Pennsylvania Tax on Gas Wholesalers Bumps Up Prices

The price of gas jumped about nine cents per gallon in the first week of 2014, prompting several analysts to conclude that the state's newly increased wholesale gas tax trickled down to consumers.

Gas prices in the Pittsburgh metro market show that gas rose from $3.45 per gallon on Dec. 31 to $3.54 by Friday, according to AAA East Central.

“It shouldn't be this high,” said Dallas Chrestler, 33, of the North Side while filling up at a North Side Sunoco, where a gallon of regular unleaded has cost $3.50.

Gas prices are “out of control,” he said.

To fund road and bridge fixes across the state, lawmakers agreed in November to pass a $2.3 billion transportation bill that gradually eliminates the cap on the wholesale gasoline taxes.

The bill increases fines for speeding tickets and also increases vehicle-related fees and permits.

The state Department of Revenue said the bill raised the tax on wholesale gasoline by 9.5 cents per gallon as of Jan. 1 and will go up again next year.

State officials, including PennDOT Secretary Barry Schoch, in stumping for the law, said the tax wouldn't necessarily be passed on to customers at the pump because the tax was imposed at the wholesale level.

“I can tell you any tax or fee whatsoever is going to pass through. There's no way on God's green earth we can absorb that, especially 9.5 cents,” said Donald Bowers, manager of petroleum and transportation for distributor Superior Petroleum Co. in Ross. “Absolutely we increased it. I can tell you (the tax) was figured into the price. So yes, we took the price of gas up. Do I like a tax increase? No, but I think it's fair. I don't condemn them as long as they use it for roads and bridges.”

PennDOT spokesman Richard Kirkpatrick said Schoch's statements reflected what the industry told the department. Kirkpatrick also pointed out that gas prices had been rising prior to the enactment of the legislation.

“My point is it is very difficult in this pricing climate to say how much of the tax change is showing up at every location. Some supermarket and convenience chains offer gas discounts in return for shopping at their stores. Individual companies make decisions about how to price gas. We don't control those decisions and have no say in them,” Kirkpatrick said.

“PennDOT is getting additional resources and that means tremendous value for the people of Pennsylvania. PennDOT can get to more bridge and road repairs and eventually larger highway improvement projects and that will make a big difference for drivers. We have said that by year five of the transportation plan, the average driver can expect to pay about $2.50 more a week.”

Gov. Tom Corbett pushed for the transportation law. Spokesman Steve Chizmar said gas prices depend on a host of factors.

“The reality is the improvements that the state is going to get for this investment,” Chizmar said.

AAA East Central director of legislative affairs Theresa Podguski said that the price of crude oil on the open market makes up about 71 percent of the cost of gasoline. About 13 percent is dependent on taxes, 11 percent on distribution marketing and 5 percent on refining costs and profits.

“It's hard to say but I would say it's likely (the increase) is due to the tax because when you looked at neighboring states that's not the case,” Podguski said. “As the year goes by the tax may be less noticeable because we expect prices to decrease overall as refineries increase capacity.”

Patrick DeHaan, senior petroleum analyst at GasBuddy.com, said arguments that taxes won't be passed down to consumers are flawed.

“The majority of the time, whoever is feeling the tax will pass it on,” DeHaan said.

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