|Contact: Gene Guilford email@example.com or Chris Herb firstname.lastname@example.org|
|For Immediate Release March 28, 2012|
CONNECTICUT GENERAL ASSEMBLY TO PASS GROSS RECEIPTS TAX CUT
But cutting the tax isn't the only thing going on...
[Cromwell, CT] Today the Independent Connecticut Petroleum Association [ICPA], representing the majority of the state's gasoline and heating oil retailers, issued an analysis of what has been going on in the nation's gasoline markets and addressing legislation soon to pass the General Assembly dealing with one of the state's two gasoline taxes.
Since Mid-December through today, the Wall Street, CME/NYMEX gasoline contract has increased from $2.48 a gallon to $3.37. That is an increase of 89c a gallon in 100 days. The NYMEX is the largest commodity marketplace in the world, and the NYMEX is where the price of commodities such as gasoline have their prices set each and every day.
CME/NYMEX Gasoline Contract Behavior
Today, the Connecticut General Assembly will pass legislation in an attempt to provide some relief from what Wall Street Investment Banks and Commodity traders have done in the commodity markets over the last 100 days. Every state in the United States has been effected by what has happened on Wall Street, and the power of any state to address what Wall Street has done is very, very limited.
Here is what Connecticut's State Government proposes to do. [a] cap the gross receipts tax and  impose an abnormal market disruption declaration that involves three different state agencies and hundreds of companies, most that have no impact on establishing gasoline prices:
1. The average retail price of gasoline in Connecticut today, which according to the AAA survey is $4.06 per gallon, is about the very same price as found in all our neighboring states when you remove state gasoline taxes. While we do not like where the price of gasoline is, there is nothing unusual happening to the price of gasoline in Connecticut that isn't happening everywhere else in America.
2. Provide a permanent cap of the petroleum gross earnings tax (GET) when the wholesale price of gasoline reaches or exceeds $3.00 per gallon. For example, if the wholesale price of gasoline is $3.01 the GET would apply to the first $3.00 but not 1 cent per gallon (cpg), if the wholesale price if $3.23 the GET would not apply to 23cpg of the $3.23. The average wholesale price of regular grade gasoline today in New Haven Harbor, among the 13 largest wholesale suppliers of gasoline to Connecticut, is $3.23. If the cap is imposed on the collection of a GET at $3.00, this means instead of imposing a tax of 24.22 cents [7.53% x $3.23], the state imposes a GET of 22.5 cents [7.53% x $3.00]. As of today, this cuts the tax by 1.7 cents per gallon.
3. While the CME/NYMEX gasoline contract has gone up by 89c a gallon over the last 100 days, the actual average wholesale price of gasoline has gone up 63c a gallon during the same period. It is not possible to know if the CME/NYMEX Wall Street gasoline contract will continue to rise, or if wholesale prices nationally will continue to rise as a result. What we do know is that with a cap on the GET, Connecticut will not collect additional, higher taxes as a result of any increases in wholesale gasoline prices.
4. Under Connecticut's gouging statutes, today's action triggers notice of an "abnormal market disruption" declaration when the wholesale price of gasoline increases by 15% or more over a 90 day period. In the future this will be determined by the Department of Energy and Environmental Protection (DEEP), if the wholesale price of gasoline is at or above $3.00 per gallon and the price has increased 15% or more over any 90 day period. DEEP will use the Hartford/Rocky Hill OPIS rack average price or the New Haven OPIS rack average price to determine if future wholesale gasoline prices increase by 15% or more.
5. What happens during "an abnormal market disruption" declaration? During any period of an "abnormal market disruption," the Attorney General reviews energy prices and determines whether sellers of all energy resources [gasoline, propane, aviation fuel, natural gas, electricity, coal, wood, heating oil, and other resources yielding energy], have charged an unconscionably excessive price. Further, there are additional specific penalties for those companies selling more than 1 million gallons of gasoline, if found in violation of the gouging statute. As Connecticut service stations sell 4.2 million gallons of gasoline per day, we believe the 1 million gallon per-year threshold established in the law for other purposes reaches Connecticut-based companies who do not set the market price for gasoline, do not operate large wholesale gasoline terminals, and who have nothing to do with the CME/NYMEX. This law captures 187 companies, 146 of which are Connecticut-based and who do not set gasoline prices.
6. The Department of Energy and Environmental Protection [DEEP], does the 15% calculation under item #4 above - the Attorney General does the determination of what "unconscionably excessive price" means - and the Department of Consumer Protection does the investigation and enforcement of any allegation on the over-collection of the Gross Earnings Tax above $3 per gallon and may impose penalties of up to $5,000 per occurrence for such violations.
7. Based on the Connecticut, AAA-average price of regular gasoline of $4.06 per gallon, looking at the breakdown of what goes into the price of a gallon of gasoline http://icpa.org/motor_fuels/retail_gasoline_price.htm the retailer is paying $4.02 per gallon before adding ANY mark-up. Credit card companies are making 8c a gallon just for the retailer to be connected to a system that allows for consumers to buy gasoline using a credit card - twice what the average retailer mark-up is today.
Important to note that neither the U.S. Department of Justice nor the Federal Trade Commission has any investigation of gasoline prices underway.
ICPA represents more than 576 Connecticut based independent businesses. These businesses serve more than 680,000 heating fuels consumers, employ 13,000 Connecticut citizens at the majority of our state's 1,400 motor fuels outlets and 600 heating fuels retailers. ICPA's offices are at 10 Alcap Ridge, Cromwell, CT 06416. For more information about today's Press Release, contact Gene Guilford or Chris Herb.