NEWS
State grips rising tax costs following Hurricane Katrina
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by Carolyn Smith
Wednesday, September 7, 2005
State legislators and officials have begun scrambling for new legislation following last week’s Hurricane Katrina, which negatively affected state and national gas prices.
The average price of regular unleaded gas in Madison was $3.06 Tuesday, according to the American Automobile Association, compared to a national average of $3.04.
Last month, Madison’s average gas price was $2.35, up more than 40 cents since last year.
Mike Bie, a spokesperson for AAA Wisconsin, said that though Katrina has had no effect on the nation’s oil supply it has caused dramatic increases in gas prices.
“When the hurricane hit, a significant number of refineries were shut down,” Bie said. “As a result, there has been a crimp in the nation’s supply and production of gas.”
Between eight and 12 oil refineries were knocked out of commission by Katrina, Bie added.
In response to the jump in the cost of gas, state Rep. Robin Vos, R-Burlington, and Rep. Steve Nass, R-Whitewater, have both called for the state to intervene to lower or remove state gas taxes as part of a “Gas Tax Holiday.” If approved, the holiday would last until the end of the year.
“We have middle and low-income families that need help right now,” Nass said. “They can’t wait a few months for the gas prices to go down.”
Nass has called for an extraordinary session of the state Legislature to deal with this issue and said he hopes it will take place later this week.
However, Kelly Kennedy, a spokesperson for State Attorney General Peg Lautenschlager, said the Wisconsin Department of Transportation would suffer from this, as it is funded by state gas taxes.
While Nass said some road projects could be delayed to deal with the loss of DOT funding, he said state budget money could be reallocated to make up the difference.
Increases in the price of gas are not to be solely blamed on Katrina, some state officials say. Gas prices rose for the past two years before the hurricane due to a worldwide increase in the demand for crude oil and gas, according to Bie.
“Industrialized economies around the world, particularly in Asia, are growing significantly, and they are using more energy and buying more oil, which is creating a greater demand for oil,” Bie said. “At the same time, the world is producing roughly the same amount of crude oil so the law of supply and demand is coming into play.”
Lautenschlager and several other attorneys general have begun a joint inquiry into the cause of recent gas price hikes and whether price gouging has contributed to the surge in prices.
In relation, Lautenschlager and state Sen. Dave Hansen, D-Green Bay, and state Rep. Josh Zepnick, D-Milwaukee, announced last week they will introduce anti-price gouging legislation to protect consumers.
“While complicated factors drive the cost of gasoline, we must draw a clear line between free-market fluctuations and out-and-out price gouging at the pump or at the well, which we will not tolerate,” Lautenschlager said in a release.
Kennedy said there was a similar concern of price gouging when Hurricane Andrew hit Southern Florida and a shortage of plywood sent prices skyrocketing.
“If we have a price gouging statute, no matter what the crisis is at the time, if we find examples of excessive profit-taking, we could act,” Kennedy said. “But right now, our hands are tied.”
