LIMA — Ohio consistently ranks among the most expensive states in the nation to buy fuel, compounding the financial strain on families here as gas prices hit record highs.
The average price for a gallon of gasoline in Ohio has increased by $2.02 in the last 12 months, the twelfth-largest change in regular fuel prices in the nation, according to data compiled by GasBuddy, which compares pump prices across the country.
Ohio hit another record last Monday when the average cost of regular gasoline surpassed $5 per gallon—a 38-cent increase from the prior week, according to AAA estimates Monday. Prices fell just shy of $5 by the end of the week.
Why are gas prices higher in Ohio?
Ohio claims the sixth highest gas tax in the country with its 38.5-cent per gallon tax on regular gasoline and its 47-cent per gallon tax on diesel fuel. Motorists pay another 18.5 cents per gallon in federal taxes on gasoline and 24.5 cents per gallon for diesel.
Lawmakers at one point considered lowering Ohio’s gas tax to its previous rate of 28 cents per gallon amid the influx in federal infrastructure funding available to states. But Gov. Mike DeWine described the proposal as a “mistake,” estimating that it would cost the Department of Transportation and local governments $800 million per year, according to Cleveland.com.
The bill, Senate Bill 277, has not advanced to a floor vote since it was sent to the Transporation Committee in February.
Gas tax holidays
Federal lawmakers have similarly considered enacting a gas-tax holiday to offer drivers some relief, while other states have experimented with their own tax holidays and direct payments to taxpayers.
Suspending gas taxes may be politically popular, but the idea makes less sense economically, said John Navin, a professor and dean of the Ohio Northern University College of Business.
“There are better ways to put money back in people’s pockets than to just suspend the gas tax,” he said. “Think about who it is that you want to impact. If you’re talking about a household and you suspend the gas tax—let’s say the tax is 20 cents per gallon—how many gallons of gas do you put in your car a month? One hundred? At 100, you’re going to save them $20 a month.”
How high will prices go?
Domestic refining capacity has declined by nearly 1 million barrels per day since the pandemic started, according to GasBuddy.
But Patrick De Haan, head of petroleum analysis for GasBuddy, said in a news release Thursday that “demand doesn’t seem to be responding to the surge in gas prices,” which translates to a “high probability that prices could go even higher in the weeks ahead.”
“It’s a perfect storm of factors all aligning to create a rare environment of rapid price hikes,” he said. “The situation could become even worse should there be any unexpected issues at the nation’s refineries or a major hurricane that impacts oil production or refineries this summer.”