Taxes driving up gas prices

Americans are now paying $.80 more per gallon for gasoline compared to this time last year. That’s an increase of 39 percent. Specifically, the average price nationally for regular is $2.86, up from $2.06. Drivers who must use mid-grade or premium now pay $3.04 and $3.15 respectively on average.

Before we discuss why, note this. Don’t be mislead by media reporting of seasonal increases in driving. That is factored into the year-to-year comparison prices captured by the American Automobile Association, the source of the information discussed here. AAA places each state into one of five price groups.

Most of the states in the two groups with the lowest gas prices are in the Southeast. For example, South Carolina and Tennessee are in the lowest range of $2.638-$2.747, while Alabama and Louisiana are in the next lowest range of $2.747-$2.825. Florida is the only Southeastern state in the middle group which along with Pennsylvania has a gasoline price range of $2.825-$2.873.

Gas purchases in states coded light red by AAA, such as Connecticut and Vermont, are paying $2.890-$2.971 per gallon while transactions in the most expansive group of states, including Hawaii and Illinois, are paying $2.983-$3.552.

While the percent increase noted above is unacceptable, the gross price is unacceptable as well.

Before any of us start blaming the oil companies or even OPEC, which is part of the cost problem, let’s uncover an elemental cost that often goes unnoticed or not discussed: Taxes!

Regardless of where you live or where you purchase gas, embedded within the retail price you pay at the pump is a federal tax of $0.184 cents per gallon. That means the federal government has inflated the cost of each gallon of gas you purchase by 6.5 percent. Given that the average vehicle gas tank holds between 15 to 18 gallons, that means the feds drive up your cost to fill-up the tank by around $3.

It doesn’t stop there.

Each state has jumped aboard the ‘tax ‘em-at-the-gas-pump’ bandwagon.

Here’s the skinny. For consistency, we’ll use the same states as noted above and include the federal tax in the tax total displayed.