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Fuel tax increase might not bring corresponding rise in gasoline prices

Oct 19, 2012 - MCT

CHEYENNE -- A proposal to raise the state's fuel tax may not mean motorists will pay more at the pump.

So say some legislators and advocates of the plan to hike the state's gasoline and diesel taxes each by 10 cents a gallon. They add that the proposal likely will have a "negligible impact" on residents.

Rep. Michael Madden, R-Buffalo, is a member of the Legislature's Joint Revenue Interim Committee. He says this is because gas suppliers first pay the tax, and they might not pass the extra costs on to retailers or consumers.

Madden presented his argument during the Wyoming Tax Association's annual meeting on Tuesday. He pointed to the fact that the this state typically has retail gas prices near its neighbors even though its fuel tax is by far the lowest in the region.

He said because of the complex market dynamics involved in setting prices for fuel, higher taxes do not always mean higher prices at the pump.

"When we talk about the market for fuel being in a regional context, it is way too naive to think this 10-cent variation is going to be passed to the consumer," Madden said.

He also said he doubts gasoline prices would drop 14 cents if the state did away with its entire 14-cent fuel tax.

Erin Taylor, executive director of the Wyoming Taxpayers Association agreed.

She pointed to data from gasbuddy.com, a website that tracks gas prices throughout the country. She said it shows the tax increase would not necessarily mean higher prices.

The site showed that in the last three months, Montana n which has the region's highest fuels tax at 27.75 cents a gallon n does not always have the highest retail prices.

Wyoming also sometimes has higher retail prices than Colorado despite having a tax that is eight cents per gallon lower.

"If you look at the charts, the prices are all over the place," Taylor said. "So there is no direct correlation between the price at the pump and what you pay for a gasoline tax."

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