Gas Tax Guessing Game

By Tony Romeo

HARRISBURG, Pa. (CBS) - Governor Corbett has proposed a significant increase in wholesale gas taxes to raise new money for transportation. But, how much of that increase would show up at the pump is hard to say.

Governor Corbett is proposing a small decrease – 2 cents per gallon -- in gas taxes at the retail level but a much larger increase at the wholesale level. Robert Latham of the Pennsylvania Highway Information Association says his group estimates that if approved and fully phased-in after five years, the tax on wholesale gas would increase 25 to 28 cents per gallon at today's prices.

A cynic would say the entire increase will be passed on to motorists. "A cynic would say that but they would be incorrect, yes," Latham says.

Latham believes that in the long term, competitive market forces will prevent most if not all of that wholesale tax hike from being passed on to consumers. For example, "Demand by customers – as we get more fuel efficient cars, I think you're going to see fuel prices at the retail level go down."

Meanwhile, John Kulik of the Pennsylvania Petroleum Association believes that, while not all of the wholesale gas tax hike would be passed on, some would. "Either extreme is not accurate at this point."

But, Kulik believes competitive market forces will mitigate the effect on consumers, "Particularly in the southeast Pennsylvania area and southwest Pennsylvania. [The] Pittsburgh area is actually one of the most competitive gasoline markets in the country."

But ultimately how much may be passed on Kulik cannot guess.