Georgia drivers find gas cheaper

Down, down, mercifully further down.

The pump price of gasoline, which in the past three months has plunged faster and further than ever before, is slipping a bit more now that state taxes have been clipped by 4 cents per gallon.

As of Thursday afternoon, the average price of gas in metro Atlanta had dipped to $1.46 a gallon, according to AtlantaGasPrices.com. That level —- down 8 cents a gallon from a week ago —- was last seen in the spring of 2004.

Part of the recent drop can be pegged to a government decision to snip the state’s fuel tax from 18.5 cents per gallon to 14.6 cents, a change that took effect with the popping of champagne for New Year’s.

The cut was ordered by Gov. Sonny Perdue last month, aimed at easing costs for consumers during a deepening recession.

Georgians will continue to pay local taxes, which vary from county to county, as well as an 18.4 cents-per-gallon federal tax. But the latest tax cut is the second break drivers have received in the past six months. The governor also put the kibosh on a scheduled tax hike last summer when average gas prices were reaching $4 a gallon.

Environmentalists often argue that a lower price not only encourages waste, it sets up consumers for pain at the pump the next time prices soar.

Prices have had an impact, although the struggling economy is at least part of the explanation: During the first five months of the state fiscal year, Georgians bought about 125 million fewer gallons of gasoline than what they purchased during the same five months a year earlier, according the state Department of Revenue. In November, even though gas prices were already dropping hard, Georgians bought 4.9 percent less gasoline than during the same month a year earlier.

Price cuts also have immediate economic consequences.

First, they pad driver paychecks just a bit at a time when layoffs have been climbing and even people with jobs feel a squeeze. Scott Davis of Lawrenceville paid $1.39 per gallon on Thursday. “I’m happy because I’m buying gas,” Davis said of the tax decrease. Davis said that when gas prices were high last year, it cost him about $60 to fill his Honda Element. Now that gas prices have declined, he said it costs about $22 to fill up.

The lower prices might help —- at least a little —- in keeping a Georgia family out of foreclosure or bankruptcy. Extra spending money might also go somewhere more local than it does when buying gasoline.

But lower fuel taxes also shift revenues away from state government at a moment when officials are scrambling to stay within budgets and avoid job cuts. Likely budget cuts in Georgia imply the loss of between 11,500 and 28,700 jobs this year, according to a study of the 50 states released this week by the Center for Economic and Policy Research.

“Spending cuts have the effect of restricting demand and increasing unemployment,” said Matthew Sherman, research assistant at the Washington-based center. “During a recession, when the economy is already shrinking, these … measures can make things worse.”

The state Revenue Department reported that the governor’s tax cut of last summer saved motorists $60.4 million through November.

On the other side of the ledger, gas tax collections were off 5.2 percent, for the fiscal year that began July 1.

In any event, gas taxes are a modest part of a more than $400 billion-a-year Georgia economy.

And tax changes are only a small part of a story that has drivers feeling like they are riding a roller coaster.

On Thursday, gas could be had in various area stations as cheaply as $1.25 a gallon, according to AtlantaGasPrices.com. Even the highest local price —- $1.69 a gallon —- would have seemed a near-felonious discount in early fall, when the average price crested at $4.13 a gallon.

A year ago, gasoline in metro Atlanta had averaged $3.05 a gallon, but then came an unprecedented spike in the price of oil. And it is the price of oil, not taxes, that accounts for the lion’s share of the pump price.

The rocketing prices of spring and summer were blamed by many on trader speculation, by others on fears that global demand would outpace supply —- a concern fueled by several hurricanes in the Gulf of Mexico.

Then the world’s economies stumbled, and demand dropped. At nearly the same moment, financial markets were seizing up —- along with credit.

Whatever the cause, the price of oil plunged.

Still, even if $4-a-gallon gas is not around the corner, history would encourage drivers not to grow too accustomed to bargain-basement gasoline. While oil prices are the biggest component, U.S. gasoline prices also ride with American habits. Prices typically fall to yearly lows in late fall or midwinter, then rise in late spring as vacation driving picks up.