A lot of New Jersey drivers expected the first week of January to sting a little at the pump. The state’s gas tax went up again on New Year’s Day, and for many motorists, that usually means higher prices almost immediately.
That didn’t happen.
Instead, gas prices across the Garden State quietly moved in the opposite direction. In the days following the tax increase, the average cost of a gallon of regular gasoline actually fell, surprising drivers who had rushed to fill their tanks before the calendar turned.
AAA reports that regular unleaded is now averaging $2.81 per gallon in New Jersey. That’s down slightly from the previous week, when prices hovered around $2.83. Compared to a month ago, when the statewide average was close to $2.98, the drop is more noticeable.
The reason has little to do with state policy and a lot to do with timing.
Crude oil prices remain low, with a barrel trading near $58, according to GasBuddy. That alone puts downward pressure on gas prices. Layer in what analysts call a seasonal winter slowdown—fewer road trips, less recreational driving, and shorter commutes around the holidays—and prices tend to soften even when taxes rise.
The gas tax increase itself was planned well in advance. New Jersey adjusts the tax annually as part of its funding formula for the Transportation Trust Fund, which pays for road repairs, bridge work, and other transportation projects. This year’s increase, just over four cents per gallon, marked the third January hike in a row.
Many drivers anticipated it. Gas stations across the state reported heavier traffic in the final days of December as motorists topped off ahead of the increase. For some, it was habit. For others, it was insurance.
But once the holiday rush passed, demand eased. That shift appears to have outweighed the tax bump—at least for now.
A petroleum expert told local media outlets that speculation about new foreign oil sources is not playing a meaningful role in the current price movement. Instead, the market is responding to existing supply levels and seasonal demand patterns that repeat themselves most winters.
Looking ahead, some analysts believe drivers may continue to see relatively low prices through much of 2026 if oil prices remain stable and demand stays muted. While gas taxes will remain part of the equation, broader market forces are doing most of the work at the moment.
For New Jersey motorists, the result is unexpected but welcome: a cheaper fill-up in early January, even after the tax increase many assumed would push prices higher.
The New Jersey Digest is a new jersey magazine that has chronicled daily life in the Garden State for over 10 years.