Revenue Secretary David Hoyle said last month the state motor fuels tax would grow by 3.9 cents per gallon to 38.9 cents starting Sunday. That's the highest-ever state tax on gas. The tax rose by 2.5 cents per gallon in July.
State law directs the tax be recalculated automatically twice a year based on a formula linked to wholesale gas prices.
The North Carolina House voted in November to cap the tax at 35 cents for six months, but the Senate declined to take up the bill, saying it wasn't the right time to consider the change.
Nothing says Happy New Year like a natural experiment on the price elasticity of demand at the state level. My prediction: Gas consumption by NC residents will change very little. Gas stations in North Carolina along I-95 near the South Carolina and Virginia borders will see significant decreases in sales. Pedro at South of the Border will see an increase in visitors who choose to stop for gas in South Carolina rather than North Carolina.