Gas prices headed higher, especially in Georgia

Gas prices headed higher, especially in Georgia

April 18th, 2011 by Mariann Martin in News

DALTON, Ga. - Tennessee travelers already anxious about soaring gas prices may want to make a pit stop at the nearest station before hitting Interstate 75 to head south into Georgia.

Even though Georgia's fuel tax is nearly 4 cents a gallon lower than Tennessee's, the average gas price per gallon is consistently several cents higher.

Prices likely will go even higher when Georgia bumps up its gasoline taxes by nearly 3 cents a gallon on May 1.

Georgia fuel taxes partially are tied to fuel prices. Tennessee, on the other hand, has a flat fuel tax.

On Friday, Chattanooga's lowest pump price was $3.54 for regular, according to GasBuddy.com. In Ringgold, it inched up to $3.59, and Dalton's best bargain was $3.60. Calhoun's lowest price, $3.65, was more than 10 cents higher than in Chattanooga.

"It's really hard to compare state-to-state prices," said Jessica Brady, a spokeswoman for AAA. "You can have county and city taxes on top of state taxes. But Tennessee tends to have lower prices than either Georgia or Florida. They may have some areas or more cities with less demand. And unfortunately it looks like gas prices are going to remain elevated."

SUMMER INCREASE

Many areas have seen prices rise about 10 cents a week for several weeks, Brady said.

Continued unrest in the Middle East, a weak dollar and increased demand for crude oil have driven prices up about 75 cents a gallon since Jan. 1.

A federal report out last week predicts national average summer gas prices will be 40 percent higher than last summer - $3.86 a gallon compared with $2.76 last year.

According to AAA's Daily Fuel Gauge on Sunday, Alaska, California, Connecticut, Hawaii, Illinois and New York had gasoline prices above $4 a gallon.

More recent increases partially have been caused by Saudi Arabia's announcement that it plans to reduce crude oil production, Brady said.

"And we haven't entered the summer driving season or the hurricane season," she said.

FUEL TAXES

Prices in Georgia and Tennessee are below the national average, perhaps because in part of lower fuel taxes in both states.

Tennessee's state gas tax of 21.4 cents per gallon ranks 35th in the nation, while Georgia's 17.6 cents per gallon ranks 37th. There's also a federal gas tax of 18.4 cents per gallon.

The two states calculate gas taxes differently.

Tennessee Department of Transportation spokeswoman Jennifer Flynn said the state rate includes an excise tax of 20 cents a gallon, which last was raised in 1989, and a special petroleum products tax of 1.4 cents a gallon. There is no state or local sales tax on gas.

More than half of Georgia's tax is pegged to gas prices and can increase or fall every six months.

"It's not as much money, but it's a lot of work," Georgia Department of Transportation spokesman David Spear said.

The state has a flat excise tax of 7.5 cents per gallon. It then adds a 4 percent sales tax, based on gas prices assessed twice a year. If prices rise more than 25 percent in the six-month assessment period, the tax can be adjusted sooner.

The sales tax is now 10.1 cents per gallon, but will rise to 12.9 cents May 1 because gas prices have risen so quickly.

Counties also charge a local sales tax of 1 to 3 percent. Whitfield County has a 2 percent local sales tax rate, but most surrounding counties have a 3 percent rate, which is about 9 cents per gallon in fuel tax.

That means a stop at the pump after May 1 will cost as much as 30 cents per gallon in fuel taxes.

SUGGESTED CHANGES

David Sjoquist, an economics professor at the University of Georgia, served as a member of the Special Council on Tax Reform and Fairness for Georgians, which recommended revising the gas tax as part of overall changes to the state's tax structure. The council recommended a fuel tax be assessed on an annual basis based on road construction costs.

Those recommendations were not adopted by Georgia lawmakers, and it is unlikely that Georgia's three-tiered fuel tax system will change anytime soon, Sjoquist said.

However, both states have seen a decline in fuel tax revenues as more fuel-efficient cars hit the road every year. That means fewer dollars for the Department of Transportation to repair aging roads, even as gas prices rise.

"It is a clearly defined, predictable downward spiral," Spears said. "We rely almost exclusively on gas tax revenues, but it will not be a long-term solution."