Tax falls but gas prices still rise

Published 6:08 pm Saturday, July 13, 2013

Virginians hoping to see a drop in gas prices corresponding to the elimination of the state’s retail gas tax have been disappointed so far.

Gov. Bob McDonnell proposed eliminating the 17.5-cent per gallon gas tax as part of a transportation-funding package that hiked the sales tax and placed a wholesale tax on gasoline. The changes went into effect July 1.

In June, AAA Tidewater Virginia predicted retail gas prices would drop by about six cents per gallon, though it acknowledged the change wouldn’t be noticeable immediately.


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“Over time, Virginia’s historic elimination of the retail gas tax should leave consumers just shy of a dollar more in their pocket with each fill up,” said Georjeane Blumling, vice president of public affairs for AAA Tidewater Virginia.

But nearly two weeks after the change, prices are going up rather than down.

On Friday, listed the average price of regular-grade gasoline in Suffolk at $3.41. That’s higher than the average price a month ago, $3.38, or a year ago, $3.27.

Patrick DeHaan, senior petroleum analyst at, said a number of factors currently are pushing gas prices higher and disguising the loss of the retail tax.

“It’s real likely that prices will go up nationally, by 10 to 20 cents a gallon,” DeHaan said. “A lot of it’s going to be fueled by a rise in oil prices that has already taken place.”

In addition, DeHaan said, prices are “being pushed up by the situation in Egypt, as well as fear over the situation in Egypt, and declining crude oil inventories here in the United States.”

Unrest in Egypt began two weeks ago, when protestors overthrew President Mohammed Morsi, whose supporters fatally clashed with law enforcement during mass protests.

Even with gas prices rising, Virginia remains one of the cheapest states in which to fill up. Even before July 1, Virginia boasted the seventh-lowest average price in the country.

AAA estimates Virginia motorists still will pay about 11.7 cents in taxes and fees per gallon.