Last month, the State of California added another 12 cents tax to a gallon of gasoline at the pump and about 20 cents to a gallon of diesel.
As expected, the price of fuel at the pump spiked soon after the tax increase went into effect statewide. But Friday, a month later, the price of a gallon of gas here in the North State has dropped between three and seven cents despite the added tax.
According to AAA, the price of a gallon of gas in the Chico-Paradise area stood at an average of $2.96 a gallon on Nov. 1, right when the gas tax took effect. This Friday, 30 days later, the average price is now three cents lower to about $2.93. In Redding, the price for a gallon of gas has dropped about seven cents to an average of $3.21 a gallon since Nov. 1.
The new gas tax, approved by the legislature and signed by the governor in April, expects to raise roughly $5.4 billion annually over the next decade. About half of the money is expected go to the state to improve highways, bridges and culverts. The other half will go to cities, counties and transit agencies for local street and road repairs, and improving public transit options.
Incidentally, the tax has plenty opposition, especially from Republicans who have started trying to collect enough signatures so voters can decide whether to repeal the tax in November.
But why the price drop when taxes on a gallon of gas increased by 12 cents for unleaded and 20 cents for diesel just a month ago? Seasonal market forces, according to one North State fuel distributor.
Bud Caldwell of Northgate Petroleum Company, said gasoline prices typically drop between 18 to 22 cents a gallon during this time of year. But, in his opinion, it was no mistake as to the timing of the increase by state officials.
He and other distributors believe that the tax increase went into effect Nov. 1 to allow the seasonal market price per gallon drop take a bit of the sting out of Nov. 1 increase for customers.
“The governor knew full well what he was doing when he made this effective in the fall," Caldwell said.
He warned, however, that drivers will eventually feel the sting of the tax increase in a big way next summer.
“Just wait until June,” Caldwell said.