Will gas prices plummet now, as part of transportation bill?

Posted at 6:40 PM, Jul 01, 2013
and last updated 2013-07-01 19:27:36-04

RICHMOND, VA (WTVR) -- It was a key component of the General Assembly's historic transportation bill past last winter: raise the state sales tax, but lower the state gas tax.

July 1st those changes took effect in Virginia.

The flat 17.5 cent per gallon of gas tax has been replaced by a tax at the wholesale level of 3.5%. Experts say that should lower the price of gas about six cents per gallon.

So why wasn't there a dramatic decrease in the price of gas Monday?

Officials say that's because the gas currently being sold at the pump was sold before midnight on July 1 and that gas is being sold under the old tax system.

"That's going to take some time to get sold through the system," Michael O'Connor, President of the Virginia Petroleum, Convenience, and Grocery Association said.

"Interstate locations might be a day or two or three, rural locations could be longer," O'Connor added.

That means, purchasing gasoline could vary greatly from one station to another in the next few days - even ones right across the street from one another.

Some critics however say the price of gas may not trickle as low as government officials believe.

Under the old tax system,regardless of the cost of  gas, the tax was a flat 17.5 cent per gallon. Now, it will be calculated every six months. The new 3.5 percent wholesale tax will fluctuate depending on price.

So when gas is high, taxes will be higher. When prices are low, taxes will be lower, but never as low as 11.5 cents per gallon according to the law.

"If the price of gas goes up over the next six months, the tax will go up," O'Connor said.

Additionally, where you buy gas in Virginia will matter as well. Hampton Roads and Northern Virginia gasoline will have more taxes than gasoline sold in Central Virginia.

So if you drive to the beach or to D.C., be sure to fill up in Central Virginia before you go.