Consumers have been cutting back on gasoline use. Many conserve because it is the right thing to do. More of us agree with that sentiment but have no real economic alternative to gasoline or diesel for the family’s transportation. Electric car and hybrid capital costs remain much higher than conventional car prices and many gas-fueled cars achieve very good fuel efficiency.
Regular gasoline prices dropped from $3.92 per gallon in mid April 2012 down to $3.54 in mid April 2013. We use 8.4 million barrels of refined gasoline per day (1.13 gallons per capita per day, or $4/day at the pump). The BLS estimates family gasoline consumption at $2,655 per year or $51.05 per week in 2011. CNN estimates family consumption at $4,416 in the same period. AAA estimates the average American will spend $2,100 on gas in 2013. While $51 per week is a noticeable burden, consumers who commute further than average will suffer a higher cost. A 30-mile (one-way) commute can add $42 per week to the family’s other transport costs and a 70-mile commute can add $100 per week. Commuting costs are not usually tax-deductible.
Gasoline is loaded with taxes. In April 2012, federal tax of 18.4 cents per gallon applies in all states. On top of that are state taxes, e.g. 69.6 cents per gallon in New York, 41.9 cents in Maryland, and 26.4 cents in Alaska. Some counties pile other gas taxes on top of federal and state taxes.
Regardless of party affiliation, voters oppose increasing these taxes. Gallup tested the proposal of a 20 cent per gallon tax to fund infrastructure and mass-transit projects. 66% of surveyed voters opposed the proposal, including opposition from 55% of Democrats and 72% of lower middle income households (those households with annual income between $24,000 and $60,000).
Despite widespread opposition from voters, Maryland plans to institute a 20 cent per gallon tax increase. That will raise Maryland gasoline taxes to 61.9 cents per gallon (17.5% of retail price), putting it just slightly behind New York, California, Hawaii, Connecticut and Illinois. Some politicians won’t take advice from voters.
Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research