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Would cutting Pa.'s 30-cent-per-gallon gas tax do more harm than good?
Thursday, September 08, 2005

HARRISBURG -- Faced with growing outcry from constituents over the rapid run-up in gasoline and diesel fuel prices, a legislative policy group held a special meeting yesterday on how to ease the pain for motorists and truck drivers.

 
 
 
State Fuel Taxes

GASOLINE

HIGHEST (per gallon)
Rhode Island, 31 cents
Pennsylvania, 30 cents
Wisconsin, 29.1 cents

LOWEST (per gallon)
Georgia, 7.5 cents
Alaska, 8 cents
Wyoming, 14 cents


DIESEL

HIGHEST (per gallon)
Pennsylvania, 36.4 cents
Rhode Island, 31 cents
Wisconsin, 29.1 cents

LOWEST (per gallon)
Georgia, 7.5 cents
Alaska, 8 cents
Oklahoma, 14 cents
Wyoming, 14 cents

 
 
 

One bill would lower or even temporarily suspend the state's current 30-cent-per-gallon tax on gasoline.

"We know we have a serious problem," said Rep. Mario Civera, R-Delaware, chairman of the state House Republican Policy Committee.

In some Pennsylvania towns last week, when Hurricane Katrina devastated 15 oil refineries off the coast of Mississippi and Louisiana, prices at the pumps jumped up three times in a 24-hour period.

Several legislators said they saw retail gasoline prices last week go from about $2.70 per gallon to $2.99 and then to $3.19 or $3.29 or even higher.

"I was really ticked at myself because I didn't fill up when the price was below $3,'' said Rep. Robert Flick, R-Chester.

Trucking official Jim Runk said drivers of big rigs are hurting, too, which could drive up prices for consumers.

Runk heads the Pennsylvania Motor Truck Association, with 2,200 trucking company members. Just a week ago, the national average for diesel fuel was $2.59 per gallon and the Central Atlantic region average was $2.65. Now, the national average has jumped to $2.89 per gallon and the Atlantic region's to $2.99.

"If you fill your two 150-gallon fuel tanks, you'd pay about $897 in the Central Atlantic region,'' he said.

 
 
 
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Graphic: Gas prices in Pittsburgh, statewide

Fuel prices forcing cutbacks in city services, Pittsburgh officials say

 
 
 

While some truckers have escalator clauses in their contracts with shippers, Runk said "many small Pennsylvania-based carriers cannot pass on the increase'' to the companies for whom they haul.

The GOP policy committee can't enact legislation, but any recommendation it makes about the gas tax would carry weight because Republicans control the House by a 110-93 margin.

Legislators yesterday clearly wanted to do something to ease the rise in gasoline prices, but there was concern that some ideas might do more harm than good.

If they choose to suspend the gas tax, it would go back to 30 cents next March or April, when it is hoped damaged refineries will be back in action, supplies increase and gas prices ease a bit. Another idea is to set lower limits on the wholesale price of gas, the amount retailers pay to their suppliers.

Currently, Pennsylvania has the second-highest gas tax in the nation, to Rhode Island's 31 cents per gallon. Other states are close, with Wisconsin at 29.1 cents, Washington at 28 cents, West Virginia and Montana at 27 cents and Ohio at 26 cents.

Pennsylvania has the unwelcome distinction of being No. 1 nationally with its 36.4 cent-per-gallon tax on diesel fuel. Rhode Island is second at 31 cents.

Runk warned that some truckers can't sustain the burden of high fuel prices. If they go out of business, he said, it will make it harder to get products to consumers and prices for goods could rise.

"A short-term reduction in fuel taxes would at least provide an otherwise overburdened industry with a breather from continued increases in operating costs,'' he said.

But other speakers at the hearing warned that cutting the gas tax might not bring lower prices for motorists, especially if the wholesale price of crude oil keeps rising.

Lowering prices at the pump could bring another harmful effect -- causing motorists to ignore the crisis and drive more, at a time when Gov. Ed Rendell is urging people to reduce their use of gas and take mass transit.

"A 30-cent decrease in the price of gas could increase consumption at a time when there has been a substantial disruption in the gasoline supply system,'' said Mike Cortez, corporate counsel for Altoona-based Sheetz convenience stores, which sell a large volume of gasoline.

A road-building advocate, Robert Latham of Associated Pennsylvania Constructors, said reducing the gas tax will reduce the amount of money available to build and repair state roads and bridges. The gas tax goes for state and local road projects and also partly funds the state police, he said.

Many Pennsylvania road projects already have been put off, Latham said, because Rendell in February decided to shift up to $419 million from road and bridge work to bail out ailing mass transit systems in Philadelphia and Pittsburgh.

If the state provides less for road repairs, the federal government also would lower the amount it provides under an 80-20 match, he added.

Other ideas discussed, but not acted upon, at the hearing included:

Adopting a law like one in New Jersey that prevents gas station operators from changing gas prices more than once within a 24-hour period.

Asking the federal government to permanently change the Clean Air Act's requirement for reformulated gasoline, which would lower refining costs. Such gasoline is used to improve air quality in southwestern and southeastern Pennsylvania from June 15 to Sept. 15.

Allowing retailers to blend different types of reformulated gasolines in their underground storage tanks. Current rules prohibit such mixing.

Changing federal and state laws to make it easier to build new refineries and expand domestic refining capacity.

Rolf Hanson, executive director of Associated Petroleum Industries of Pennsylvania, which represents oil companies, said there hasn't been a new refinery built in the United States since 1979, even though demand for gasoline has continued to climb in the past 26 years.

One reason is that a refinery costs $2 billion to build and takes at least eight years.

First published on September 8, 2005 at 12:00 am
Harrisburg Bureau chief Tom Barnes can be reached at tbarnes@post-gazette.com or 1-717-787-4254.