Local News

State Tax Partial Reason N.C. Gas Prices Among Highest In U.S.

Posted October 3, 2005 7:05 a.m. EDT

— Just when you thought you had heard all the bad news from the gas pump, there is more to put in your tank.

According to AAA

, the average price per gallon in North Carolina is $3.07 -- the highest-ranked state in the continental United States. The District of Columbia and Hawaii have higher gas prices than North Carolina, at $3.14 and $3.24 respectively.

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  • "That is surprising," said driver Matthew Carter. "Hawaii is an island, so, obviously they'd have high gas prices, but I'm not sure why we have such high gas prices."

    Carter is not alone in wondering why the cost of gas is so high in the Tar Heel state.

    Something motorists may not think about when paying for gas is the state's gas tax. North Carolina has the fifth-highest gas tax in the nation and the highest in the South. For example, Virginia's gas tax is 17 cents per gallon and South Carolina's is 16 cents per gallon, while North Carolina motorists pay 27 cents per gallon.

    About 17.5 cents of the 27 cent tax is a flat rate. There is also a variable rate that increases when the price of gas increases. It changes every six months, based on the price of gas during that period. That is why the gas tax could jump between 2 and 5 cents Jan. 1.

    Then, retailers add their costs.

    Factor in that North Carolina gets about 90 percent of its gas supply from the hurricane-ravaged Gulf, which usually produces 1.5 million barrels of crude oil each day. Recovery in the region remains slow, with 98 percent of the area's crude production still shut in and natural gas output down 79 percent, the U.S. Minerals Management Service said.

    With gas prices so high, the

    North Carolina Petroleum Marketers Association

    wants a cap on the gas tax for about a year while wholesale prices get back under control.

    Gov. Mike Easley, however, says the state would lose too much revenue, even with a temporary freeze.

    Around the state, buying gas in Asheville could hurt the most with a gallon of regular unleaded averaging $3,19. That same gasoline is about $3.09 in Charlotte and about $3.02 in Fayetteville. WRAL found most stations in the Triangle had gas prices above $3, and there were some stations charging $3.58 for a gallon of regular unleaded.

    Repeated consumer studies show American drivers are the least sensitive to gas prices. One predicts if gas prices hit $4 a gallon and stayed there for a year, gas purchases in the U.S. would only fall 5 percent.