Blame taxman, not Saddam, for next gas price increases

November 29, 1990|By Liz Atwood | Liz Atwood,Evening Sun Staff Knight-Ridder contributed to this article.

Motorists who already are seeing red over rising prices at the gas pump should get ready for another surge of adrenalin.

Prices could rise by as much as a nickel a gallon when the federal gasoline tax goes into effect Saturday.

Although the price markup might elicit a few curses, it probably won't stop customers from buying, predicted William Zorzi, vice president of public affairs with the Maryland Division of AAA Mid-Atlantic.

"We've had a 30-cent increase," said the spokesman for the automobile association. "I don't think 5 cents will cause any more effect."

Gas prices have risen dramatically since Iraq invaded Kuwait on Aug. 2, threatening Middle East oil supplies.

The 5-cent increase in the gasoline tax, approved by Congress late last month, will raise the federal levy on gasoline to 14 cents a gallon. Revenues from the tax will be split between the Federal Highway Trust Fund and the U.S. general fund, where the money will help finance the budget deficit.

The average price of regular unleaded gasoline at a self-serve pump could climb to around $1.45 a gallon in Maryland. Average premium gas prices could hit $1.60, according to AAA.

Roy Littlefield, executive director of the Maryland Service Station Association, said motorists shouldn't expect much relief from the gas stations.

In the past, he said, dealers often have absorbed some of the tax increases themselves, but this time most of the federal tax increase might be passed on to the customer.

"Dealers really are having a tough time," Littlefield said. "It's going to be hard . . . to eat a lot of it [the tax increase]."

Although prices have climbed, profit margins have dropped, Littlefield said. In addition, customers are turning away from premium gasolines to lower grades, which produce smaller profits for the service stations.

"It's hard to say how much of the tax rise will show up at the pump," said national AAA spokesman Geoff Sundstrom. "It could be the entire 5 cents, or it could be just part of it."

The federal tax could be just the beginning of gas taxes for Maryland motorists.

The state gasoline tax already is 18.5 cents a gallon. But, with the state facing a budget deficit and cost overruns on the Baltimore light-rail project, Maryland legislators are considering a gas tax increase to raise additional revenue next year.

Zorzi said the AAA is opposed to increasing the state tax for those purposes, but said the association might be willing to go along with a 5- to 10-cent tax increase to raise money for roads and bridge repairs.

Depending on what happens in the Middle East, motorists could be facing $2-a-gallon gasoline in the near future, Zorzi said.

Although some motorists are following gas-saving tips such as keeping their tires properly inflated, they aren't so pressed that they are using public transportation or forming car pools, Zorzi said. Thanksgiving traffic showed no decline, he said.

One factor might be a recent decline in gas prices, which reflect volatile crude oil prices.

Since Nov. 12, gasoline prices nationwide have declined an average of about 3 cents a gallon -- from $1.385 to $1.359, the AAA said Tuesday.

Pump prices are up an average 0.7 cent a gallon this week over last, the AAA said in its weekly price report. The cost of a gallon of self-serve regular unleaded rose to $1.366 -- 29.1 cents more than on Aug. 1, the day before Iraq invaded Kuwait and triggered the price explosion.

Premium unleaded also rose 0.7 cent to an average of $1.537 a gallon; the middle grade of unleaded climbed 0.8 cent to $1.453 a gallon.

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