| As I sit here writing this, I can't help but be amazed that New Jersey's average price of $3.434 a gallon for regular unleaded gasoline is anywhere close to cheap. Considering I spent a tad over $44 yesterday to fill my tank, it sure doesn't feel cheap. But looking at AAA's fuel price reports we are actually second only to Wyoming for the cheapest price in the country (by two cents a gallon).
But, of all places, why would New Jersey rank among the lowest prices for gasoline? Consider our neighbors: New York-$3.751; Pennsylvania-$3.608; Delaware-$3.554. There is 12 cents difference with Delaware, 17 cents difference with Pa, and 31 cents difference with New York. It seems like a lot for those of us who grew up with sub-dollar-per-gallon prices, but in reality, it's only a range of 3% to 9% higher than what we pay in Jersey. If you're like me, though, you'd rather have that 3-9 percent in your pocket than in theirs.
But still, what accounts for the differences in price? |
The first thing to look at is if we are actually selling the same gasoline.
As you can see, a comparison with Pa and NY is complicated by the fact that different blends of gasoline are used in those states, but both NJ and De use the same blend throughout the state. We use a blend referred to as RFG-North - reformulate gasoline mandated by federal law for use in this area to address our inability to meet federal ozone limits.
Areas of New York and Pennsylvania that are not required to use RFG use conventional gasoline - which is actually cheaper to produce than reformulated. Even though part of western PA uses a RVP blend, the overall effect of using conventional gas throughout the majority of the state should be a lower average gasoline price than what would otherwise be found.
A direct comparison of gasoline taxes shows a fairly direct connection between total state taxes charged per gallon of gas and the difference in prices among our states. New Jersey charges only 14.5 cents per gallon, while Delaware charges 23 cents per gallon, Pennsylvania charges 32.3 cents per gallon, and New York charges 41.2 cents per gallon. Compared to New Jersey, gasoline tax in Delaware costs 8.5 cents more, 17.8 cents more in Pennsylvania, and 26.7 cents more in New York.
Well, that goes a way towards explaining why, even with conventional gasoline being sold in Pa and NY, the overall price of gasoline is higher, not lower, than in New Jersey. If none of the states taxes gasoline, then it would cost $3.294 in New Jersey, $3.324 in Delaware, $3.285 in Pa, and $3.196 in NY. So gasoline prices in Pennsylvania and Jersey are practically the same and, while a dime more expensive than in New York, it is a nickle cheaper than gasoilne in Delaware.
So gasoline, it seems, is not so much cheaper in New Jersey. Constrained by higher prices for the raw product, New Jersey chooses not to impose punative taxes above that. The benefit of having significantly lower prices for gasoline is that New Yorkers, in particular, find it beneficial to purchase their gasoline here - giving New Jersey fourteen and a half cents per gallon while depriving New York of slightly more than forty-one cents (of course, they pay the tolls if they cross on the bridges or tunnels, but that is their consideration).
It also benefits those who are dependent on personal transportation - those who do not live near mass transportation hubs, rural residents and farmers, and those of us who find it impossible to manage our schedules against the various timetables of NJ Transit, PATH, and the amalgamation of private transport companies. In the face of pressures to erase the structural deficit, some see gasoline taxes as a way to "spread the pain". The question is: Spread the pain to whom?
With evidence at hand that our economy is stumbling, now is exactly the wrong time to increase levies that fall disproportionately on the poor and those who barely meet the end of the month with a few dollars left. The power to tax is the power to destroy - and those who live all too close to destruction must be considered before rushing headlong into policies that can have far-reaching effects.
The fact is that gasoline is not cheap in New Jersey. The summer spike in gasoline prices has yet to be felt and we can expect at least another ten to twenty cents per gallon - if not more - will be added to the price because of natural constraints in the market. With strikes in Scotland's refinery, violence continuing in Nigeria, and production in Mexico falling, prices could easily rise two or three times as much as that. The worst action that could be taken - for our economy and for the people of New Jersey - would be a higher gasoline tax. |
