5/18/07
Who sets prices: A look at gas taxes
Editor's note: Part two of three
By STEPHEN H. SUTHERLAND
Fuel prices are very difficult to follow and to understand. I keep getting asked, "Why are the prices so high? Who is responsible for the high prices?" I have received quite a few comments so far, and not all with the same viewpoint.
After the first column a reader responded, "Your article appears that it is just a hired gun by big oil. Get to the truth, the greed, and the corruption with the Bush administration." The second column generated a much different response: "Unfortunately today's article degenerated into a rant against Big Oil and American oil producers. You made no attempt to be objective, or explain the international energy industry of which I doubt you know very much. The Record-Eagle prints a bunch of left-leaning, anti-capitalist crap, and your article is just another example. Too bad."
Hmmm, so one week I'm a hired gun for big oil and the next I'm a leftist! Just maybe I'm getting to the truth here.
Gas Taxes: A historical timeline for federal gas taxes;
1919 — Oregon is the first state to install a gas tax.
1932 — Federal government imposes a temporary gas tax of 1 cent per gallon.
1941 — Feds make the temporary gas tax permanent and hike the tax to 1.5 cents to fund the war.
1951 — Feds increase the tax to 2 cents to fund the Korean War.
1959 — President Eisenhower increases the tax to 4 cents to pay for the new interstate highway system.
1959-81 — Taxes remain stagnant.
1982-93 — Taxes increase by 360 percent to 14.4 cents for various reasons.
2007 — Today federal taxes are at 18.4 cents per gallon.
Michigan's gas tax
Did you know that Michigan charges 19 cents per gallon in road fuel tax? Then did you know that each time the gas price increases, the amount of taxes Michigan collects also increases. Despite all the rhetoric from politicians claiming they want to help since Hurricane Katrina, the State of Michigan continues to rake it in through the state's sales tax. Yes that is true, Michigan also collects a 6 percent sales tax on each gallon of fuel sold here. At the bargain price of $3.499, Michigan's sales tax is approximately 19.8 cents per gallon. This brings Michigan's share to approximately 38.8 cents per gallon. Now Gov. Granholm wants to raise the gas tax again! Can we say gouging, or is that just politics?
Gas margins fell dramatically early this week, but as of Tuesday Speedway seemed to be leading the pack upward with a staggering increase of 20 cents per gallon ($3.499), bringing price margins back to about 21 cpg. As of Tuesday evening a few stations in town had only increased to $3.399 and the same on Wednesday although the rack price dropped approximately 10 cents raising the margins to as much as 31 cents per gallon. The cost of fuel rose again Thursday while Speedway and others dropped to match the retail price of $3.399.
Again, I want to caution you, not all retailers (suppliers) are able to purchase at these prices, although some can actually purchase fuel even cheaper. The prices (although accurate for some) are only quoted to give you a bench mark to follow the fluctuations in margins from day to day. These stated prices also do not reflect day to day operating cost.
| Friday | Monday | Tuesday | Wednesday | Thursday | |
| 5/11/07 | 5/14/07 | 5/15/07 | 5/16/07 | 5/17/07 | |
| Retail | 3.299 | 3.299 | 3.499 | 3.499 | 3.399 |
| Cost of fuel | 3.238 | 3.275 | 3.287 | 3.188 | 3.219 |
| Margin | .061 | .024 | .212 | .311 | .18 |
The GasMan -