BIZMOLOGY — A report issued this week by the US Energy Information Administration (EIA) shows state gas taxes averaged 23.5 cents per gallon (cpg) as of January 1, 2013, down slightly from a year ago. A full list of state rates can be found here, but a sample serves to illustrate the striking variance:
- California (38.2 cpg)
- North Carolina (37.75 cpg)
- Washington (37.62 cpg)
- West Virginia (34.7 cpg)
- Rhode Island (33.12 cpg)
- South Carolina (16.75 cpg)
- Wyoming (14 cpg)
- New Jersey (10.55 cpg)
- Alaska (8 cpg)
- Georgia (8 cpg)
State gas taxes can have a significant impact on local economies, most immediately because they fund major upgrades to roads, bridges, and other infrastructure. That’s work that fuels demand for heavy construction contractors and myriad products and services that support them. But as my colleague Laura Huchzermeyer has noted, not every industry is in favor of state gas tax hikes.
For many industries, state gas tax increases (or any factor that raises overall fuel costs) create both challenges and opportunities. High prices at the pump can stifle tourism activity, but the aforementioned infrastructure investments benefit the industry. High gas prices tend to drive down retail spending and cause consumers to delay major purchases, but they’ve also driven demand for fuel-efficient vehicles, boosting sales for automobile dealers and manufacturers. High gas prices also spur demand for bus transportation services, although those companies may see their operating costs increase with fuel prices.
It should be noted that state taxes are only one of many factors that contribute to regional gas price fluctuations, and on average they only make up about 6 percent of retail gas prices. (Together, state and federal taxes account for about 11 percent of the pump price, a minor contribution compared to crude oil costs.) But seemingly minor factors — individually and collectively — create major opportunities and challenges. Identifying what those factors are, and where they might be felt most acutely, can help you understand any business and its customers.
For more information about industry-specific opportunities, trends, and challenges, as well as regional economic indicators, check out First Research’s Industry Profiles and State and Province Profiles.
Graphic courtesy of the U.S. Energy Information Administration.