"There's only so many dollars that people have to spend," Dan Long, chairman of the state Commission on Government Forecasting & Accountability, told the newspaper.
Long said reports on fuel-tax revenues are among the most frequent requests from legislators, especially when gasoline prices [image-nocss] are on the rise. The questions came again when prices returned to $3 a gallon this fall, said the report.
The commission projects a 3.3% increase in motor-fuel tax collections in the current fiscal year, based on federal price forecasts and consumer-usage patterns. But Long said that also depends on an overall rebound in consumer spending. "It's not like their budget goes up when the price of gasoline goes up," said Long.
The commission began tracking the relationship between tax revenues and fuel prices in the summer of 2000, when then-Governor George Ryan and legislators suspended the state sales tax on gasoline for six months.
Ryan pushed for the suspension in response to what he described as the "outrageous" price of $2 a gallon.
The commission's analysis of revenue and price trends during the decade found that "any dramatic increase in the price of gasoline or diesel leads to a corresponding increase in the amount of sales tax collected from this sale of motor fuel."
But the study also found that when fuel prices rise, consumers shift spending from other goods, said the report.
When gasoline prices hit $4 a gallon in the summer of 2008, the analysis found, sales tax collections from motor fuel sales increased $151.6 million for that fiscal year or more than 25%; however, overall sales tax collections were up only 1.1%.
In the fiscal year that ended June 30, sales-tax collections on motor fuel were up 2%, but overall sales tax revenues were down nearly 7%.
Candy is known as a "high impulse" item in the convenience store industry, because consumer surveys show half of such purchases are unplanned.
While gasoline prices get most of the attention, fuel sales generally are not big profit generators for c-stores, Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association/Illinois Association of Convenience Stores, told the paper.
In fact, high gasoline prices cut into sales of other items that often generate bigger profits, said Fleischli. "It reduces people's discretionary income," said Fleischli, who added that profit margins on gasoline typically are 8 to 15 cents a gallon.
Fleischli said smaller margins on gasoline also contribute to consolidation toward ever-larger c-stores and c-store chains. "You see it in the cash flow. You either have to get bigger and bigger, or you have to get out," said Fleischli.
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