Last week I mentioned NC's January 1 "largest gas tax increase in 16 years" here and here. If you read those posts you know that I don't think the increase is such a big deal. Typical drivers will pay $15 more each year into a NC Department of Transportation highway fund. Absent graft, corruption and incompetence, these funds will improve the NC highway system (a public good: who'll maintain the roads of the state doesn't do it?).
The hearings in our state capital sound juicy (Tax Jump at Pump Sized Up):
On Thursday, a special legislative panel, called the Joint Select Committee on Energy and Fuel Costs, attempted to respond to questions like those. The committee was created last week after constituents complained to their representatives about the state's largest gas tax increase in 16 years.
For five hours, legislators on the panel heard from experts representing the oil industry, the state Department of Transportation, small businesses and home heating programs for the poor.
...
At times, the committee meeting resembled the congressional hearings held last fall in Washington, D.C., with oil industry representatives explaining why their recent profits were not unreasonable.
Some comments to the first post from North Carolinians seem to confuse the small gas tax that hit January 1, 2006 with the increase with higher gas prices that are a result of global demand and supply conditions:
Like many motorists in North Carolina, Wanda Washington of Butner wants to know why the price of gasoline jumped 15 cents at her local service station on Dec. 30.
Did the increase have anything to do with the 2.8 cent per gallon hike in the state's fuel tax rate? Were oil companies simply taking advantage of that rate hike to make a quick buck?
...
Gary Harris, executive vice president of the N.C. Petroleum Marketers Association, said ... the international crude oil market dictates much of the price consumers pay. The price of crude is driven largely by speculation, he said.
...
That answer is likely to be a tough sell with Wanda Washington.
"I don't understand," said Washington in an interview after Thursday's meeting. "I know the oil companies are up to something."
I think that sums up a big part of the problem. Consumers might buy into the idea that demand and supply sets gas prices if they had more trust in the "big business" oil companies.
Also, note that Wanda's $00.15/gal price increase occured on Dec 30. Unless consumers rushed out to stock up on gas in advance of the tax increase, increasing demand and price (as I joked here), the $00.028/gal price increase on Jan 1 had nothing to do with it. What is more likely, if gas stations were raising prices above cost in order to increase profits, is that they raised prices to take advantage of any new year weekend holiday travel.
