Maryland’s new gas tax goes into effect today, potentially breaking a nearly 100-day streak of an uninterrupted downward trending of gas prices.
Despite the 3-cent per gallon increase in taxes, motorists can expect to continue to experience gas prices at the lowest they’ve been in more than five years.
Ragina Cooper Averella, spokeswoman with AAA Mid-Atlantic, said gas prices have been consistently low over the past several months, and the tax will hardly be felt by most motorists. As of Tuesday, the average price in Maryland was $2.45 per gallon, down a full dollar from compared to the same time last year.
Though the addition of the gas tax is expected to end the downward streak this week, Averella said gas prices are predicted to continue falling in the new year.
“There’s a few factors involved, including sluggish global oil demand and abundant supply,” Averella said. “We’ve seen increases in domestic oil production, and all of these combine to forecasted low prices in 2015.”
The increase in gas tax is taking effect as part of the Transportation Infrastructure Investment Act of 2013, which passed the Maryland General Assembly in March of last year. The act, which first raised the gas tax by 3-1/2 cents to 27 cents per gallon in July 2013, established a series of increases over a four-year period. The rate is scheduled increase again July 1, 2015, Jan. 1 in 2016 and July 1 in 2016.
The tax increase anticipated bringing in an additional $830 million per year in order to support a variety of transportation initiatives, including the Montgomery County Purple Line Light Rail and the Corridor Cities Transitway rapid bus line. Rural highway projects also are slated for extra funding.
The tax increase adding 3 cents to each gallon, constitutes less than half of what gas prices fell by in the past week. Kevin McIntyre, economics professor at McDaniel College, said despite the overall cheapness of gas, the public tends to notice increases in price, particularly if tied to taxation.
“I’ve got the strong sense the general public is much more sensitive to the increase of gas prices than to the decreases,” McIntyre said. “Gas prices are definitely going to be lower than they were this time last year, but people will probably still take note [of the slight increase].”
Averella said despite the slight increase, gas prices are still expected to stay much lower throughout 2015 than Carroll drivers are used to.
“We do typically see an increase in the spring, when the refineries switch from winter fuel to the cleaner burning spring fuels, which is an EPA mandate,” Averella said. “Despite that, barring any disruptions, we should expect to see prices continue to drop for a few months.”
McIntyre said he doesn’t see the increase affecting people’s budgets, though gas prices are often one of the more visible forms of price inflation and deflation.
“I would say gas prices have a medium effect on people’s pockets as far as a factor,” McIntyre said. “I don’t see gas prices being as big of a deal today as they were in the past in terms of impact, but it’s certainly out there. Gas prices wouldn’t be as talked about as often as they are if they weren’t.”
By the numbers
According to the Federal Highway Administration, the average driver travels 13,476 miles in a year. Driving a new car, with the average fuel economy of 24 miles per gallon, the 3 cent gas tax increase will cost drivers $16.85 annually.
This article was written by JACOB deNOBEL from Carroll County Times, Westminster, Md. and was legally licensed through the NewsCred publisher network.