Uncertainty at the pump
Uncertainty at the pump

Fear of a Spike in Gas Prices Is Overblown, Experts Say

Many motorists are looking at California's gas tax as financial armageddon on the highway. But experts say that when you fuel up this week, it might not be so bad after all.

Yes, an extra 12 cents per gallon is a lot. But here's the deal, according to Auto Club of Southern California spokeswoman Marie Montgomery: The extra tax, effective today, could be offset by California-mandated winter-blend gas, which also comes online today.

Winter-blend gas has been calculated, in fact, to be as much as 12 cents per gallon cheaper than the more additive-intensive summer blend it replaces, and lawmakers intended the Nov. 1 tax hike to coincide with winter blend's required debut, she said. The summer and winter fuels are formulated to reduce pollution.

Montgomery says the pump price for winter blend is more like 6 cents cheaper these days — but that it will still lessen the blow. "It's not quite a 100 percent offset," she says, "but we don't think there's going to be a drastic increase."

She says prices could have fallen but have been holding steady in the last few weeks — the average is $3.06 per gallon in Los Angeles and Long Beach, according to the AAA — in anticipation of buffering the tax. "Maybe there was anticipation there," Montgomery says.

In the past, tax hikes have not all been dumped on consumers in a single day, she adds. "We're not expecting too many stations to post 6- or even 12-cent prices increases," Montgomery says. "It would appear this isn't going to drastically impact prices."

Ryan Hanretty, executive director of the California Independent Oil Marketers Association, agreed. "You're probably not going to see all 12 cents at the pump in one day."

The gas tax was enacted as part of an effort to patch up the state's ailing roads. It will raise $5 billion a year for road maintenance funding. Sen. Jim Beall, the San Jose Democrat who authored the gas tax legislation, said in a statement that it "serves to maintain and preserve California’s road and highway system for generations to come."

Not everyone is convinced that impacts on motorists' pocketbooks will be minimal this week, however. Patrick DeHaan, head of petroleum analysis for pump price comparison site GasBuddy.com, says that with production being pinched by the Organization of the Petroleum Exporting Countries (OPEC) in order to shore up wholesale prices, and with some California refineries facing annual maintenance that could cut local supplies, the only direction for prices appears to be up.

"Not only are stations faced with higher taxes from the state but they're also contending with higher wholesale prices," he says. "This could turn into a double whammy at the pump."

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