Increasing the gas tax does not result in a corresponding penny-to-penny increase in the retail price motorists pay at the pump, a study of the market impacts of five state gas tax increases enacted in 2013 found.
The analysis, by Dr. Alison Black, chief economist for the American Road & Transportation Builders Association (ARTBA), found, on average, the price for a gal of regular gasoline the day after a state gas tax increase goes into effect only reflects about 22% of the new tax. A month after enactment, only about a third of the levy shows up in the pump price, she says, and thereafter, it is not a significant retail price factor.
The study also found that since 2005 the average weekly price of gasoline nationally has fluctuated, on average, five cents per gal. Black says a modest increase in the federal gas tax rate to restore the purchasing power of the user fee—last adjusted in 1993—would likely be "lost" in the week-to-week price fluctuation experienced at the pump.
Black used national and state-specific daily gas price data obtained from the U.S. Energy Information Administration (EIA) and the Oil Price Information Service, as source for petroleum pricing information. The study looked at gas tax retail impact in Massachusetts, Maryland, Pennsylvania, Vermont and Wyoming.
The research found that one year after enactment of a state gas tax increase, the average price for a gal of regular had dropped, on average, 3.7% below the market price the day before the tax increase went into effect. Over the same time frame, the average national price had dropped 3.3%.
