Thursday, July 1, 2004

Higher gasoline tax kicks in today

2 cents more for record number of July Fourth drivers

By Justin Fenton
Enquirer staff writer

Ohio drivers hitting the road for the Fourth of July weekend will see a 2-cents-a-gallon gasoline tax increase today, the second part of a multiyear plan to pump millions of dollars into road construction projects.

Across the river, a 1-cent increase in Kentucky based on the price of wholesale gasoline prices also will go into effect.

Although the price increases might be considered minimal, they come just before a record number of motorists are set to hit the road. An estimated 39.4 million Americans will travel 50 miles or more from home this holiday, according to AAA. That's a 3.4 percent increase over last year's Fourth of July traffic.

Average gasoline prices were $1.72 in Cincinnati and $1.79 in Kentucky Wednesday, up from last week and last year, and well below the national average of $1.89.

July Fourth in 2000 - when prices were at their previous highest point for the holiday - gas was $1.68 in Cincinnati and $1.78 in Kentucky.

Ohio lawmakers approved a 6-cent increase last year to be spread over three years. The increase is expected to bring in an additional $120 million for use on highway construction projects.

The Kentucky increase kicked in because of a clause in a 1980 law that allows the tax to be raised if the average wholesale statewide price for a gallon of regular unleaded exceeds $1.11 for the first month of any quarter.

The price for wholesale reached $1.27 in April.

Tom Kloza, publisher of Oil Price Information Service, an independent newsletter that covers the petroleum industry, said the Kentucky increase is likely to stick beyond the third quarter.

"I would predict that penny will stay in place, and it may be more routine to see that in place," he said. "We might have a chance to get down to $1.10, $1.15 for wholesale by the end of the third quarter, but not until then."

Kloza also said refineries have so far escaped problems that caused prices to soar in recent years.

"This has been a remarkably quiet spring and summer for refineries. The margin of error is so faint," he said. "So if you see footage of a refinery fire on CNN, and it happens during the summer - look out."

Staff writer James Pilcher contributed.


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