My take: Missing out on savings from our low gas tax


Good evening,

As I have noted occasionally,  legislators take pride in  Delaware’s low 23-cent-a-gallon state gas tax.

Thanks to cost of living formulas in other states, the Delaware gas tax is nearly half of the figure motorists pay in Maryland, Pennsylvania, and New Jersey.

The unanswered question is why a  lower tax does not reach the gas pump.

During a trip to South Jersey last week, gas prices often matched the figure across the river in Delaware.


A while back, one of our readers suggested subtracting the state gas tax from the price at the pump to get a truer picture.

With Maryland recently seeing an increase in its gas tax, I thought it would be a good time to run the numbers based on AAA’s weekend average gas price figures.

As noted in the above graphic,  the net price of gas, once the state tax is subtracted in Delaware, is around $3.40  a gallon, the highest around.

It is true gas prices are affected by rural areas not having the same clean fuel requirements that add to the price.  Another factor is the situation with expensive RINS that track the use of ethanol in fuel and make life difficult for smaller refineries.

Still, it remains unclear as to why Delaware businesses and consumers are not playing a nickel or so less at the pump.

Not that you will hear many complaints from the powers that be.

The pressure on the Legislature to increase gas taxes is reduced by motorists in other states fueling up in Delaware and adding to revenues.

Also, DelDOT is good at stretching those tax dollars, even if means some projects take far too long to complete.

Longer term all states are facing a flattening and eventually a sharp reduction in gas tax revenues as vehicles become more fuel efficient.

Electric vehicles that completely avoid gas taxes now account for about 7% of new car sales and is now closer to 10.

Some states are poised to levy a tax on electric vehicles, oil-rich Texas being one example.

A tax based on annual mileage, while the fairest method, remains a non-starter.

As for Delaware, it remains clear that motorists are only getting a few cents a gallon in benefits from a lower gas tax.

We’ll leave the discussion for another day on whether anyone is getting a  piece of the pie somewhere within the supply chain.

As always, your comments are welcome. – Doug Rainey, chief content officer.