Ga$ Price$

The average cost of a gallon of gasoline has passed US$2. This reminds me of a statistic I once included in a client report. (Disclaimer: I have done work for several multinational energy companies.) I've updated the current per-gallon price, but the tax rates could have changed since last year.

Price per gallon at the pump (as of 3/22/05)
Regular: $2.095
Mid: $2.224
Premium: $2.305

Federal gasoline tax: $0.184 per gallon
Average state excise tax: $0.184 per gallon
Other state taxes: $0.072 per gallon
Total average tax: $0.44 per gallon
Product price (no taxes): $1.655 per gallon

In short, 21 percent of the cost of a gallon of gasoline comes from taxes. In 17 states, the number is higher. New York state leads the way at 58 cents in tax. Hawaii is second with 57.2, and California comes in third at 56.6. The bottom three are: Alaska (26.4), Wyoming (32.4) and New Jersey (32.9).

It would be interesting in the future to compare these tax rates with those of cigarettes. I do not hesitate, however, to assume that cigarette and gas taxes everywhere are incredibly out of proportion with other "use" taxes. Yet state and federal governments spend an incredible amount of money (through grants and agency funding) to encourage Americans to conserve fuel and not to smoke.

But with these tax rates, what would the tax coffers look like tomorrow if every American commuter started riding a bike and every smoker quit the Marlboros? In reality, governments have no real interest in drying up this revenue source. They can say, for example, that they would save health-care costs by cutting back the number of smokers. But does anyone believe you can wean the giant public health-care hogs off the teat they have become so accustomed to sucking? The minute you take one dollar away, they will scream bloody murder.

So be a patriot ... fill up that SUV and fire up another smoke. Our government is depending on it!