by Sean R. Sedam and Janel Davis | Staff Writers
ANNAPOLIS — With oil prices setting record highs each day and the national economy slumping, lawmakers said this week that they have little hope of passing legislation to either provide relief from prices at the pump or increase the gasoline tax in hopes of addressing a bleak budget outlook.
‘‘I don’t know that there’s anything we can really do about it,” House Speaker Michael E. Busch said. ‘‘This is a national issue now.”
AAA has asked federal and state officials, including the three leading presidential candidates, to address the issue long-term, with goals of reducing overall gasoline consumption and the country’s reliance on oil.
In the short term, as prices continue to exceed post-Hurricane Katrina levels, the automobile association is warning officials that something must be done.
‘‘There has been a deafening silence on the presidential trail, and in Annapolis and Richmond and on both ends of Pennsylvania Avenue,” AAA spokesman John B. Townsend II said. ‘‘This is a large concern for consumers because it takes up so much of people’s money. With the record highs we have not seen the end of it yet.”
Prices hit a record average high of $3.24 for a gallon of regular unleaded in the Washington metropolitan area Thursday, including an average of $3.21 per gallon in Maryland, according to AAA. The price of oil reached $110.70 a barrel.
If the price of crude oil reaches $135 a barrel, Maryland drivers could see gas prices reach $4 per gallon, according to the association. And that does not account for the switch over to the summertime gasoline mixture, which has increased prices 80 cents between the end of winter and the beginning of the summer driving season, Townsend said.
So with state lawmakers already wrestling with budget difficulties and limited revenue options, how does the legislature deal with the record gas prices?
While high prices post-Katrina could be attributed in part to price gouging — something the legislature can address — today’s price spikes are different because they reflect an economic phenomenon, said Busch (D-Dist. 30) of Annapolis.
‘‘When petroleum is $110 a barrel, I don’t know what any individual state can do to avoid that,” he said.
That has not stopped some from trying.
Sen. Nathaniel Exum (D-Dist. 24) of Capitol Heights and Del. Aisha N. Braveboy (D-Dist. 25) of Mitchellville have introduced a bill to establish a task force to study how oil refiners sell gasoline to retailers at wholesale prices determined by geography and competition, a practice known as zone pricing.
Del. Warren E. Miller has also reintroduced a bill that he says would allow discount gasoline retailers such as Wawa and Sheetz to continue to sell gas at prices below those of ‘‘big oil” franchisees such as Exxon, Shell and BP.
‘‘I’ve introduced it the last two years because I felt that there was a problem after Hurricane Katrina with gas prices in Maryland,” said Miller (R-Dist. 9A) of Woodbine.
The base price of gasoline Wednesday was $2.62 per gallon before commercial markups, according to the American Petroleum Institute in Washington, D.C.
Smaller retailers add fewer costs to that base price because they do not spend money on advertising or branding, said Miller, who added that he disagrees with the ‘‘below-cost sales” title that bill drafters gave to his bill.
‘‘Wawa and Sheetz don’t sell below cost,” Miller said. ‘‘The problem is there’s an arbitrary standard used for cost.”
That standard, the so-called rack price, is a wholesale price set by oil companies based on market conditions, including competitors’ prices.
Price competition has led to franchisees reporting neighboring gas stations to the comptroller’s office for selling gas below the rack price, Miller said.
Upon receiving a complaint about a station, the office sends representatives to investigate. They immediately raise the station’s price to the rack price, said Miller, who plans to amend his bill to give retailers a three-day window, in which to provide documentation showing they are selling gas at or above the cost to them.
Miller is not optimistic about the bill’s chances because of its late introduction, March 3, but he said he hopes there are ‘‘some minor things” the legislature can consider with a zone pricing task force.
Another possible — though unlikely — way to give consumers some relief would be for lawmakers to temporarily suspend the state’s portion of the fuel tax, Townsend said. ‘‘While that may sound appealing,” he said, ‘‘I think you create a greater burden for the budget.”
In fact, one proposal would raise the 23.5-cent state gasoline tax to help bridge a growing state budget gap.
Sen. Robert J. Garagiola introduced a bill to increase the tax by 4 cents in fiscal 2009, raising $132.5 million for the state’s Transportation Trust Fund, and by 8 cents beginning in fiscal 2010, raising $269.7 million. It would also repeal the computer services tax bill passed during the special session, a major sticking point as the Senate hammered out the final details of its budget this week.
Senate President Thomas V. Mike Miller Jr. (D-Dist. 27) of Chesapeake Beach introduced a similar 12-cent increase last year, before the computer services tax was passed.
A 12-cent increase would put Maryland’s gas tax above that of Pennsylvania, which levies a 32.3 cent tax per gallon, West Virginia (31.5 cents), Delaware (23 cents), Washington, D.C. (20 cents) and Virginia (19.6 cents), according to data from the Tax Foundation, a nonpartisan tax research group based in Washington, D.C.
But with gas prices setting record highs daily, ‘‘a lot of people are afraid of doing 4 cents,” said Garagiola (D-Dist. 15) of Germantown.
By the time the gas tax bill was heard Wednesday, even Garagiola admitted it had no traction.
‘‘It had 18 votes [in the Senate] a month or so ago and then I started working on alternatives,” he said. The bill would need 24 votes to pass the Senate.
Garagiola’s bill might not get support from his colleagues, but a gas tax does have the support of Montgomery County Executive Isiah Leggett (D) and County Council President Michael J. Knapp.
Leggett pushed for an increase in the tax even before taking office two years ago. This week the two county leaders sent a letter of support to the county’s Annapolis delegation that reiterated their stance on the issue.
Like Garagiola, Knapp admits the gas tax increase will not be an easy sell to legislators.
‘‘At this time, I don’t think any tax would be an easy sell,” said Knapp (D-Dist. 2) of Germantown.
Townsend went a step further. With the prospect of $4 gas, any increase in the gas tax, whether at the federal or state level, is ‘‘dead on arrival,” he said.
Staff Writer Alan Brody contributed to this report.
