Gas prices will impact transportation budget

Before I share how rising gas prices will impact our transportation budget at Senior Services, let’s have a brief history and civics lesson about gas prices in the U.S. and around the world.

When I arrived at Clermont Senior Services in July 1991, the average price of gasoline in the U.S. was $1.14 per gallon. This included a federal tax of 14.1 cents, and an Ohio tax of 21.0 cents per gallon. Fast forward to March 2011. As of last week, the national average was $3.40 per gallon. Locally we are paying about $3.49 per gallon (make that $3.499), and the price is headed up so enjoy $3.50 gas while you can.

Interestingly, the federal gasoline tax has not increased since 1993 when it was raised from 14.1 cents to 18.4 cents per gallon. Ohio’s gas tax has only increased by 7.0 cents sense 1991, and has been fixed at 28.0 cents per gallon since 2005. So, 46.4 cents is what you are paying in taxes per gallon of gas, which is only 11.3 cents more than you paid in gas taxes 20 years ago. That’s barely a half cent increase per year; not a bad deal for taxes.

This is surprising news for most Americans. According to one recent poll, a majority of Americans believe the federal gasoline tax is indexed to inflation and increases every year. In another recent poll two thirds of Americans said the federal government should do more (spend more money) to improve roads, but only 27% supported the idea of increasing the federal gasoline tax to do so. I’m not suggesting that we increase gas taxes. I’m just making the point that the reason gasoline prices are going up in the U.S. and around the world is the rising price of crude oil, exacerbated by the dramatic political and societal changes occurring in the Middle East.

I’ll offer just a few more observations to put this in perspective at a national and global level. Gasoline prices vary across the U.S. based on each states tax rate for gasoline and on the costs associated with producing and delivering gasoline to the pump. At 46.4 cents in federal and state gasoline taxes, Ohio is less than a penny below the national average of 47.0 cents.

California leads the nation at 64.5 cents, and Alaska ranks lowest, paying only the federal share of 18.4 cents per gallon. I’m pretty sure they have mini refineries posted along the trans-Alaskan pipeline where residents can fill up for free – except for the federal gas tax. Finally, we hear a lot about the extraordinarily high price of gasoline in Europe. The difference is almost entirely in the taxes they pay. Recently, gasoline prices topped $8 per gallon throughout Europe, but in most European countries half, or even more, of the pump price is gasoline taxes. This explains why they drive little cars and spend a lot of money on mass transit.

This is interesting information but let’s get to the point of this column – rising gas prices will impact our transportation budget at Clermont Senior Services. When we were spending $1.14 per gallon in 1991, we had nine vehicles on the road each day. Today we’re paying $3.49 cents per gallon, with 18 passenger vehicles and several meal vehicles on the road each day. In 2010 these vehicles drove over 800,000 miles, and we purchased over 80,000 gallons of gasoline. Here’s the math. Each time the price of gasoline goes up by just one dime we will pay about $8,000 more per year for gasoline. An increase from $3 to $4 per gallon translates to an additional $80,000 per year to keep our vehicles on the road, taking seniors where they need to go. And keep in mind that most have no other options.

Fortunately, through a bulk purchasing plan, we save two to three cents per gallon off the pump price, and, as a nonprofit organization, each quarter we file to be reimbursed for the state gasoline tax. This means we actually pay about 30 cents below the pump price. But no matter how you cut it, as the price of gasoline increases from the $2.50 level we were paying just a few months ago to $4 or more per gallon by later this year, it will have a major impact on our transportation budget.

Austere budget measures enacted over the past few years will allow us to cover this expense for now without cuts in services. But as the price of gasoline and other operating expenses continues to rise, our ability to maintain service levels will be at risk, which brings me to a final point.

The Clermont Senior Services Levy will be on the ballot in November. For a lot of reasons, some of which I’ll write about in future columns, this will be the most challenging year ever to pass the Senior Services Levy. But, simply put, without this levy there would be no money for trips to cancer treatments and dialysis appointments, for meals-on-wheels, or other essential services that help frail older adults continue to live at home.

Since the Senior Services Levy was first passed in 1982, you and your fellow citizens have shown your overwhelming support by passing this levy each time it has been on the ballot.

This fall your support will be more important than ever. Despite these difficult economic times, I’m confident that, as you have done six times before, you will again support the Senior Services levy.