State gasoline tax resumes today after year off

Sean Cockerham | Tribune Media Services

Alaska gasoline prices are about to rise as the 8-cents-a-gallon state tax that's been suspended for a year comes back into force today.

Retailers say to expect prices to go up 8 cents, likely by the end of the day, in order to make up for what they'll now be paying the state.

"I don't know if they'll wait a few hours, wait a day or whatever. But I just know that the margin isn't there to let it go forever," said Tom Iverson, Alaska manager for Holiday Station stores.

Gov. Sean Parnell on Monday, as he pumped $65.23 worth of gas into his black Ford F-150 truck at Garrett's Tesoro in Anchorage, reiterated his call for the state Legislature to either suspend the gasoline tax for an additional year or just get rid of it altogether. If Parnell had bought gas after the 8-cent a gallon hike, it would have cost him about $1.60 more to fill up his 9-year-old truck.

"I'm going to pursue suspension of the gasoline tax again once the (legislative) session comes back in January," Parnell said. "Alaskans are strained by this economy and they need a break."

He could have a hard time convincing the Legislature. Some lawmakers argue that being the only state without its own gas tax could weaken Alaska's case in Congress for sending federal road money to the state. Fairbanks Republican Rep. Jay Ramras said he doesn't think gas stations really passed the savings on to consumers over the past year that the tax has been suspended.

"I appreciate the effort of the governor to practice populism on this subject. But I think the effort is ill-placed and ignores the realities of how stressed our (upcoming) budgets are for the state," Ramras said Monday.

The Legislature suspended the tax for one year last summer as gasoline prices soared to record levels. A year ago the average price in Anchorage was $4.31 a gallon, compared with $3.18 Monday, according to AAA.

The one-year suspension also included the 5-cent tax on marine fuel and state taxes on aviation fuel, all of which will return today. The high oil prices that caused the gasoline price to spike last summer also poured hundreds of millions of unexpected dollars into the state treasury, making it easy for the state to forgo the $40 million a year the fuel taxes raise.

Parnell said the state still doesn't need the money. He dismissed the argument that getting rid of the tax could hurt Alaska's clout in getting dollars from Congress.

"They say that about the Permanent Fund, too, but I think the Permanent Fund is a great idea for Alaska," he said of the state's $32 billion oil-wealth savings account. "It's an excuse more than a reason not to give Alaskans a break."

A bill by Anchorage Democratic Sen. Bettye Davis to keep the taxes suspended failed to pass the Legislature in the spring. Parnell then unsuccessfully urged legislators to take up the issue at a special session last month. But lawmakers said they wanted to keep it limited to a quick session focused on overriding former Gov. Sarah Palin's veto of spending some federal stimulus money and confirming the new lieutenant governor.

Fairbanks Rep. Ramras argued it's not about giving Alaskans a break at the gas pump.

"I maintain that, as attractive as the (suspension) was, with the rake off by the refiners, the delivery trucks ... and the retailers, that very little of the 8 cents found its way into the consumer's pocket," said Ramras, who held hearings last fall on gas prices as chair of the House Judiciary Committee.

Representatives of both Holiday and Tesoro Alaska Petroleum Co. disputed his contention.

"I have no way to prove him wrong or right. Other than I know that when the tax was suspended, that day, everybody's prices went down 8 cents," said Tesoro spokesman Kip Knudson. "The second day, all bets are off, I have no idea. Then it is just back to market forces determining up or down."

Find Sean Cockerham online at or call him at 257-4344. The Associated Press contributed to this story.