Why New Jersey Gasoline Prices Didn’t Go Down With The Gasoline Tax – And Now They Are Going Up

TRENTON – It wasn’t your imagination. Gasoline prices in New Jersey did not fall when the gasoline tax fell 8.3 cents last Friday.

And if you thought it was disappointing, you won’t like the sequel. Prices have started to rise and a jump of one nickel or more per gallon is expected in the coming days.

This is not a plot to line the pockets of gas stations, insists Sal Risalvato, executive director of the New Jersey Gasoline-Convenience-Automotive Association. He said there were valid reasons why prices will always slowly come down and soaring crude oil prices will now overwhelm the tax cut.

“I will convict anyone in this matter whenever they need to be convicted. I have zero tolerance for dishonesty and cheating and so on, ”Risalvato said. “But, not lowering the price because the gasoline tax went down is not one of those things they did. It is not ethically wrong, morally wrong, legally wrong in any capacity.

The gasoline tax was lowered for fuel delivered from October 1, but Risalvato said stations still had thousands of gallons of inventory in their underground tanks on which they had paid the highest rate.

“They had to buy it with the tax, so they can’t just go out and lower their price because the tax went down because the gas they sell, they paid the tax,” Risalvato said.

The New Jersey statewide average price was unchanged $ 3,226 for the first three days of October, according to data from the American Automobile Association, AAA. It was very different from a year ago, when the tax was increased by 9.3 cents on October 1 and the price at the pump increased by 6 cents in three days.

Tracy Noble, director of public and government affairs for AAA Mid-Atlantic, said the likely causes of the increase are a slight increase in demand and the high price of crude oil.

“Gas prices across New Jersey remain at the highest levels of 2021, despite the recent gasoline tax cut and the seasonal shift to blended fuels for the winter,” Noble said. “We never see prices going down as fast as they are going up, but the fact that they are going up even with the recent gas tax cut is certainly an anomaly.”

But Risalvato said there is an explanation why what goes up quickly goes down slowly.

“The state of New Jersey doesn’t return that tax to them, which is the exact opposite of what they do when the tax goes up,” he said.

When the tax increases, gas stations receive a state income tax return on which they must report the number of gallons they have in their tanks and pay the state the new tax rate on that inventory.

“So they go right away and they increase the price of the pump,” Risalvato said. “In this case, the tax has already been paid. He descended. But, they can’t just go out and lower the price because they already paid it, and the state of New Jersey isn’t returning it to them.

“The state does not return its tax money to anyone. They keep it, ”he said. “So blame the state.”

Trucks delivering 8,800 gallons of gasoline arrive at some gas stations once or twice a day, but other stations can take several days between deliveries. Over time – in theory – this should have caused gas prices to start falling in most places by now or yesterday, Risalvato said.

However, the wholesale price of gas paid by stations is now skyrocketing.

“So you’re actually going to start seeing increases the next day, probably in the 5-cent zone,” Risalvato said. “You wouldn’t have seen the first 8-10 cents because of the tax cut, but now the wholesale price was literally 15 cents a gallon higher at midnight last night than at midnight last Thursday. “

Risalvato said he expected the price to climb 5 or 6 cents a gallon over the next few days to a week.

“Whatever the price at the pump today, whatever the price increases or decreases, it is definitely 8 cents less than it would have been if they hadn’t lowered the tax,” did he declare.

The average price of a gallon of regular unleaded in New Jersey rose by a tenth of a hundred on Monday, another by a tenth on Tuesday and three tenths on Wednesday, to reach $ 3,231, according to AAA. Compared to the Sept. 30 price, that’s half a cent in six days – up from 3.2 cents a gallon nationally, at $ 3.221.

Risalvato said the wholesale price of gasoline had nothing to do with New Jersey’s tax adjustment. This is the price across the country, reflecting the increase in the price of crude oil. The price of a barrel of oil hit a three-year high before plunging on Wednesday.

“Believe me, OPEC didn’t raise prices because New Jersey’s gasoline tax went down,” he said. “… There’s no way the crude oil traders are saying, ‘Oh, we can raise the price of crude by that much because New Jersey cut its gasoline tax by 8 cents.’ I bet you they don’t even know it.

Noble said global economic uncertainty and supply chain issues caused by the COVID-19 pandemic could play a role in keeping crude oil prices high.

Michael Symons is the State House bureau chief for New Jersey 101.5. Contact him at [email protected].

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