Gas prices fell at the pump after Washington State raised its gasoline tax to fund road projects.

DALLAS - Motorists in Washington State saw a drop in the price of gasoline as the state raised its fuel tax on Aug. 1 to help fund a 16-year, $16 billion transportation plan that will be supported by $3.5 billion of state general obligation bonds.

The price at the pump fell 2 cents per gallon between July 31 to Aug. 6, despite the increase of 7 cents in Washington State's 37.5 cent per gallon tax on gasoline and diesel, the AAA said in its nationwide report on gasoline prices.

The average price of a gallon of gas in the U.S. was $3.18 on Aug. 6 after falling by 4.2 cents per gallon over the same period, according to AAA.

Washington State was the seventh state to raise its gasoline tax in 2015, but only in one state did fuel prices track the increased levy, said Carolyn Kramer of the Transportation Investment Advocacy Center.

The lack of a link between gasoline taxes and the retail pump price in Washington State is more evidence that petroleum distributors pass along only a percentage of a tax increase to motorists, she said.

A recent study by the American Road and Transportation Builders Association found no connection between increases in state gasoline taxes and the prices that motorists pay, Kramer said.

"The data once again confirms that a gas tax increase does not translate to a penny-for-penny increase in the retail price paid at the pump," she said.

Of the six states that raised their gasoline taxes on July 1, only Idaho had an increase in the pump price and that was a hike of less than 1 cent through Aug. 6, she said. The other five - Georgia, Maryland, Rhode Island, Nebraska, and Vermont - all reported large decreases in line with a decline in the national average price of gasoline, according to the AAA survey.

The Aug. 1 tax increase in Washington State will be followed on July 1, 2016 by a 4.9 cent per gallon jump as specified in the highway funding plan signed into law in July by Gov. Jay Inslee.

In Louisiana, a former top official in the Department of Transportation and Development said 10 cents should be added to the state's gasoline tax of 20 cent per gallon to generate an additional $$250 million to $280 million per year for road projects.

Ken Perret, president of the Louisiana Good Roads and Transportation Association, said the state needs to start whittling away at a transportation backlog estimated at $12 billion. The average motorist pays about $100 per year in state gasoline taxes but is out more than $400 per year for repairs associated with poorly maintained roads, he said.

"Good roads cost money, but bad roads cost more," Perret said. "It's a fact of life we're living with right now in Louisiana. The bad-road tax is real."

The State Legislature voted down a measure earlier this year that would have raised Louisiana's gasoline tax by 10 cents. The bill was sponsored by Rep. Karen St. Germain, chairwoman of the House Transportation Committee.

The U.S. Congress will have at least three proposals to raise the federal gasoline tax of 18.4 cents per gallon on the table when it returns after Labor Day from its August recess but likely will consider neither one because key House and Senate committee chairs have ruled it out.

Sen. Tom Carper, D-Del., is sponsoring a bill to raise fuel taxes by 16 cents per gallon over the next four years to bring in an additional $220 billion over 10 years. Carper's measure, S. 1994, would index the gasoline tax rate to inflation at regular intervals.

Rep. Tom Rice, R-S.C., introduced H.R. 2971 in July to raise the federal gas tax by 10 cents and offset it with a $130 per year tax credit.

Rep. Earl Blumenauer, D-Ore., offered a H.R. 680 earlier this year to raise the gas tax by 15 cents over three years.

 

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.