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SALT LAKE CITY — The state tax on gasoline will go up nearly a nickel a gallon Friday, a cost that retailers may or may not pass along right away in the price charged at the pump.
"It's a very competitive marketplace," said John P. Hill, director of the Utah Petroleum Marketers and Retailers Association that represents some 188 independent gas stations around the state.
Hill said it's difficult for stations to pass along any price increase in its entirety because higher fuel charges mean consumers have less to spend on drinks, snacks and other items the stations sell.
"It always hurts," he said.
The smaller stations generally look to what the big retailers like Smith's Food and Drug are charging, Hill said, so they're waiting to see the per-gallon prices posted on New Year's Day.
That's when the 4.9-cent increase approved by the 2015 Utah Legislature takes effect. The 24.5 cents per-gallon tax, unchanged since 1997, has been shifted to a 12 percent sales tax that will be adjusted annually to rise with prices.
Marsha Gilford, Smith's Food and Drug vice president for public affairs, declined to say whether customers will pay more to fill up on Friday as a result of the tax increase.
"We don't generally talk about our pricing strategies. But I can tell you we do intend to be extremely competitive," Gilford said. "Gas prices do fluctuate and I'm sure that won't be any different going forward."
A recent report to lawmakers stated a Utah family driving 13,000 miles per year can expect to pay about $42 more annually at the pump for fuel. The tax increase is expected to raise about $76 million for highways and local roads.
AAA Utah spokeswoman Rolayne Fairclough had no doubt that gas prices will go up at some point because of the size of the tax increase.
"That's a lot of money. So retailers will have a difficult time absorbing that money over the long run," Fairclough said. "If they hold back and see what prices are, we do know prices increase. Of course you're going to pay it."
The same law that raised the gas tax also permitted counties to ask voters to raise sales taxes for transportation needs. Proposition 1 passed in 10 counties, but failed in seven, including Salt Lake and Utah counties.
