Blog: Dermot Cole
Tax plays small part in fuel price
Published Monday, August 31, 2009
Fuel prices may go up with the return of the eight-cent state gasoline tax in Alaska, but the tax is a drop in the bucket.
There are other reasons why gasoline in Fairbanks is about 70 cents a gallon above the national average. According to AAA, the local average price is up 23 cents in the last month and 5 cents in the past week.
Earlier this year a study for the Alaska Municipal League recommended an increase in the state fuel tax to provide funds for fixing state roads.
The consultant, Cambridge Systematics, had this to say about the relationship between fuel taxes and fuel prices.
While the amount of each state’s fuel tax is added to the wholesale price of the fuel (gasoline or diesel), the differences in retail price levels of fuel in each state do not appear to correspond to the tax rates.
The fuel tax, which is technically a user fee, does not send a strong price signal to the motorist. In fact, most of us do not know what the state
and Federal fuel tax rates are that we are paying.
Nevertheless, in a recent survey from ADOT&PF, almost 67 percent of respondents indicated that state funding for roadways should be increased.
Furthermore the data shows stronger public support for user fees if they are assured the revenues go to the specified purpose versus into unrestricted revenues.
Perhaps even more important, changes in a state’s fuel tax rate seem to have little or no influence in the state’s retail fuel prices. This appeared to be the case when Alaska’s eight-cent gas tax was suspended.
There is strong evidence that changes in retail fuel prices are driven by demand and changes in the state’s fuel tax rate may only affect who captures the increment of profit from the retail sale of a gallon of fuel: the State, the gas station, the distributor, the carriers, the refiners, or the producers.
The data indicate that the suspension of the State’s fuel tax did little to reduce the retail price of fuel and any temporary effect was quickly overwhelmed (by) market forces.
Prior to its suspension, Alaska’s fuel tax at eight cents per gallon (cpg) was the lowest in the nation. This amount generates about $30 million annually.
The consultants gave this example of the disconnect between tax rates and retail prices.
In New York, the state tax rate is 42 cents a gallon. In New Jersey, the state tax rate is 14 cents a gallon.
Stations in New Jersey, a block away from New York, charge just as much as New York stations.
Here is the Alaska Municipal League study on transportation finance needs in the state: http://www.akml.org/documents/2009TransportationStudy.pdf
The American Society of Civil Engineers has a 50 state ranking of the quality of our infrastructure. As is very typical, Alaska did poorly due to the lack of vision/competence by Alaska leaders.
Here's two points ASCE documented:
Key Infrastructure Facts
* 35% of Alaska’s bridges are structurally deficient or functionally obsolete.
* 46% of Alaska’s major roads are in poor or mediocre condition.
The full report is here:
http://www.infrastructurereportcard.org/...
Most of us would like to drive on decent roads and safe bridges. But since we live in Fairbanks we don't.
If we had the voter mandated gasline providing affordable gas we could use CNG to run our cars and trucks and we'd pay less than 40 cents per gallon equivalent. We could then charge a 50 cent tax per gallon equivalent and use those funds to build a first class road system. We could even afford to build a road to Nome.
Yes, with competent leadership we could drive for 90 cents per gallon, have cleaner air, and beautiful roads. All it takes is competent leadership.
Over all in the United States infrastructure for its roads systems are deficient compared to other parts of the world. Maybe another 8 cents? To me it sounds more like a national issue more than a state issue of vision and funds.
The State eight cent tax may play a small role in fuel taxes but all the other taxes play a large role. The taxes on a gallon of gas or diesel is far far more than eight cents.
i just want similar fuel prices compared tot he lower 48
Dermot..... while your resting why dont you give us a report
on why you think we are paying so much more than the
nationa average. Please be specific.
The fact is the legislature could have extended the moratorium on the tax during their special session this summer as Governor Parnell requested, but they didn't. To afraid that the Federal Government won't give them money because they would think the State didn't need federal funds. Just goes to show you the legislator does not represent Alaska, but is a slave to the Feds. Even when they don't know how the Feds will act, the legislature is to afraid to make a decision that may help the people of this State.
FreeDarfur I agree 100% with your comments. We need to go to the constituent meeting and let OUR State Legislators know what we want and emphasize IF they don't want to listen, then we'll vote them out. FYI this year Guttenberg/Thomas will be hosting three meetings in the Fairbanks area.
Thursday, September 3rd from 6-8pm
West Valley High School Library
Tuesday, September 15th from 5-7pm
UAF Wood Center (Parking is free
after 5pm)
Thursday, October 1st from 6-8pm
Rolland Hartung Community Hall (Ester)
liberals/socialists love taxes they increase dependency on the Government.
How do you fill a bucket - one drop at a time - just add another drop and another and another
Dermot, thank you for this information. Timely answers to questinos raised just yesterday! I appreciate your work.
Much talk about Alaska self-sufficiency, yet when the subject of self imposed revenue generation (taxes) ... watch the "conservative" free loaders scream bloody murder.
