BANGOR, Maine — Tumbling gas prices mean that delighted drivers in Maine are paying an average price of $1.74 a gallon — but that’s still a dime more than the price in neighboring New Hampshire, and almost a quarter more than in New Jersey, according to the American Automobile Association’s latest figures.
With prices nationwide ranging from $1.49 a gallon in Montana and South Carolina to $2.52 a gallon in Alaska, the discrepancy in Maine can be explained in part by transportation costs, but mainly by state-added fuel taxes, officials say.
In Maine, transportation costs for fuel tend to be higher than in many other places, in part because there are no refineries in the state, said Jamie Py, president of the Maine Oil Dealers Association. The fuel must be trucked in, adding costs.
Moreover, “Maine’s gas tax is 10 cents a gallon higher than in New Hampshire,” Py said last week. “If you compare the prices regionally, that leads us to perhaps what could be the problem in Maine, and that is taxes.”
According to the American Petroleum Institute, an oil and natural gas trade association, Maine’s gasoline tax of 47.5 cents a gallon ranks as the nation’s 16th-highest fuel tax. California’s 63.9 cents a gallon gasoline tax is the highest in the country. Alaska, which levies a tax of 26.4 cents a gallon, is the lowest.
The numbers include state and federal excise taxes and other taxes.
Most of Maine’s fuel tax generates revenue for the state highway fund. For the 2008 fiscal year, the gasoline tax raised $184 million and the diesel tax raised $46 million, according to Peter Beaulieu, director of the sales, fuel and special tax division of the Maine Revenue Service.
A small portion of the excise tax on fuel revenue generates money for the Coastal, Inland and Water Fund and the Groundwater Fund, but the vast majority is spent to maintain the state’s roads and bridges, said a Maine Department of Transportation spokesperson.
“About 67 percent of the Highway Fund revenues are derived from the gasoline and diesel fuel tax,” said Herb Thompson, director of the DOT’s Office of Communications.
Fuel tax revenues have been declining for more than a year now, he said, because they are tied to consumption — not to the price of fuel.
Maine’s motor fuel tax is adjusted every year according to the consumer price index.
“Nationwide, for many, many years, motor fuel consumption didn’t go down. It continued to gradually rise. Obviously, in the past year, the cost of fuel finally began to have an impact on purchasing,” Thompson said.
According to the most recent figures available from the state, the fuel taxes collected increased by 0.2 percent in October from the same month in 2007, but the fiscal year-to-date taxes were 2.3 percent less than in 2007.
The downward trend for the fuel tax means more challenges ahead for the state agency, which also must meet Gov. John Baldacci’s target of a 10 percent reduction in base spending.