Transportation Experts Skeptical Of Gas Tax Holiday As Prices Increase
The recent increase in gas prices nationwide could result in some West Virginians crossing state borders to fill up their tanks.
In regions like the Eastern Panhandle, many consumers cross the border for states with lower taxes on gas. Maryland’s legislature is set to enact a 30 day gas tax holiday to curb increasing gas prices. This could lead even more West Virginians to look for cheaper gas prices elsewhere. But some transportation experts think this tactic is not worth the drive.
Robert Fuentes is president of Washington D.C-based Eno Center for Transportation. He's unsure that these gas tax holidays would be worth it for consumers.
“The public policy can only affect a small piece of it, which is the tax part,” Fuentes said. “And so I'm just skeptical that it's actually going to result in enough meaningful savings to the average driver, in order to make a really big dent in their everyday expenses.”
Fuentes says carrying out a gas tax holiday would only affect a small share of the price – only around one-fifth of the price of a gallon of gas. Most of the price is made up of other fees like the price of crude oil, marketing materials, and other expenses.
West Virginia Public Broadcasting reached out to the West Virginia Oil Marketers & Grocers Association but did not receive a response. An infographic on their website shows the current West Virginia state tax is nearly 36 cents per gallon of gas. To compare, Maryland’s state gas tax is 37 cents. States like Pennsylvania and Virginia are also considering enacting a gas tax holiday. They have respective state taxes of 59 cents and 29 cents.
“If there is some kind of impact, then that will have some kind of effect on the retail businesses on the West Virginia side, who may not have as many folks coming to their stations to buy gasoline, but then also all the other ancillary things that go along with gasoline purchases in convenience stores and automotive equipment and things like that,” Fuentes said.
Asha Weinstein Agrawal, director of San Jose State University’s Mineta Transportation Institute, agrees that the longer trip for gas might not be worth it. She says there is no guarantee savings would actually be passed directly to drivers, noting that oil refineries are usually the ones that actually pay the gas tax directly.
“It has to go through two layers,” Agrawal said. “First, do they pass the savings on to your local gas station, and then does the gas station – if it got some or all of that savings – pass it on to the consumer?”
Agrawal also notes that crossing state borders for cheaper gas could set West Virginians up for longer term disadvantages, like reduced revenue for roads and public transportation.
Both experts say consumers can save money in the long-term by making the switch to fuel efficient vehicles.
“Let's not even think of electric vehicles, we just stick with gas and diesel; if it just went 10 miles to the gallon, you could be saving a lot of people 50 percent of their gas costs,” Agrawal said. “And that's forever, it's not just some holiday that lasts a few months.”
As of Friday, the American Automobile Association reports the average price of a gallon of gas in West Virginia is $4.10. This price is 17 cents lower than the national average of $4.27.
On Thursday, West Virginia Democrats held a rally urging Governor Justice to enact a gas tax holiday here in the state, with the governor responding that he did not have the power to suspend the tax and that the issue is the legislature’s responsibility. House Speaker Roger Hanshaw and Senate President Craig Blair also released a statement opposing a suspension of the tax.