Yep, if you could keep the "liberal" big spenders from wasting all the loot on "make pretty flower pots" and fill the pot holes ... we might end up with a transportation system that gets Alaskans from point A to point B.
Yep, Alaska is a real progressive state ... we got an area larger than Texas that doesn't have a connecting road and can't figure out why it cost so much to ship something.
it is SOOO cheap to live here near FAIRBANKS,,,
What is the breakdown for a gallon of gas? What is the amount of each tax (and where does it go)? If the wholesale cost of a gallon of gas is not public knowledge, then why not? Just how much profit goes to the retailer, the bulk distributer, and on up the line?
What I like is paying a sales tax on tax like North Pole is doing on their fuel at the pumps.
Let's ask Jay Ramras to perform another thorough investigation.
Daaaaah, the state sells your royalty oil crude to the refineries at a 60 dollar per barrel profit.
Does the State's wholesale price effect the retail price of heating oil?
If so how much?
It's just an itty bitty little tax.
Let's see, the itty bitty state gas tax, add that to the federal gas tax. Then there is the property tax. We get to vote on teeny weeny sales tax soon. You'll hardly notice it. Then there's federal income tax. FICA and Medicare for sure. Social Security. Don't forget them. What am I forgetting? Oh yea, sin tax for booze and tobacco. Plus hotel/motel tax if you can still afford to travel. Airport tax, I almost forgot. If you make any money investing, well we have capital gains tax for that. I know I forgot a few. Then when you die, just for a last grab for your hard earned money, there's the estate tax.
It's just an itty bitty little tax. Right?
TheBigDipper
...best comment I've read all year...
Days of oil & coal are over and Alaskans would benefit from electric cars and jobs making batteries, solar panels, wind turbines. Or buy all this stuff from China as the world moves to renewable energy and the U.S. is left behind.
Moving our country to clean energy with HR 2454 (Clean Energy and Security Act) will generate millions of new jobs, break our dependence on dirty oil and coal and reduce the carbon pollution that causes global warming. HR 2454 will create jobs that include building wind turbines, building and installing solar panels, renovating buildings to make them more energy efficient, and constructing the Smart Grid—jobs that can’t be outsourced. profits from wind energy.
China will soon pass the U.S. as the world’s largest market for wind turbines. After doubling wind power capacity in each of the last 4 years, Chinese state-owned power companies are competing to see which can build solar plants fastest. So while the U.S. talks about becoming a leader of exporting green energy, China is forging ahead of us. India is racing to create clean technology and Germany makes more solar panels than we do. We need to act now and ask Iowa members of Congress to support HR 2454 so America can become a global leader in clean, renewable technologies that drive economic
3.49 unleaded 3.67 diesel - No, not everyone who lives in North Pole buys their gas here.
It's been years for me.
Henry Hub was at $2.50 yesterday and oil dropped below $70 a barrel and yet the prices continue to go higher in this community and rural Alaska.
Fuel sales to a full service gas station owner is just a convenience for the customer, they make their profit on fixing your car. Their profit in most cases isn't worth the hastle.
Concidering that we do not have the corrosion problem here in the interior that they have near the coast or in the midwest, are bridges judged on safety by the years in service or by the thickness of the steal beams after corrosion starts. The age of a bridge is not necessarily a factor by itself, and a corrosion factor is accounted for in order to judge the lifespan of a bridge.
Gas prices have dropped every week for the past 3 weeks - maybe not here but everywhere else
Bobgray1, or anyone, will there be someone running against JayBird this time around? I agree, it's time for some change but it always seems to be the same people being voted back into office, time after time. Please, someone with some clout, run against JayBird.
TheBigDipper, I agree 100%. Want to run against JayBird???
http://www.youtube.com/watch?v=q6YVowty1...
i was in north pole last night.........
maybe we can get the governor to practice his foreign diplomacy and get more affordable fuel from Russia??
:P
Can anyone tell me how you keep the interior of a vehicle warm in an electric car in our below zero days in Fairbanks?Apparently, there is no engine heat to circulate inside the car for personal warmth and defrosters. Please advise. Thanks.
Dear Employee:
As the CEO of this organization, I have resigned myself to the fact that Barack Obama is our President and that our taxes and government fees will increase in a BIG way. To compensate for these increases, our prices would have to increase by about 10%. But since we cannot increase our prices right now due to the dismal state of the economy, we will have to lay off sixty of our employees instead. This has really been bothering me, since I believe we are family here and I didn't know how to choose who would have to go.
So, this is what I did. I walked through our parking lots and found sixty "OBAMA '08" bumper stickers on our employees' cars and have decided that these folks are the ones who should be let go. I can't think of a more fair way to approach this problem.
They voted for CHANGE...I gave it to them.
Sincerely,
lol outstanding DPinAK and calendar.
calendar
With an auxiliary heater .
And CO2 is less than 1% of atmospheric gasses. So, what is Cole suggesting, that we be like New York or New Jersey? How about France?
dpinak...so now your going out of business after firing your most intelligent and highly educated employees?
good move ..they will get a better job..
A green job??
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