True fuel cost

[LDB]

In different threads it's been mentioned you should buy fuel in state X because it's more expensive in state Y. On the surface it only makes sense to pay $2.499 instead of $2.579 but you can't go by the price on the pump for true fuel pricing. Fuel taxes are figured into the price on the pump so the true cost of the fuel isn't given to you.

One of the best examples of neighboring states with a major difference is Georgia and Florida. The tax rate in Fl is .2937 and the rate in Ga is .1480 and the rate in Al is .19. If the pump price for fuel is $2.449 in Ga, $2.499 in Al and $2.599 in Fl you are paying the same price for fuel and the difference is just the tax rate you are paying.

You can save a penny or two a gallon by fueling in Ga compared to Fl if you are careful where you choose to fuel but you can also pay up to a dime a gallon more by fueling in Ga if you don't know the tax structure and fuel prices at various locations. In addition to that you are responsible for the higher tax rate on the miles you drive in Fl and that has to be paid as well.

Let's say you are headed from Nashville to Tampa and you decide to fuel in Byron, Ga for $2.439 because you can make it to Tampa and back to Byron to refuel. Your fuel cost $2.291 and the rest was tax. You paid .148 per gallon in taxes and Ga expects to receive .148 for each gallon used in Ga. Now you get into Fl and they expect to receive .2937 for each gallon burned. You are going to owe an additional .1457 to Fl for each gallon burned in Fl. If you use 50 gallons in Fl. that's $7.285 additional tax you owe.

Let's reverse that and say you have enough fuel to get to Wildwood, Fl. where you pay $2.499 at the pump. Your fuel cost is $2.2053 or .0857 cents per gallon less. If you buy 100 gallons that's $8.57 less for the actual fuel. You also paid .2937 in tax which is the rate Fl expects for the gallons burned in Fl. Part of the fuel you bought will be used once you get up into Ga. and they only collect .148 in tax. If you only used 50 gallon in Fl then you have a credit for 50 gallons worth of tax. Let's say you use the other 50 gallons in Ga. then instead of owing $7.285 more tax you have a credit of $7.285 to your tax account plus the $8.57 you saved on the pure fuel price so you are $15.855 ahead by buying fuel in the expensive state. You just have to know the prices and tax rates and figure out where the true value is.

Pricing is available at dieselboss: http://www.dieselboss.com/fuel.htm and your carrier should be able to supply you the current quarterly fuel tax rate sheet.

Leo Bricker, owner trucks 3034, 4958
OOIDA 677319
73's K5LDB
Highway Watch Participant, Truckerbuddy
EO Forum Moderator 1+ Years of Service
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[ATeam]

Outstanding post, Leo! If everyone read and took it to heart, a whole lot of fuel tax misinformation would cease to be passed around on CB radios, truck stop lunch counters, and internet forums.

I know an expediter truck dealer who could have benefited from your info. For a while, he was putting twin 150 gallon tanks on the D-units he was building. The dealer thought large tanks were a selling point since the driver could buy "cheap" fuel in one state and burn it in another. A truck driver who knew about fuel tax told the dealer how fuel tax worked. In subsequent trucks, the tanks got smaller, front axle weights got lighter and space became available for toolboxes, tire chain hangers, and the like.

 

[LDB]

Thank you. This is a topic all expediters should know since they all buy fuel but I'm afraid probably very few know it. That's one factor when some go broke I suspect. As to large tanks I think they have a place. The extra weight of the tank itself isn't very much and you can choose how full to make it. Back to the example, fueling in Fla. is actually about the cheapest true cost within 1000 miles unless you can fuel in Biloxi going across 10. If you fill large tanks there you have more fuel tax credit than you need until you get to Pa, Mi or Il. so you are going to build a fuel tax surplus until running/buying way outside Fl. You also don't want to buy fuel in In, Ky or Va because they charge you more usage tax than they give you credit for when you buy fuel so any gallons you buy more than you use you are losing on every one.

Leo Bricker, owner trucks 3034, 4958
OOIDA 677319
73's K5LDB
Highway Watch Participant, Truckerbuddy
EO Forum Moderator 1+ Years of Service
-----
Support the entire Constitution, not just the parts you like.

 

[guest]

A few thoughts on this matter. First, large fuel tanks are still useful, you just have to know how to do the fuel tax math in order for them to be fully utilized. Once you back out the fuel tax, there remain areas of the country where fuel is much cheaper than others, though this may not be obvious by looking at the posted prices.

Considering that I am rarely near my weight capacity, the extra weight of large fuel tanks doesn't bother me.

As for where the true cheap fuel can be found, I have found that truck stops in higher tax states near the border with lower tax states often have good prices. Perhaps this is to be more competitive with the stations in the lower tax state, which are just a few miles away.

