After July 1st with the implementation of Gov. Bob McDonnell’s transportation funding plan, Virginia retail gas prices should begin to drop by about six cents per gallon as the Commonwealth’s retail gas tax is replaced with lower tax at the wholesale level.
In contrast to the current 17.5 cents per gallon tax, The Virginia Petroleum, Convenience and Grocery Association (VPCGA) is estimating Virginia motorists will end up paying a total of 11.7 cents in taxes and fees for a gallon of gasoline through the end of the year (that figure includes the Virginia Petroleum Storage Tank Fee of six tenths of a cent).
The difference should fill the pockets of Virginia motorists according to the America Automobile Association (AAA). “AAA urges the petroleum industry to pass gas tax reductions on to the consumer and not exploit the situation as an opportunity to increase profits,” said Martha Mitchell Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. In 2012, six of the ten most profitable companies worldwide were petroleum companies leaving some consumers skeptical. “Motorists should not, however, expect an immediate impact or an exact six cents reduction per gallon as the gas in the tanks on July first was paid for under the current gas tax structure and fluctuations in the daily price of gas must be taken into consideration,” Meade added.
Just how low will gas prices go? Soon Virginia motorists may find themselves in one of the coveted five most affordable states in which to fill up. The average for a gallon of self-serve regular gas in Virginia today is $3.40. Theoretically, if that price dropped by six cents, today’s adjusted price would be $3.34 making Virginia the fourth most affordable state in the nation to purchase gas. Only Mississippi, Alabama and South Carolina would come in lower in that scenario. Today, Virginia sits in the number seven spot, with six states boasting lower gas prices.
Gasoline prices are heading in a different direction, however, in Maryland as a result of new motor fuel tax laws that go into effect in two weeks. Virginia’s historic fuel tax policy transformation should give consumers just shy of a dollar more in their bank accounts with each fill up while the cost of gasoline in Maryland will likely increase by three and a half cents or so a gallon in the early stages of their new gas tax plan (or about 53 cents per fill up).
That is only the beginning; however, as Maryland’s excise tax on gas will skyrocket by 21.1¢ in the out-years, leap-frogging from 23.5¢ per gallon now to 44.6¢ per gallon by FY2018. In the long term,
Maryland could emerge as one of the most expensive places in the country to purchase gasoline.
This could be welcome news for some Virginia gas retailers as penny-wise customers drive across state lines for cheaper gas prices at filling stations in Virginia.
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