Gasoline prices have become a big policy issue, especially during this election year.
And justifiably so. After all, contrary to the declarations of President Obama, policy does in fact affect the price of oil and prices at the pump. That includes policies that prohibit oil exploration and development both offshore and onshore, along with regulations that seek to raise the costs of carbon-based energy.
And then there are taxes. At the federal level, for example, Mr. Obama has been pushing a package of tax increases on energy firms that would accomplish nothing more than reducing resources available for investment and production by such firms, and ultimately raise costs for consumers, including small businesses.
A survey done by TechnoMetrica for the Small Business & Entrepreneurship Council released in mid-March made clear how small firms are impacted by higher gas prices:
• 72 percent of respondents say that higher gas prices are impacting their business.
• 41 percent of small business owners said higher prices were affecting their plans to hire.
• 22 percent of small business owners have cut back on employee hours.
• 40 percent of small business owners have raised their prices.
• 43 percent of respondents agreed with the following statement: “My business will not survive if energy prices continue to remain high or increase further.” (23 percent strongly agreed with the statement.)
Nonetheless, in late March, U.S. Senator Robert Menendez (D-NJ) put forth the President’s tax increases, coupled with subsidies for politically preferred, but noneconomic energy sources. Fortunately, that measure failed in the Senate.
Of course, though, states weigh in with their own taxes that impact the costs of gas and diesel for individuals, families and businesses. While various factors come into play in terms of the different prices paid at the pump from state to state, taxes certainly matter.
Gasoline and diesel taxes, therefore, are included in SBE Council’s “Business Tax Index 2012,” which ranks the 50 states and District of Columbia according to how burdensome their tax systems are on entrepreneurship and small business.
The following shows how the states ranked on gasoline taxes (in dollars per gallon):
|21t||Dist. of Columbia||0.235|
So, consider the price differences of a gallon of gasoline between two neighboring states: New Jersey and New York. According to GasBuddy.com (accessed on April 18), the average price for a gallon of gasoline in New Jersey stood at $3.773. Meanwhile, right next door in New York, the average price was $4.127.
That’s a price difference of $0.354.
The per gallon tax in New York, as noted above, was $0.49 (highest among the states), while in New Jersey, it was $0.145 (third lowest levy).
That’s a difference of $0.345 per gallon in taxes.
Like I said, taxes matter when it comes to prices paid at the pump.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is “Chuck” vs. the Business World: Business Tips on TV.