It's good to carry a chart with you with the fuel tax for each state and the real price of the fuel with the tax backed out of the fuel price. You will quickly memorize the tax rates in the states you run in and you can do the math on where the best deals on fuel are found.

To summarize Leo's post, it would make more sense to buy $2.40 fuel in a state that was collecting a 20 cent per gallon tax at the pump than it would be to buy $2.30 fuel in a state that was collecting a 5 cent per gallon tax at the pump.

None of this applies, of course, to vans and big trucks not subject to IFTA reporting.

 

[jaminjim]

But let us not forget there are some states that do not refund the extra tax if you don't use it. can you say Oregon.

 

[Broompilot]

OR, NM doe not share the IRP I do believe those are the only two if anyone knows for sure any others please post.

If you purcahse the Truck Stop Guide under $15 at most truck stops or the Rand McNally Truckers version they list every states tax rate for gas and diesel.

Personally, Wythville is the best place in the US to fill up even though the tax rate is only .17 the price of diesel is below $2.25 gallon. North Carolina is now at .41 or .42 our Democratic Govenor cannot budget anything so he sticks every hole at tax payers he can. Fuel is running 2.57 So its much less expensive overall in VA I will pay the difference quarterly instead of at the pump.

The true expert to this is Doc Rushing he showed me how to do this last year and showed me where to look up the state tax rates, subtract pump price and thats your real cost.

 

[LDB]

The table below is 4th quarter 2005 and is the most current I have. It may not be totally accurate but it is at least very close. It shows the rate you pay on what you burn in the state as well as the amount of credit you get for what you purchase in the state. Indiana, for one, may not be a good state to buy fuel in because the credit for what you buy is much less than the charge for what you use. You have to do your calculations carefully to optimize your purchases. I hope this is helpful.

Ok, after a few tries I can't get it to line up when posted like it does when I enter it so it isn't going to be a nice table with straight lines etc. but it's the best I can do. Also, there are a few on there that I have no clue if they are Canadian provinces or what but you can just ignore the ones you don't go in like I do.

State Used Purchased
AB 0.2914 0.2914
AG 0 0
AK 0 0
AL 0.19 0.19
AR 0.225 0.225
AZ 0.26 0.26
BC 0.4857 0.4857
BJ 0 0
CA 0.295 0.295
CO 0.205 0.205
CP 0 0
CT 0.26 0.26
DC 0 0
DE 0.22 0.22
EM 0 0
FL 0.2937 0.2937
GA 0.148 0.148
IA 0.225 0.225
ID 0.25 0.25
IL 0.314 0.314
IN 0.27 0.16
JA 0 0
KS 0.26 0.26
KY 0.204 0.141
LA 0.2 0.2
MA 0.21 0.21
MB 0.3723 0.3723
MD 0.2425 0.2425
ME 0.27 0.27
MI 0.302 0.302
MN 0.2 0.2
MO 0.17 0.17
MS 0.18 0.18
MT 0.2775 0.2775
NB 0.5472 0.5472
NC 0.271 0.271
ND 0.23 0.23
NE 0.253 0.253
NF 0.5342 0.5342
NH 0.18 0.18
NJ 0.175 0.175
NL 0 0
NM 0.21 0.21
NS 0.4986 0.4986
NT 0 0
NV 0.27 0.27
NY 0.0462 0.3795
OH 0.28 0.28
OK 0.13 0.13
ON 0.463 0.463
OR 0 0
PA 0.364 0.364
PE 0.6573 0.6573
PQ 0.5245 0.5245
PR 0 0
QA 0 0
QC 0.5245 0.5245
RI 0.3 0.3
SC 0.16 0.16
SD 0.22 0.22
SI 0 0
SK 0.4857 0.4857
TL 0 0
TN 0.17 0.17
TX 0.2 0.2
UT 0.245 0.245
VA 0.195 0.16
VT 0.26 0.26
WA 0.31 0.31
WI 0.329 0.329
WV 0.27 0.27
WY 0.14 0.14
YT 0.2725 0.2725


Leo Bricker, owner trucks 3034, 4958
OOIDA 677319
73's K5LDB
Highway Watch Participant, Truckerbuddy
EO Forum Moderator 1+ Years of Service
-----
Support the entire Constitution, not just the parts you like.

 

[X1_SRH]

Thanks for an excellent post Leo!

This is the kind of information that will help somebody keep some cash in their pocket.

Print it and stickit on the dash!!

 

[davekc]

This is good information if one is responsible for paying their quarterly fuel tax. I agree with the others, it is amazing how many are unaware of these costs. Almost the same percentage that are unaware of their actual cost per mile.
Every penny counts in a penny business.




Davekc
owner
21 years
PantherII
EO moderator