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Sunday, July 7, 2013
When they first heard the idea of abolishing the state’s 17.5 cents per gallon retail gas tax January, it sounded tantalizing to Roanoke-area motorists.
Regular gas hovered around $3.15 per gallon back then. Many said “hooray!” when I found them pumping fuel around town, and asked about Gov. Bob McDonnell’s eyebrow-raising proposal.
It held out the prospect of gas below $3 per gallon. Every little bit of money they could save would help, many of the drivers said.
The law passed and that tax ended Monday. So Tuesday I took another spin around Roanoke Valley gas pumps to listen to the gas buyers again. “Underwhelmed” was the best term to describe them.
“I really haven’t been paying attention,” said Deonta Banks when I found him pumping at the Kroger pumps on Peters Creek Road, where regular was selling for $3.22 per gallon.
Keisa Brown of Roanoke was filling up at a Valero station on Williamson Road in Roanoke County, where the price was $3.29. She hadn’t noticed a drop, and “I’ve been paying attention to gas prices,” she said. Brown further wondered why gas is often cheaper when she visits Greensboro, N.C. — that state’s tax is more than 37 cents per gallon.
The price “seems the same to me,” said Leslie Thomas of Roanoke, who was filling up for $3.24 per gallon at the Hess station on Electric Road in Salem.
Their indifference might partly be explained by some of the out-of-the-headlines fine print in the new transportation revenue package approved by the General Assembly. Because, as you know by now, the devil is always in the details.
Sure, the 17.5-cents-a-gallon retail tax charged to consumers went away July 1. But at the same time, the state slapped a new 3.5 percent tax on the wholesale end. Right now, that translates into just a little more than 11 cents per gallon. And it gets built into prices charged to consumers.
They didn’t see the 6-cents-per-gallon difference immediately, though, because of a gas-delivery calendar quirk, said Pat Flint, owner of Flint’s Service Center on Franklin Road.
The new law took effect Monday, but “the gas I got in the ground was bought last week, in June,” Flint said. So they were paying the same old 17.5 cents a gallon tax.
“I see,” I replied. “So they should expect the price to go down 6 cents a gallon after your next delivery of fuel arrives?”
“Not necessarily,” Flint replied Tuesday.
“How’s that?” I asked.
With that, Flint launched into a long-winded explanation of gas pricing. With 43 years in the business, he knows something about it.
The street price essentially depends on three factors, he said. The first is the wholesale price. Retailers have no control as to whether the oil companies raise the price they charge him. If they push it up, he’s more likely to increase prices.
The second is competition. If the station up the street reduces its price, Flint might feel forced to do the same — otherwise he could lose customers.
The third is demand. If that’s healthy, or it’s increasing, both Flint and the station up the street are going to be less inclined to reduce the street price, even if the tax is reduced. They might even raise prices.
Now that we’re full-swing into the summer vacation season, demand is up. And partly because of that, supplies are down. Meanwhile, the military coup in Egypt is making international oil traders nervous.
Their uncertainty pushed oil prices on Friday to their 2013 peak of $103 a barrel. As recently as June 23, it was $95 a barrel. That has an effect on prices, too.
Flint called me Friday, right after he’d purchased his latest load of gas. “The wholesale price went up 13.5 cents per gallon,” he said. So instead of a 6-cent drop because of the reduction in the tax, consumers should expect to pay about 7 cents a gallon more this week, he said.
Gas isn’t the only thing you’ll be paying more for, though.
Virginia’s general sales tax jumped from 5 percent to 5.3 percent (6 percent in Northern Virginia and Hampton Roads). The increase affects the price of just about everything except for groceries and medicine.
Owners of hybrids now have to pay an additional $64 per year, which compensates the state for the money they’re saving in fuel taxes.
The tax you pay when you title a new or used vehicle jumped from 3 percent to 4 percent. And there’s some other stuff such as hotel and real estate transfer taxes that increased, depending on the area of the state, too.
In all, it raises about $1 billion for the state’s faltering transportation trust fund, which will pave some new lanes in Northern Virginia and repair a bunch of potholes in Tidewater. The best thing the Roanoke Valley will get out of it may be Amtrak service a few years down the road.
Lets boil this all down.
The gas tax went down, nominally, about 6 cents per gallon. But, gosh darn it, the wholesale price went up 13 cents a gallon.
Meanwhile, the tax on everything else went up, especially if you’re renting a hotel room in Virginia Beach or Northern Virginia.
The solons in Richmond held out a hope we’d be paying less for gas. The reality is we’re paying more for everything.
“What the purpose in them doing it at all?” asked Clark Dent of Roanoke, who was filling up at Hess in Salem. “One way or another they’re going to get you.”
He can say that again.
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