Fuels

New Jersey’s Gas Tax Increase Shakes Up Competition

New York, Pennsylvania drivers see differing economics for crossing the border

TRENTON, N.J. – New Jersey, which used to have the second-lowest gasoline tax in the nation, now has the seventh-highest.

On Nov. 1, a 23-cent-per-gallon (CPG) increase to New Jersey’s gas tax went into effect, the first one since 1988. According to GasBuddy, this put the average for the state at $2.243 as of Nov. 2.

While New Jersey’s tax is higher, it remains lower than that of some other states in its region, including New York, where the tax is 43.07 CPG (adding up to a state average of $2.379 on Nov. 2, according to GasBuddy); and Pennsylvania, which leads the country with a 51.4-CPG tax, and had an average of $2.395.

In the days leading up to the gas-tax increase, drivers from New York were making a point to fill up in New Jersey to take advantage of the lower prices. The Journal News reports that several gas stations along the states’ border were busy on the day before the increase was set to take place.

This includes a Pilot travel center in Mahwah, N.J., where employees reported that up to half of the fuel customers were from New York, and some were there only to top off their tanks with purchases as small as $5. Business got much more hectic during rush hours.

With the gas-tax increase now in effect, New Jersey fuel retailers’ pricing advantage over those in nearby states is pretty much gone, particularly in luring commuters from New York City, said at least one expert.

“With a 23-cent gas-tax increase, that competitive advantage will evaporate,” Siamack Shojai, dean of the Cotsakos College of Business at William Paterson University, told NJ.com.

For the trip to New Jersey to be economical for New York City drivers, gas prices in the state would have to be at least 40 CPG lower, Shojai estimated. Those drivers who already are going into New Jersey would still continue to fill up there if prices remain cheaper.

Meanwhile, Pennsylvania drivers may also not see enough of a price incentive to cross the border, Shojai said, except at some Delaware River bridges that have low tolls.

“The gas price ratio is minimized,” said Shojai. “If it's not too difficult, people traveling back and forth may take advantage of the price.”

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