more on social services, he said. Even if natural gas becomes a more viable option for fueling cars, those who can’t afford the extra tax can’t afford a new car running on natural gas, he said.
“Everyone knows we need to fix the roads and bridges, and (the public) needs to absorb some, but this dumps the entire burden on hard-working families,” Mirabito said.
Lycoming County Transportation Planner Mark Murawski said it’s difficult to pin down causes of gasoline price fluctuations, as he recently saw a 20-cent difference between gas station prices between Lock Haven and Williamsport, “and this has nothing to do with the gas tax yet,” he said. ” … It’s always a wild card.”
However, as Pennsylvania is first in the nation for worst bridges, “We’ll put the money to good use,” Murawski assured.