State, county gas tax cuts not fully showing up at pumps

The state's and Suffolk and Nassau counties’ fuel tax rollbacks that went into effect Wednesday total about 25 cents off each gallon of gasoline sold, but the cost cuts are not being reflected at the pumps — at least not yet.

The average per-gallon price of regular gas on Long Island between Wednesday and Friday fell only about 11 cents to $4.850, which was 58.4% higher than the price a year earlier, $3.062, according to AAA. The average price Tuesday was $4.9442.

Price records were broken several times in recent weeks, with Long Island's current record high, $4.974 per gallon of regular gas, having been set May 23.

There are a few possible culprits for the small price decrease, fuel experts said.

For one thing, gasoline futures are at all-time highs and wholesale prices are quickly approaching record levels, said Denton Cinquegrana, chief oil analyst at the Oil Price Information Service in Rockville, Maryland.

“This has been happening the past couple of days and can largely explain why there was not a 1-for-1 decline in retail prices,” he said.

As of Friday afternoon, the contract average price for wholesale regular gas on Long Island was $4.176 per gallon, up 35 cents from a week earlier, he said.

Also, it may take time for gas stations to pass on the tax reductions to customers, depending on how the laws were written, said Patrick De Haan, head of petroleum analysis at GasBuddy, a Boston-based technology company that provides fuel price data. 

“Stations may have paid tax already" — on inventory purchased before tax reductions took effect — "and [are] reluctant to drop the price until they buy the tax-reduced fuel,” he said.

 But gas stations shouldn't be using their pre-paid fuel taxes as a reason to delay price cuts for consumers, said Jason Gough, spokesman for economic development in Gov. Kathy Hochul's office. The stations can claim refunds or credits from the state Department of Taxation and Finance for taxes they already paid on fuel held in their inventory before Wednesday,  Gough said. 

The state’s motor fuels tax was rolled back under a "tax holiday" that started Wednesday and will run through December, as part of efforts to offset high gas prices.

The reduction took off 16 cents (8 cents of excise tax and 8 cents of sales tax) of the 33.35 cents of state fuel tax per gallon. Also, there is an additional three-fourths of a cent of state sales tax suspension in the Metropolitan Commuter Transportation District, which covers New York City, Long Island and five other counties in the metro area, Gough said.

Also taking effect Wednesday were Nassau and Suffolk counties’ partial caps on fuel taxes, with the first $3 per gallon of gas being taxed at the 4.25% county sales tax rate, while the remaining amount will not be taxed.

Estimated savings

Nassau County estimates that the county tax cut will save the average consumer about 9 cents per gallon, based on a gallon of regular gas being priced at about $5. 

Twenty-four of the state's 62 counties enacted partial gas tax caps — on $2, $3 or $4 per gallon — that went into effect Wednesday and will expire between September and March, Gough said. (Seneca County has had a partial gas tax cap since 2006.)

Nassau County’s tax cap will expire Dec. 31, while Suffolk County’s will expire Dec. 1.

The fuel tax cuts were a good idea, but the counties’ rollback amounts should have been applied equally across the board, said Wayne Bombardiere, executive director of the New York State Association of Service Stations and Repair Shops, an Albany-based trade group with 3,000 members.

Some gas stations’ fuel prices have not been lowered by an amount equal to the government tax rollbacks, but the association can’t determine if the stations’ costs increased or if they just didn’t pass along the full tax breaks, he said.

“The government can’t regulate how much the oil company charges the distributor or the dealer … and they can’t regulate how much the business owner makes in his business,” he said.

Hochul worked with the State Legislature to ensure all the savings from the state gas tax holiday are passed directly to consumers, Gough said.

“At her direction, the Department of Taxation and Finance has instructed all gas stations of their legal requirement to suspend 16 cents of the gas tax beginning on June 1, as well as their requirement to abide by additional sales tax suspensions imposed by certain counties,” he said.

Consumers can report complaints about noncompliant businesses to the Department of Taxation and Finance, the Department of State Division of Consumer Protection, or the Attorney General’s Office, he said. In counties that have passed fuel tax caps, complaints may be reported to offices in those jurisdictions, Gough said.

Consumers with complaints in Nassau County may contact the Department of Consumer Affairs, the county said.

Consumers in Suffolk County with complaints may call Suffolk 311, spokeswoman Nicole Russo said.

The Suffolk County Department of Labor has conducted outreach to the Long Island Gasoline Retailers Association and individual stations to notify them about the county’s gas tax cap, Russo said.

Staff from Nassau and Suffolk counties’ Weights and Measures departments began visiting gas stations Thursday to survey prices, county representatives said.

By Tory N. Parrish

tory.parrish@newsday.comToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.