Will out-of-state drivers continue buying NJ gas? Big problem if they don’t
The gas tax in New Jersey was raised 23 cents a gallon on Tuesday, but the tax could go up again next year if the amount of gas that is sold decreases. Some experts predict that is exactly what will happen.
Siamack Shojai, the dean of the William Paterson University Cotsakos College of Business, said that before the gas tax hike, the price differential between New Jersey and New York was more than 40 cents a gallon, so drivers on the other side of the Hudson had a real incentive to come to the Garden State to fill up their tanks, especially those living outside New York City who could cross the Tappan Zee Bridge, where the toll is about $5.
Traveling into New Jersey via the George Washington Bridge or going through the Lincoln or Holland tunnels costs $15, but Shojai said many New Yorkers were willing to make the trip if they drove a lot because ultimately they could still save a significant amount of money.
Now, however, with the cost of gas up 23 cents a gallon in New Jersey, that’s no longer the case.
He pointed out now the savings is in the 10 to 15-cent-a-gallon range, so “the fact that you have wear and tear on your car, you face a lot of traffic, it’s not that convenient."
Shojai noted if New Yorkers work in New Jersey or have to go through the Garden State on a regular basis to get to another location, they may make a point of stopping for gas here.
He said some Pennsylvania residents may continue to fill up in New Jersey because it remains a bit cheaper here, about 10 to 15 cents-a-gallon compared to many locations near the Delaware River in Pennsylvania. But in certain areas, “gas prices in Pennsylvania may be even lower than what it is in New Jersey now.”
Everyone agrees no one from Delaware will now drive to New Jersey to buy gas because Delaware now has cheaper gasoline.
On a per capita basis, New Jersey has one of the highest gas consumption rates in the country, literally twice as much as New York. New Jersey also is a corridor state, which means a lot of traffic moves through. With the cost of fuel now significantly higher than it was, he says short-term “demand for gasoline may go down by about 3 percent."
“In the longer run, it may go down about 5 percent or so.”
If that happens, New Jersey’s tax-hike law guarantees the tax will be raised to make up for the revenue that is lost.
Contact reporter David Matthau at David.Matthau@townsquaremedia.com.