Staff Writer 

Summer fuel prices are creeping closer to the $3 per gallon mark, but some industry experts say there’s no need to worry about a repeat of last year’s record high fuel costs. 

“Right now [fuel prices] are about $1.50 lower than they were last year,” said John Cogan, spokesman for the national Energy Information Administration “There has been an increase since [December] but I don’t expect to see $4 a gallon gasoline prices again.”

Since December, fuel prices have increased more than 40 cents a gallon for unleaded regular gasoline based on EIA national averages. Cogan said the reason for that increase is the cost of crude oil. He said during the past six months the price of crude oil had more than doubled, increasing from $30 a barrel to $70 a barrel.

“There’s been a steady movement upward since the December lows, and clearly that’s been reflected at the pump,” Cogan said. 

Maine Oil Dealers Association, a group that represents the interests of oil dealers, haulers and investors, President Jamie Py said he also did not expect gasoline prices to increase as much as they did last year based on the difference in the world market.

“There’s plenty of supply out there, there’s not a lot of demand. I don’t see [fuel prices] moving much higher,” he said. “A few years ago to go from $2 to $2.40 a gallon, people would have gone crazy but now that the volatility is different, so are the perspectives.”

Ultimately, new state legislation may be the real driving force behind any further fuel cost increases this year, Py said. Last week, he said the transportation committee discussed altering the way the state taxes fuel sales, a change that would increase the cost of gasoline regardless of the volatility in the market.

“They’re just looking to increase the taxes, which is a problem at the stores near the New Hampshire border,” Py said. “We already have a 10-cent higher tax on gasoline than New Hampshire and this is just going to drive more people away from those stores.”

Ripley Republican Rep. and transportation committee member Douglas Thomas said the proposal is to increase the taxes collected on gasoline sold at retail stores by 11 cents during the next three years. 

Currently, the state collects approximately 30 cents for every gallon sold, and each year legislators have voted to increase the tax according to inflation, roughly one cent per year, he said. Thomas said the new proposal – primarily targeted at increasing revenue for the Department of Transportation – increases tax Mainers would pay by 3.5 cents per gallon this year, another 3.5 cents in 2010 and 2 cents in 2011 and 2012.

Maine DOT spokesman Mark Latti said a one cent increase in the fuel tax equates to roughly $6.5 to $7 million in revenue. By his estimates, the DOT could receive up to $24.5 million in additional revenue this year and again in 2010. Latti said the additional funds would be used for highway and bridge maintenance projects. 

“The gas tax already goes into those sorts of things, this is just an increase in the amount,” Latti said.

For Thomas, the needs of the DOT don’t outweigh the financial struggles Mainers are currently facing.

“Do I think we need better roads, of course I do. We aren’t putting enough into our roads,” Thomas said. “But where does the money come from? The taxpayers, and they don’t have it. My constituents are broke. I understand the DOT has wants – well, I want a Corvette. I can’t afford it.”

Py said he understood the need for more funding for roadways, as the Maine Oil Dealers Association represents many trucking companies that “would rather pay a little more in taxes and not break an axel.”

“If the roads are bad, it’s time to fix them, and [DOT] is doing a great job with the money that they have,” Py said. “It’s a complicated issue for us, but we just can’t support [the 11-cent fuel tax proposal]. I’m just not sure if the public would support higher taxes. Maine will look like taxation land.”

Thomas said he believes the DOT can save money by “being more efficient” rather than increasing taxes. 

“We can’t afford to have six guys standing around watching one guy work,” he said. “It’s not money well-spent.”

Last week, the committee approved the 11-cent fuel tax proposal in a 9 to 4 vote. Thomas said he expected the issue to be considered by the legislature later this month. 

“I’ll do whatever I can to stop it from moving forward,” he said.

Staff Writer Nate Jones may be reached at 282-4337 ext. 233.

Trends in gas rates 

June 1976: 61 cents per gallon

August 1990: $1.19 per gallon

May 2008: $3.76 per gallon

July 2008: $4.09 per gallon 

(highest in record)

May 2009: $2.41 per gallon

Energy Information Administration national averages for regular unleaded gasoline, including federal and state taxes