With the exception of its address, the State Line Shell in Hammond, Ind., appeared to be in Illinois: Not one Indiana license plate could be found on the dozens of cars, whose drivers were waiting to fill up with gas priced at a tempting $1.49 a gallon.
“Right now, this is the only side of the state line to be on,” said Maurice Owens, who spent $30 Thursday filling the tank of his mini-van.
This is the back-and-forth flow of competitive gas pricing along state borders, where Illinois drivers have been known to jump into Wisconsin and Indiana to save a few cents.
But news that the Illinois Senate voted to repeal the state’s sales tax on motor fuel, which could save drivers up to 9 cents a gallon at today’s prices, could give Illinois’ gasoline stations along the borders an edge in the price war.
The proposal, which has been characterized as a political ploy by opponents, still must be approved by the General Assembly. It would go into effect in October. The Senate also suggests ending the tax cut in 2004 if gas sales in the state do not go up by 15 percent.
Proponents of the repeal say the savings could be enough to keep Illinois drivers in state while wooing out-of-state drivers to Illinois’ gasoline stations.
Louise Ekes, who was filling up at the Amoco in Genoa City, Wis., Thursday, said a better price could persuade her to drive the extra mile south into Richmond.
“If it went down 9 cents, I could be tempted,” said Ekes, filling her car with $1.59 gasoline, 2 cents cheaper than gas at Citgo’s Richmond Express Lanes. “But a cent or two, no.”
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Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association, said there is no doubt that Illinois loses gasoline and diesel sales to surrounding states, according to the group’s research. He said the motor fuel tax has been raised five times in the past 20 years, and with each increase the state’s total gasoline consumption has dropped.
Fleischli said Illinois charges more in gasoline taxes–sales tax and motor fuel tax–than just about any state. The sales tax, money from which goes to the general revenue fund, is set at 5 percent.
The motor fuel tax–19 cents for gasoline and 21.5 cents for diesel–pays for road improvements.
“Since 1978 our fuel sales have been flat,” Fleischli said. “We say if you make us competitive with surrounding states, we will do something that hasn’t been done in 22 years–we’ll sell more fuel.”
The proposed repeal comes at a time when gasoline prices are likely to keep rising, perhaps above $2 a gallon. Proponents say the high prices increase the proposal’s chances of passage.
The proposal has piqued the interest of gasoline station managers near the state’s borders, where the competition can get downright fierce.
Each morning before her shift starts at the Richmond Citgo, clerk Dawn Smith drives a half-mile north to the Amoco station in Genoa City and jots down her competitor’s gas prices.
Along the highway she probably passes Judy Schwartz, Amoco’s manager, who travels south each morning to check gas prices in Richmond.
Schwartz said she doesn’t fear a repeal in Illinois. If the price goes down, she’ll follow suit.
“We’d have to stay competitive and lower the price,” Schwartz said. “We probably couldn’t go down as low as them, but we’d still lower our price.”
There have been some concerns about whether gasoline stations will actually drop their price to mirror the tax cut if the repeal is approved.
But Schwartz said it would be foolish for any station not to comply because motorists are too savvy when it comes to gassing up their cars.
“If it’s advertised, and in the newspapers and out there where people know about it, you’d better do it,” she said.
Perhaps proof that drivers make deliberate choices when it comes to gasoline is evident at the State Line Shell where Linda Witting, of Calumet City, was dishing out $10 in Indiana for a fill up.
“If it’s lower or equal to prices in Indiana, I would buy gas in Illinois, but right now it’s much cheaper here,” Witting said.
About 1 1/2 miles away at the Clark gas station at 158th Street and Burnham Avenue, the price per gallon jumped a dime. Not one of its six pumps was being used.
“They come in and they get $2 or $3 worth of gas–that’s just enough to get them over to Hammond,” cashier Tayina Kelly said. “Tax or no tax, people are still going to try to get the cheapest gas they can.”