| Will gas prices eclipse the record high? |
| Feb-20-2013 |
| Keywords: gas prices, aaa, summer blend, crude inventory, taxes |
Everyone's seeming asking the same question: What's up with the recent surge in gasoline prices?
Prices as of Wednesday have risen 33 straight days, with the nationwide average price for a gallon of regular unleaded gasoline now at $3.77, according to AAA.
Traditionally gas prices begin rising from February through Memorial Day on expectations of rising consumption and costlier summer-blend gas.
But this year's increases began a lot earlier, and are on a ferocious pace, up 45 cents in the past month, and 20 cents higher than a year ago.
But as Fox Business Network's Elizabeth McDonald found, it's not just the speculators or the transition to summer blends, taxes are also raising prices at the pump.
"U.S. crude oil inventories typically decline during December as oil companies try to reduce the tax they must pay on the value of their oil holdings," EIA spokesman told Fox Business.
December 31 is the day states like Louisiana and Texas, where huge volumes of crude oil are stored, slap state taxes on crude oil stocks. The lower the inventory, the lower the tax bill for oil companies.
"These taxes," the EIA says, "create an incentive to draw down crude stocks in the region at the end of the year in order to reduce the tax bill. If oil prices have risen during the year, this accounting practice gives companies stronger incentive to reduce inventory because doing so will further limit their tax exposure," the EIA says.
The EIA adds: "Although large crude oil draws can be an indication of demand outpacing supply, the December phenomenon typically does not reflect tightening of the oil market, but rather how companies in the region are taxed on crude stocks." It says it believes the markets take this tax move into account.
But those tax moves can only work for so long. States are pushing to raise gas taxes more than ever, to fill balance sheet holes blown open by things like government benefits.
Differences in state taxes help cause huge swings in gas prices, ranging from a low of $3.19 a gallon in Wyoming and Montana, to $4.17 in California and $4.28 in Hawaii, says AAA. New York taxes are about 49 cents, the highest in the nation, but the price per gallon is on average $3.99, AAA says.
Read more about how taxes are impacting gasoline prices on FoxBusiness.com |
|
|
Posted by Lou Dobbs Staff at 2:00 PM Email to a friend |
| < Back to Today's Issues |
|
 |
|
|
|
|
|
